10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2019

OR

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

For the transition period from ________________________ to _____________________________

Commission File Number                          000-13232                                                                                              

Juniata Valley Financial Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2235254
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Bridge and Main Streets, Mifflintown, Pennsylvania	17059
(Address of principal executive offices)	(Zip Code)

(717) 436-8211

(Registrant’s telephone number, including area code)

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

x  Yes ¨  No

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

x  Yes ¨  No

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

Large accelerated filer  ¨	Accelerated filer  x
Non-accelerated filer  ¨	Smaller reporting company  x
Emerging growth company  ¨

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

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

¨  Yes x  No

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of May 10, 2019
Common Stock ($1.00 par value)	5,100,248 shares

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of March 31, 2019 (Unaudited) and December 31, 2018	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Not applicable.
Item 4.	Controls and Procedures	45
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
	Signatures	48

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Financial Condition

	(Unaudited)
(Dollars in thousands, except share data)	March 31, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	15,002		$	15,617
Interest bearing deposits with banks		5,539			110
Federal funds sold		3,736			729
Cash and cash equivalents		24,277			16,456
Interest bearing time deposits with banks		2,800			3,290
Equity securities		1,127			1,118
Securities available for sale		140,208			141,953
Restricted investment in bank stock		2,535			2,441
Total loans		414,979			417,631
Less: Allowance for loan losses		(2,994	)		(3,034	)
Total loans, net of allowance for loan losses		411,985			414,597
Premises and equipment, net		8,644			8,744
Other real estate owned		744			744
Bank owned life insurance and annuities		16,013			15,938
Investment in low income housing partnerships		4,435			4,545
Core deposit and other intangible assets		383			405
Goodwill		9,047			9,139
Mortgage servicing rights		193			200
Accrued interest receivable and other assets		5,391			5,666
Total assets	$	627,782		$	625,236
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	128,670		$	126,057
Interest bearing		395,186			395,665
Total deposits		523,856			521,722
Securities sold under agreements to repurchase		2,683			2,911
Short-term borrowings		-			11,600
Long-term debt		25,000			15,000
Other interest bearing liabilities		1,572			1,596
Accrued interest payable and other liabilities		5,498			5,029
Total liabilities		558,609			557,858
Stockholders' Equity:
Preferred stock, no par value:  Authorized - 500,000 shares, none issued		-			-
Common stock, par value $1.00 per share:  Authorized 20,000,000 shares
Issued -
5,141,749 shares at March 31, 2019;
5,134,249 shares at December 31, 2018
Outstanding -
5,098,748 shares at March 31, 2019;
5,092,048 shares at December 31, 2018		5,142			5,134
Surplus		24,832			24,821
Retained earnings		42,818			42,525
Accumulated other comprehensive loss		(2,816	)		(4,299	)
Cost of common stock in Treasury:
43,001 shares at March 31, 2019;
42,201 shares at December 31, 2018		(803	)		(803	)
Total stockholders' equity		69,173			67,378
Total liabilities and stockholders' equity	$	627,782		$	625,236

See Notes to Consolidated Financial Statements

3

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Income (Unaudited)

	Three Months Ended
	March 31,
(Dollars in thousands, except share data)	2019			2018
Interest income:
Loans, including fees	$	5,255		$	4,551
Taxable securities		849			775
Tax-exempt securities		61			103
Other interest income		53			10
Total interest income		6,218			5,439
Interest expense:
Deposits		863			594
Securities sold under agreements to repurchase		11			15
Short-term borrowings		13			84
Long-term debt		161			93
Other interest bearing liabilities		11			8
Total interest expense		1,059			794
Net interest income		5,159			4,645
Provision for loan losses		15			158
Net interest income after provision for loan losses		5,144			4,487
Non-interest income:
Customer service fees		422			412
Debit card fee income		308			292
Earnings on bank-owned life insurance and annuities		69			81
Trust fees		99			102
Commissions from sales of non-deposit products		71			50
Income from unconsolidated subsidiary		-			69
Fees derived from loan activity		70			95
Mortgage banking income		17			19
Loss on sales and calls of securities		(56	)		(15	)
Change in value of equity securities		9			(6	)
Other non-interest income		85			75
Total non-interest income		1,094			1,174
Non-interest expense:
Employee compensation expense		1,968			1,792
Employee benefits		741			564
Occupancy		349			318
Equipment		214			207
Data processing expense		461			416
Director compensation		51			54
Professional fees		197			177
Taxes, other than income		134			113
FDIC Insurance premiums		56			70
Amortization of intangible assets		22			11
Amortization of investment in low-income housing partnerships		200			200
Merger and acquisition expense		-			64
Other non-interest expense		442			419
Total non-interest expense		4,835			4,405
Income before income taxes		1,403			1,256
Income tax benefit		(10	)		(71	)
Net income	$	1,413		$	1,327
Earnings per share
Basic	$	0.28		$	0.28
Diluted	$	0.28		$	0.28
Cash dividends declared per share	$	0.22		$	0.22
Weighted average basic shares outstanding		5,095,132			4,770,389
Weighted average diluted shares outstanding		5,117,024			4,787,769

See Notes to Consolidated Financial Statements

4

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended March 31,
	2019							2018
	Before					Net of		Before						Net of
	Tax		Tax			Tax		Tax			Tax			Tax
(Dollars in thousands)	Amount		Effect			Amount		Amount			Effect			Amount
Net income	$	1,403	$	10		$	1,413	$	1,256		$	71		$	1,327
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities:
Unrealized holding gains (losses) arising during the period		1,793		(377	)		1,416		(2,167	)		456			(1,711	)
Unrealized holding losses from unconsolidated subsidiary		-		-			-		(11	)		-			(11	)
Less reclassification adjustment for losses included in net income for sales of debt securities (1) (3)		56		(12	)		44		15			(4	)		11
Amortization of pension net actuarial cost (2) (3)		29		(6	)		23		41			(9	)		32
Other comprehensive income (loss)		1,878		(395	)		1,483		(2,122	)		443			(1,679	)
Total comprehensive income (loss)	$	3,281	$	(385	)	$	2,896	$	(866	)	$	514		$	(352	)

(1) Amounts are included in (loss) gain on sales and calls of securities on the consolidated statements of income as a separate element within total non-interest income.

(2) Amounts are included in the computation of net periodic benefit cost and are included in employee benefits expense on the consolidated statements of income as a separate element within total non-interest expense.

(3) Income tax amounts are included in the provision for income taxes on the consolidated statements of income.

See Notes to Consolidated Financial Statements

5

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders' Equity (Unaudited)

March 31, 2019

	Number											Accumulated
	of											Other						Total
	Shares			Common					Retained			Comprehensive			Treasury			Stockholders'
(Dollars in thousands, except share data)	Outstanding			Stock		Surplus			Earnings			Loss			Stock			Equity
Balance, January 1, 2019		5,092,048		$	5,134	$	24,821		$	42,525		$	(4,299	)	$	(803	)	$	67,378
Net income										1,413									1,413
Other comprehensive income										-			1,483						1,483
Cash dividends at $0.22 per share										(1,120	)								(1,120	)
Stock-based compensation							19												19
Forfeiture of restricted stock		(800	)																-
Common stock issued for stock plans		7,500			8		(8	)								-			-
Balance, March 31, 2019		5,098,748		$	5,142	$	24,832		$	42,818		$	(2,816	)	$	(803	)	$	69,173

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders' Equity (Unaudited)

March 31, 2018

	Number											Accumulated
	of											Other						Total
	Shares			Common					Retained			Comprehensive			Treasury			Stockholders'
(Dollars in thousands, except share data)	Outstanding			Stock		Surplus			Earnings			Loss			Stock			Equity
Balance, January 1, 2018		4,767,656		$	4,811	$	18,565		$	40,876		$	(4,034	)	$	(831	)	$	59,387
Net income										1,327									1,327
Other comprehensive loss													(1,679	)					(1,679	)
Reclassification for ASU 2016-01										156			(156	)					-
Cash dividends at $0.22 per share										(1,049	)								(1,049	)
Stock-based compensation							18												18
Purchase of treasury stock		(1,928	)													(40	)		(40	)
Treasury stock issued for stock plans		2,000					(3	)								38			35
Common stock issued for stock plans		5,220			5		(5	)											-
Balance, March 31, 2018		4,772,948		$	4,816	$	18,575		$	41,310		$	(5,869	)	$	(833	)	$	57,999

See Notes to Consolidated Financial Statements

6

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended March 31,
(Dollars in thousands)	2019			2018
Operating activities:
Net income	$	1,413		$	1,327
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		15			158
Depreciation		196			204
Net amortization of securities premiums		133			145
Net amortization of loan origination fees		20			15
Deferred net loan origination costs		(47	)		(55	)
Amortization of core deposit intangible asset		22			11
Amortization of investment in low income housing partnership		200			200
Net (amortization) accretion of purchase fair value adjustments		(31	)		13
Net realized loss on sales and calls of available for sale securities		56			15
Change in value of equity securities		(9	)		6
Earnings on bank owned life insurance and annuities		(69	)		(81	)
Deferred income tax expense (benefit)		24			(56	)
Income from unconsolidated subsidiary, net of dividends of $0 and $25, respectively		-			(44	)
Stock-based compensation expense		19			18
Proceeds from mortgage loans sold to others		24			23
Mortgage banking income		(17	)		(19	)
Decrease (increase) in accrued interest receivable and other assets		483			(706	)
Decrease in accrued interest payable and other liabilities		(61	)		(447	)
Net cash provided by operating activities		2,371			727
Investing activities:
Purchases of:
Securities available for sale		(11,214	)		(4,119	)
Premises and equipment		(96	)		(41	)
Bank owned life insurance and annuities		(6	)		(6	)
Proceeds from:
Sales of securities available for sale		11,107			4,285
Maturities of and principal repayments on securities available for sale		3,512			2,779
(Purchase) redemption of FHLB stock		(94	)		200
Investment in low income housing partnerships		(90	)		(100	)
Net decrease in interest bearing time deposits with banks		490			-
Net decrease (increase) in loans		2,654			(5,342	)
Net cash provided by (used in) investing activities		6,263			(2,344	)
Financing activities:
Net increase in deposits		2,135			10,455
Net decrease in short-term borrowings and securities sold under agreements to repurchase		(11,828	)		(5,529	)
Issuance of long-term debt		15,000			-
Repayment of long-term debt		(5,000	)		-
Cash dividends		(1,120	)		(1,049	)
Purchase of treasury stock		-			(40	)
Treasury stock issued for employee stock plans		-			35
Net cash (used in) provided by financing activities		(813	)		3,872
Net increase in cash and cash equivalents		7,821			2,255
Cash and cash equivalents at beginning of year		16,456			9,897
Cash and cash equivalents at end of period	$	24,277		$	12,152
Supplemental information:
Interest paid	$	933		$	792
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned	$	-		$	22
Transfer of loans to repossessed vehicles		-			12

See Notes to Consolidated Financial Statements

7

JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation and Accounting Policies

The consolidated financial statements include the accounts of Juniata Valley Financial Corp. (the “Company” or “Juniata”) and its wholly owned subsidiary, The Juniata Valley Bank (the “Bank” or “JVB”). All significant intercompany accounts and transactions have been eliminated.

On April 30, 2018, the Company, which previously owned 39.16% of Liverpool Community Bank (“Liverpool” or “LBC”), completed the acquisition of the remainder of Liverpool’s outstanding common stock. Liverpool was merged with and into the Bank. Refer to Note 3 for more information.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in Juniata Valley Financial Corp.’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2018.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of March 31, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

2. RECENT ACCOUNTING STANDARDS UPDATES (“ASU”)

Adoption of New Accounting Standards

ASU 2016-02, Leases

Issued: February 2016

Summary: The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

In July 2018, the FASB issued ASU-2018-10, Codification Improvements to Topic 842, Leases. ASU 2018-10 clarifies the intended application of certain narrow aspects of the guidance in ASU 2016-02. The amendments are similar in nature to those in the FASB’s ongoing project to make improvements to clarify the Codification or correct unintended application of the guidance. Key amendments in this ASU include:

· Updating the definition of the rate implicit in the lease to clarify that the rate cannot be less than zero;

· Clarifying application of guidance for lessors when determining impairment of net investment in the lease;

· Clarifying whether lessors and lessees should recognize certain transition adjustments to earnings rather than through equity;

· Clarifying certain transition guidance for amounts previously recognized in business combinations.

In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

8

ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to elect not to separate nonlease components from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both the timing and pattern of transfer of the nonlease component(s) and associated lease component are the same, and the lease component, if accounted for separately, would be classified as an operating lease. If the nonlease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic 606. Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic 842.

Effective Date: ASU 2016-02 was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The effective date of the amendments in ASU 2018-10 and ASU 2018-11 were the same as the effective date for ASU 2016-02.

The Company adopted ASU 2016-02 on January 1, 2019 using the optional transition method. The Company also elected the following practical expedients: the package of practical expedients, combining lease and nonlease components by class of underlying asset, and using hindsight in determining the lease terms. The adoption of this standard resulted in the recording of a ROU asset and lease liability of $556,000 as of January 1, 2019 for the Company’s four operating lease obligations. The adoption of this standard did not have a material impact on the Company’s operations, cash flows or capital ratios, nor has it caused the Company to no longer be well capitalized. See Note 14 for more information.

Newly Issued, Not Yet Effective Standards

ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

Issued: August 2018

Summary: ASU 2018-14 modifies the disclosure requirements under ASC 715-20 for employers that sponsor defined benefit pension or other postretirement plans. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments are effective for public business entities for fiscal years ending after December 15, 2020. For all other entities, the amendments are effective for annual reporting periods ending after December 15, 2021. Early adoption is permitted. This Update will have no impact on the Company’s consolidated financial position and results of operations because Juniata’s Board of Directors resolved to terminate the Company’s defined benefit retirement plan, The Juniata Valley Bank Retirement Plan, effective November 30, 2018. All participants have been properly notified and settlement of all obligations is expected to occur in the third quarter of 2019. See Note 11 for additional information.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

Issued: August 2018

Summary: ASU 2018-13 modifies the disclosure requirements for fair value measurements required under ASC 820. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments become effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted upon issuance of this ASU. An entity is permitted to early adopt all disclosure requirements in the ASU or early adopt only the removed and modified disclosures and delay adoption of the additional disclosures until their effective date. This Update is not expected to have an impact on the Company’s consolidated financial position or results of operations.

9

ASU 2017-04, Simplifying the Test for Goodwill Impairment

Issued: January 2017

Summary: ASU 2017-04 eliminates the requirement of Step 2 in the current guidance to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value in Step 1 of the current guidance.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2019. The adoption of this Update is not expected to have an impact on the Company’s consolidated financial position and results of operations.

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Issued: June 2016

Summary: ASU 2016-13 requires credit losses on most financial assets to be measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument.

The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above.

Further, the ASU made certain targeted amendments to the existing impairment model for available for sale debt securities. For an available for sale debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.

Effective Date: The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. While the Company’s senior management is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures, it expects the ALLL to increase upon adoption given that the allowance will be required to cover the full remaining expected life of the portfolio, rather than the incurred loss under current U.S. GAAP. The extent of this increase is still being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming an internal taskforce, gathering pertinent data, participating in training courses, and partnering with a software provider that specializes in ALLL analysis, as well as assessing the sufficiency of data currently available through its core database.

3. MERGER

On April 30, 2018, the Company completed the acquisition of Liverpool Community Bank, a Pennsylvania state-chartered bank with one branch location in Liverpool, Perry County. Liverpool was merged with and into The Juniata Valley Bank. As of the merger date, Liverpool had assets of $45,360,000, loans of $32,091,000, and equity of $9,246,000.

Prior to the acquisition, Juniata owned 1,214, or 39.16%, of the 3,100 outstanding common shares of Liverpool. The merger was accounted for using the acquisition method of accounting, in accordance with the provisions of ASC 805, Business Combinations. Juniata obtained control over Liverpool in a step acquisition by acquiring the previously unowned interest in Liverpool. As such, Juniata was required to remeasure its previously held equity interest in Liverpool at its acquisition date fair value and recognize the resulting gain in earnings. The purchase price for the step acquisition was calculated as the aggregate of the consideration transferred for the newly acquired interest (Step Two 60.84% interest) and the fair value of Juniata’s previously held equity interest (Step One 39.16% interest) in Liverpool.

10

On April 30, 2018, Juniata’s Step One adjusted basis in Liverpool was $5,037,000, which included a $415,000 equity gain from the acquisition, in addition to Juniata’s basis in Liverpool of $4,622,000 prior to the recording of the equity gain.

Liverpool shareholders (other than Juniata, whose Liverpool common stock owned of record or beneficially was cancelled) received either: (i) 202.6286 shares of common stock of Juniata or (ii) $4,050.00 in cash in exchange for each share of Liverpool common stock subject to the limitation that cash would be paid for no more than 20% and no less than 15% of Liverpool’s outstanding common stock. As a result, Juniata issued 315,284 shares of common stock with an acquisition date fair value of approximately $6,463,000, based on Juniata’s closing stock price of $20.50 on April 30, 2018, and cash of $1,362,000, including cash in lieu of fractional shares for a total Step Two purchase price consideration of $7,825,000. The total purchase price of the merger, including both the Step One adjusted basis and Step Two purchase price consideration, was $12,862,000.

The assets and liabilities of Liverpool were recorded on the consolidated balance sheet at their estimated fair value as of April 30, 2018, and its results of operations have been included in the consolidated income statement since such date.

The purchase price included goodwill and a core deposit intangible of $3,691,000 and $289,000, respectively. The core deposit intangible is being amortized over a ten-year period using a sum of the year’s digits basis. The goodwill is not being amortized but is tested annually for impairment, or more frequently if circumstances require. ASC 805 allows for adjustments to the estimated fair value of assets and liabilities, and the resulting goodwill for a period of up to one year after the merger date for new information that becomes available reflecting circumstances at the merger date. During the three months ended March 31, 2019, Juniata recorded a $92,000 adjustment to goodwill relating to the tax treatment of Liverpool’s acquired net operating loss resulting in goodwill related to the Liverpool acquisition of $3,599,000 as illustrated in the table below.

Allocation of the purchase price was as follows:

	Recorded at						Recorded at
(Dollars in thousands)	April 30, 2018			Change			March 31, 2019
Step One Purchase Price Consideration
April 30, 2018 JUVF basis in LCB (before gain)	$	4,622		$	-		$	4,622
Increase in Step One basis from equity gain in acquisition		415			-			415
Total Step One adjusted basis		5,037			-			5,037
Step Two Purchase Price Consideration
Purchase price assigned to LCB common shares exchanged for 315,284 JUVF common shares	$	6,463		$	-		$	6,463
Purchase price assigned to LCB common shares exchanged for cash including cash in lieu of fractional shares		1,362			-			1,362
Total Step Two purchase price consideration		7,825			-			7,825
Total purchase price		12,862			-			12,862
LCB net assets acquired:
Tangible common equity		9,246			-			9,246
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(95	)		-			(95	)
Associated deferred income taxes		20			92			112
Fair value adjustment to net assets acquired, net of tax		(75	)		92			17
Total LCB net assets acquired		9,171			92			9,263
Goodwill resulting from the merger	$	3,691		$	(92	)	$	3,599

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The following table summarizes the estimated fair value of the assets acquired and liabilities assumed.

	Recorded at						Recorded at
(Dollars in thousands)	April 30, 2018			Change			March 31, 2019
Total purchase price	$	12,862		$	-		$	12,862
Net assets acquired:
Cash and cash equivalents		8,923			-			8,923
Investments in time deposits with banks		3,675			-			3,675
Loans		31,331			-			31,331
Premises and equipment		125			-			125
Accrued interest receivable		123			-			123
Core deposit and other intangibles		289			-			289
Bank owned life insurance		632			-			632
FHLB stock		124			-			124
Other assets		267			92			359
Deposits		(36,052	)		-			(36,052	)
Accrued interest payable		(17	)		-			(17	)
Other liabilities		(249	)		-			(249	)
		9,171			92			9,263
Goodwill	$	3,691		$	(92	)	$	3,599

The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $32,091,000. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at April 30, 2018	$	32,091
Market rate adjustment		272
Credit fair value adjustment on pools of homogeneous loans		(496	)
Credit fair value adjustment on purchased credit impaired loans		(622	)
Reversal of existing deferred fees and premiums		86
Fair value of purchased loans at April 30, 2018	$	31,331

The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the stated rates of the acquired loans. The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from the loan inception to the acquisition date. The credit adjustment on impaired loans is derived in accordance with ASC 310-30 and represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective loan.

Summarized below is the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018.

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	2,022
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,273	)
Expected cash flows at acquisition		749
Interest component of expected cash flows (accretable discount)		(177	)
Fair value of acquired loans	$	572

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The following table presents unaudited pro forma information as if the merger between Juniata and Liverpool had been completed on January 1, 2017. The pro forma information does not necessarily reflect the results of operations that would have occurred had Juniata merged with Liverpool at the beginning of 2017. Due to Juniata’s former 39.16% ownership in Liverpool, the income previously recorded in the three months ended March 31, 2018 that was attributable to the partial ownership of Liverpool has been excluded, in addition to merger-related costs incurred in 2018 and the resulting tax impacts. Supplemental pro forma earnings for the three months ended March 31, 2018 were adjusted to exclude $69,000 from the income from unconsolidated subsidiary, $64,000 in merger-related expenses and the resulting $1,000 tax expense. A 21% tax rate was assumed. The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies or other factors.

(Dollars in thousands; except share data)	March 31, 2018
Net interest income after loan loss provision	$	4,962
Noninterest income		1,147
Noninterest expense		4,462
Net income available to common shareholders		1,637
Net income per common share		0.32

4. Accumulated other Comprehensive loss

Components of accumulated other comprehensive loss, net of tax, consisted of the following:

(Dollars in thousands)	March 31, 2019			December 31, 2018
Unrealized losses on available for sale securities	$	(1,186	)	$	(2,647	)
Unrecognized expense for defined benefit pension		(1,630	)		(1,652	)
Accumulated other comprehensive loss	$	(2,816	)	$	(4,299	)

5. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended March 31,
(Dollars in thousands, except earnings per share data)	2019		2018
Net income	$	1,413	$	1,327
Weighted-average common shares outstanding		5,095		4,770
Basic earnings per share	$	0.28	$	0.28
Weighted-average common shares outstanding	$	5,095	$	4,770
Common stock equivalents due to effect of stock options		22		17
Total weighted-average common shares and equivalents		5,117		4,787
Diluted earnings per share	$	0.28	$	0.28

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6. Securities

Equity Securities

Equity securities owned by the Company consist of common stock of various financial services providers. Upon the adoption of ASU 2016-01 on January 1, 2018, all of the Company’ equity securities are within the scope of ASC Topic 321, Investments – Equity Securities. Topic 321 requires all equity securities within its scope to be measured at fair value with changes in fair value recognized in net income. As of March 31, 2019, the Company had $1,127,000 in equity securities recorded at fair value and $1,118,000 in equity securities recorded at fair value at December 31, 2018. The Company recorded a net gain of $9,000 during the three months ended March 31, 2019 and a net loss of $6,000 during the three months ended March 31, 2018 on the consolidated statements of income for the change in fair value of equity securities.

Securities Available for Sale

Securities classified as available for sale, which include marketable investment securities, are within the scope of ASC Topic 320, Investments – Debt Securities. Topic 320 requires all debt securities within its scope to be stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of other comprehensive income (loss). Securities classified as available for sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Interest and dividends are recognized as income when earned. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains or losses on the disposition of securities available for sale are based on the net proceeds and the adjusted carrying amount of the securities sold, determined on a specific identification basis.

The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored agencies (approximately 17% of the investment portfolio), mortgage-backed securities issued by Government-sponsored agencies and backed by residential mortgages (approximately 78%) and municipal bonds (approximately 5%) as of March 31, 2019. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates within 5 years.

The amortized cost and fair value of securities available for sale as of March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

	March 31, 2019
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
(Dollars in thousands)	Cost		Value		Gains		Losses
Securities Available for Sale
Type and Maturity Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,999	$	20,708	$	-	$	(291	)
After five years but within ten years		2,999		2,963		-		(36	)
		23,998		23,671		-		(327	)
Obligations of state and political subdivisions
Within one year		823		824		1		-
After one year but within five years		3,688		3,692		10		(6	)
After five years but within ten years		2,226		2,204		-		(22	)
		6,737		6,720		11		(28	)
Mortgage-backed securities		110,981		109,817		355		(1,519	)
Total securities available for sale	$	141,716	$	140,208	$	366	$	(1,874	)

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	December 31, 2018
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
(Dollars in thousands)	Cost		Value		Gains		Losses
Securities Available for Sale
Type and Maturity Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,998	$	20,355	$	-	$	(643	)
After five years but within ten years		2,999		2,911		-		(88	)
		23,997		23,266		-		(731	)
Obligations of state and political subdivisions
Within one year		826		826		-		-
After one year but within five years		14,751		14,686		13		(78	)
After five years but within ten years		2,779		2,669		-		(110	)
		18,356		18,181		13		(188	)
Mortgage-backed securities		102,957		100,506		172		(2,623	)
Total	$	145,310	$	141,953	$	185	$	(3,542	)

Certain obligations of the U.S. Government and state and political subdivisions are pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law. The carrying value of the pledged assets was $39,537,000 and $50,157,000 at March 31, 2019 and December 31, 2018, respectively.

In addition to cash received from the scheduled maturities of investment securities, some securities available for sale are sold or called at current market values during the course of normal operations.

The following table summarizes proceeds received from sales or calls of available for sale investment securities transactions and the resulting realized gains and losses.

	Three Months Ended
	March 31,
(Dollars in thousands)	2019			2018
Gross proceeds from sales and calls of securities	$	11,107		$	4,285
Securities available for sale:
Gross realized gains from sold and called securities	$	5		$	-
Gross realized losses from sold and called securities		(61	)		(15	)
Net losses from sales and calls of securities	$	(56	)	$	(15	)

Topic 320 clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. Management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are taken before an assessment is made as to whether the entity will recover the cost basis of the investment. In instances when a determination is made that an other-than-temporary impairment exists and the entity does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, the other-than-temporary impairment is separated into the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income (loss).

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The following tables show gross unrealized losses and fair values of securities available for sale, aggregated by category and length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2019 and December 31, 2018:

	Unrealized Losses at March 31, 2019
	Less Than 12 Months						12 Months or More							Total
	Number						Number							Number
	of		Fair		Unrealized		of		Fair		Unrealized			of		Fair		Unrealized
(Dollars in thousands)	Securities		Value		Losses		Securities		Value		Losses			Securities		Value		Losses
Obligations of U.S. Government agencies  and corporations		-	$	-	$	-		14	$	23,671	$	(327	)		14	$	23,671	$	(327	)
Obligations of state and  political subdivisions		-		-		-		4		2,786		(28	)		4		2,786		(28	)
Mortgage-backed securities		-		-		-		44		76,640		(1,519	)		44		76,640		(1,519	)
Total temporarily impaired securities		-	$	-	$	-		62	$	103,097	$	(1,874	)		62	$	103,097	$	(1,874	)

	Unrealized Losses at December 31, 2018
	Less Than 12 Months							12 Months or More							Total
	Number							Number							Number
	of		Fair		Unrealized			of		Fair		Unrealized			of		Fair		Unrealized
(Dollars in thousands)	Securities		Value		Losses			Securities		Value		Losses			Securities		Value		Losses
Obligations of U.S. Government agencies and corporations		-	$	-	$	-			14	$	23,267	$	(731	)		14	$	23,267	$	(731	)
Obligations of state and political subdivisions		8		5,055		(10	)		13		8,242		(178	)		21		13,297		(188	)
Mortgage-backed securities		3		6,726		(32	)		43		77,170		(2,591	)		46		83,896		(2,623	)
Total temporarily impaired securities		11	$	11,781	$	(42	)		70	$	108,679	$	(3,500	)		81	$	120,460	$	(3,542	)

At March 31, 2019, 14 U.S. Government agency and corporation securities had unrealized losses that, in the aggregate, did not exceed 1.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more.

At March 31, 2019, 4 obligations of state and political subdivisions had unrealized losses that, in the aggregate, did not exceed 1.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more.

At March 31, 2019, 44 mortgage-backed securities had an unrealized loss that did not exceed 2.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more. The mortgage-backed securities in the Company’s portfolio are government sponsored enterprise (GSE) pass-through instruments issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), which guarantees the timely payment of principal on these investments.

The unrealized losses noted above are considered to be temporary impairments. The decline in the values of the debt securities is due only to interest rate fluctuations, rather than erosion of issuer credit quality. As a result, the payment of contractual cash flows, including principal repayment, is not at risk. Because the Company does not intend to sell the securities, does not believe the Company will be required to sell the securities before recovery and expects to recover the entire amortized cost basis, none of the debt securities are deemed to be other-than-temporarily impaired for the periods ended, March 31, 2019, March 31, 2018 and December 31, 2018, respectively.

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7. Loans and Related Allowance for Credit Losses

Loans that the Company originated and has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the outstanding unpaid principal balances, net of any deferred fees or costs and the allowance for loan losses. Loans acquired through a business combination are discussed under the heading “Acquired Loans”. Interest income on all loans, other than nonaccrual loans, is accrued over the term of the loans based on the amount of principal outstanding. Unearned income is amortized to income over the life of the loans, using the interest method.

The loan portfolio is segmented into commercial and consumer loans. Commercial loans are comprised of the following classes of loans: (1) commercial, financial and agricultural, (2) commercial real estate, (3) real estate construction, a portion of (4) mortgage loans and (5) obligations of states and political subdivisions. Consumer loans are comprised of a portion of (4) mortgage loans and (6) personal loans.

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 as long as (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 in the current year is reversed against current period income, and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, accruals are resumed on loans only when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Company originates loans in the portfolio with the intent to hold them until maturity. At the time the Company no longer intends to hold loans to maturity based on asset/liability management practices, the Company transfers loans from its portfolio to held for sale at fair value. Any write-down recorded upon transfer is charged against the allowance for loan losses. Any write-downs recorded after the initial transfers are recorded as a charge to other non-interest expense. Gains or losses recognized upon sale are included in gains on sales of loans which is a component of non-interest income.

Loans Held for Sale

The Company has originated residential mortgage loans with the intent to sell. These individual loans are normally funded by the buyer immediately. The Company maintains servicing rights on these loans. Mortgage servicing rights are recognized as an asset upon the sale of a mortgage loan. A portion of the cost of the loan is allocated to the servicing right based upon relative fair value. Servicing rights are intangible assets and are carried at estimated fair value. Adjustments to fair value are recorded as non-interest income and included in mortgage banking income in the consolidated statements of income.

In a business combination, the Company may acquire loans which it intends to sell. These loans are assigned a fair value by obtaining actual bids on the loans and adjusting for contingencies in the bids. These loans are carried at lower of cost or market value until sold, adjusted periodically if conditions change before the subsequent sale. Adjustments to fair value and gains or losses recognized upon sale are included in gains on sales of loans which is a component of non-interest income.

Commercial, Financial and Agricultural Lending

The Company originates commercial, financial and agricultural loans primarily to businesses located in its primary market area and surrounding areas. These loans are used for various business purposes, which include short-term loans and lines of credit to finance machinery and equipment purchases, inventory and accounts receivable. Generally, the maximum term for loans extended on machinery and equipment is shorter and does not exceed the projected useful life of such machinery and equipment. Most business lines of credit are written with a five year maturity, subject to an annual credit review.

Commercial loans are generally secured with short-term assets; however, in many cases, additional collateral, such as real estate, is provided as additional security for the loan. Loan-to-value maximum values have been established by the Company and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports, accounts receivable aging reports, collateral appraisals, and other methods.

17

In underwriting commercial loans, an analysis of the borrower’s character, capacity to repay the loan, the adequacy of the borrower’s capital and collateral, as well as an evaluation of conditions affecting the borrower, is performed. Analysis of the borrower’s past, present and future cash flows is also an important aspect of the Company’s analysis.

Concentration analysis assists in identifying industry specific risk inherent in commercial, financial and agricultural lending. Mitigants include the identification of secondary and tertiary sources of repayment and appropriate increases in oversight.

Commercial, financial and agricultural loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions.

Commercial Real Estate Lending

The Company engages in commercial real estate lending in its primary market area and surrounding areas. The Company’s commercial real estate portfolio is secured primarily by residential housing, commercial buildings, raw land and hotels. Generally, commercial real estate loans have terms that do not exceed 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property and are typically secured by personal guarantees of the borrowers.

As economic conditions deteriorate, the Company reduces its exposure in real estate loans with higher risk characteristics. In underwriting these loans, the Company performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers.

Commercial real estate loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions.

Real Estate Construction Lending

The Company engages in real estate construction lending in its primary market area and surrounding areas. The Company’s real estate construction lending consists of commercial and residential site development loans, as well as commercial building construction and residential housing construction loans.

The Company’s commercial real estate construction loans are generally secured with the subject property, and advances are made in conformity with a pre-determined draw schedule supported by independent inspections. Terms of construction loans depend on the specifics of the project, such as estimated absorption rates, estimated time to complete, etc.

In underwriting commercial real estate construction loans, the Company performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, and other resources. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers.

Real estate construction loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions. The difficulty of estimating total construction costs adds to the risk as well.

Mortgage Lending

The Company’s real estate mortgage portfolio is comprised of consumer residential mortgages and business loans secured by one-to-four family properties. One-to-four family residential mortgage loan originations, including home equity installment and home equity lines of credit loans, are generated by the Company’s marketing efforts, its present customers, walk-in customers and referrals. These loans originate primarily within the Company’s market area or with customers primarily from the market area.

The Company offers fixed-rate and adjustable rate mortgage loans with terms up to a maximum of 25-years for both permanent structures and those under construction. The Company’s one-to-four family residential mortgage originations are secured primarily by properties located in its primary market area and surrounding areas. The majority of the Company’s residential mortgage loans originate with a loan-to-value of 80% or less. Home equity installment loans are secured by the borrower’s primary residence with a maximum loan-to-value of 95% and a maximum term of 15 years. Home equity lines of credit are secured by the borrower’s primary residence with a maximum loan-to-value of 90% and a maximum term of 20 years.

18

In underwriting one-to-four family residential real estate loans, the Company evaluates the borrower’s ability to make monthly payments, the borrower’s repayment history and the value of the property securing the loan. The ability to repay is determined by the borrower’s employment history, current financial conditions, and credit background. The analysis is based primarily on the customer’s ability to repay and secondarily on the collateral or security. Most properties securing real estate loans made by the Company are appraised by independent fee appraisers. The Company generally requires mortgage loan borrowers to obtain an attorney’s title opinion or title insurance, and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. The Company does not engage in sub-prime residential mortgage originations.

Residential mortgage loans and home equity loans generally present a lower level of risk than certain other types of consumer loans because they are secured by the borrower’s primary residence. Risk is increased when the Company is in a subordinate position for the loan collateral.

Obligations of States and Political Subdivisions

The Company lends to local municipalities and other tax-exempt organizations. These loans are primarily tax-anticipation notes and, as such, carry little risk. Historically, the Company has never had a loss on any loan of this type.

Personal Lending

The Company offers a variety of secured and unsecured personal loans, including vehicle loans, mobile home loans and loans secured by savings deposits as well as other types of personal loans.

Personal loan terms vary according to the type and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis of the borrower’s willingness and financial ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower’s employment history, current financial conditions and credit background.

Personal loans may entail greater credit risk than do residential mortgage loans, particularly in the case of personal loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, any repossessed collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

Allowance for Credit Losses

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses (“allowance”) represents management’s estimate of losses inherent in the loan portfolio as of the consolidated statement of financial condition date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded lending commitments and is recorded in other liabilities on the consolidated statement of financial condition, when necessary. The amount of the reserve for unfunded lending commitments is not material to the consolidated financial statements. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

For financial reporting purposes, the provision for loan losses charged to current operating income is based on management's estimates, and actual losses may vary from estimates. These estimates are reviewed and adjusted at least quarterly and are reported in earnings in the periods in which they become known.

19

Loans included in any class are considered for charge-off when:

· principal or interest has been in default for 120 days or more and for which no payment has been received during the previous four months;

· all collateral securing the loan has been liquidated and a deficiency balance remains;

· a bankruptcy notice is received for an unsecured loan;

· a confirming loss event has occurred; or

· the loan is deemed to be uncollectible for any other reason.

The allowance for loan losses is maintained at a level considered adequate to offset probable losses on the Company’s existing loans. The analysis of the allowance for loan losses relies heavily on changes in observable trends that may indicate potential credit weaknesses. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the level of the allowance for loan losses as of March 31, 2019 was adequate.

There are two components of the allowance: 1) specific allowances allocated to loans evaluated for impairment under ASC Section 310-10-35; and 2) allowances calculated for pools of loans evaluated collectively for impairment under ASC Subtopic 450-20 (Contingencies).

A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loans and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.

The estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral. For commercial loans secured with real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the current appraisal and the condition of the property. Appraised values may be discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include the estimated costs to sell the property. For commercial loans secured by non-real estate collateral, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging, equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The Company generally does not separately identify individual consumer segment loans for impairment disclosures unless such loans are subject to a restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the Company grants borrowers’ concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a below-market interest rate based on the loan’s risk characteristics or an extension of a loan’s stated maturity date. Nonaccrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a sustained period of time after modification. Loans classified as troubled debt restructurings are designated as impaired.

20

The component of the allowance for pooled loan contingencies relates to other loans that have been segmented into risk rated categories. In accordance with ASC Subtopic 450-20, when measuring estimated credit losses, these loans are grouped into homogenous pools with similar characteristics and evaluated collectively considering both quantitative measures, such as historical loss, and qualitative measures, in the form of environmental adjustments.

Some portfolio segments are further disaggregated and evaluated collectively for impairment based on "class segments," which are largely based on the type of collateral underlying each loan. For commercial, financial and agricultural loans, class segments include commercial loans secured by other-than real estate collateral. Real estate – commercial class segments include loans secured by farmland, multi-family properties, owner-occupied non-farm, non-residential properties and other nonfarm non-residential properties. Real estate – mortgage includes loans secured by first and junior liens on residential real estate. Construction loan class segments include loans secured by commercial real estate, loans to commercial borrowers secured by residential real estate and loans to individuals secured by residential real estate. Personal loan class segments include direct consumer installment loans, indirect automobile loans and other revolving and unsecured loans to individuals.

Quantitative factor determination:

An average annual loss rate is calculated for each pool through an analysis of historical losses over a five-year look-back period. Using data for each loan, a loss emergence period is determined within each segmented class pool. The loss emergence period reflects the approximate length of time from the point when a loss is incurred (the loss trigger event) to the point of loss confirmation (the date of eventual charge-off). The loss emergence period is applied to the average annual loss to produce the qualitative factor for each pooled class segment.

Qualitative factor determination:

Historical loss rates computed in the quantitative component reflects an estimate of the level of incurred losses in the portfolio based on historical experience. Management considers that the current conditions may deviate from those that prevailed over the historical look-back period. Thus, the quantitative rates are an imperfect estimate, necessitating an evaluation of qualitative considerations (i.e. environmental factors) to incorporate these risks.

Management considered qualitative, environmental risk factors including:

· National, regional and local economic and business conditions, and developments that affect the collectability of the portfolio, including the condition of various market segments;

· Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· Changes in the nature and volume of the portfolio and terms of loans;

· Changes in the experience, ability and depth of lending and credit management and other relevant staff;

· Existence and effect of any concentrations of credit and changes in the level of such concentrations;

· Changes in the quality of the loan review system;

· Changes in lending policies and procedures including changes in underwriting standards and collection, charge-off and recovery practices;

· Changes in the value of underlying collateral for collateral-dependent loans; and

· Effect of external influences, including competition, legal and regulatory requirements.

Within each loan segment, an analysis was performed over a ten-year look-back period to discover peak historical losses, and with this data, management established ranges of risk from minimal to very high, for each risk factor, to produce a supportable anchor for risk assignment. Based on the framework for risk factor evaluation and range of adjustments established through the anchoring process, a risk assessment and corresponding adjustment was assigned for each portfolio segment as of March 31, 2019. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

The combination of quantitative and qualitative factors was applied to year-end balances in each pooled segment to establish the overall allowance.

Acquired Loans

Loans that Juniata acquires through business combinations are recorded at fair value with no carryover of the related allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

21

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows will require Juniata to evaluate the need for an additional allowance for credit losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount which Juniata will then reclassify as accretable discount that will be recognized into interest income over the remaining life of the loan.

Acquired loans that met the criteria for impaired or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent if Juniata expects to fully collect the new carrying value (i.e. fair value) of the loans. As such, Juniata may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment.

Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30, but for which a discount is attributable at least in part to credit quality, are also accounted for in accordance with this guidance. As a result, related discounts are recognized subsequently through accretion based on the contractual cash flows of the acquired loans.

Loan Portfolio Classification

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2019 and December 31, 2018.

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
As of March 31, 2019
Commercial, financial and agricultural	$	44,320	$	4,097	$	956	$	-	$	49,373
Real estate - commercial		124,394		7,566		6,944		892		139,796
Real estate - construction		34,638		303		2,206		-		37,147
Real estate - mortgage		155,860		24		2,600		152		158,636
Obligations of states and political subdivisions		19,870		-		-		-		19,870
Personal		10,143		-		14		-		10,157
Total	$	389,225	$	11,990	$	12,720	$	1,044	$	414,979

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2018
Commercial, financial and agricultural	$	42,757	$	2,992	$	814	$	-	$	46,563
Real estate - commercial		125,352		8,590		6,459		894		141,295
Real estate - construction		34,131		-		2,528		29		36,688
Real estate - mortgage		160,774		24		2,569		181		163,548
Obligations of states and political subdivisions		19,129		-		-		-		19,129
Personal		10,389		-		19		-		10,408
Total	$	392,532	$	11,606	$	12,389	$	1,104	$	417,631

The Company has certain loans in its portfolio that are considered to be impaired. It is the policy of the Company to recognize income on impaired loans that have been transferred to nonaccrual status on a cash basis, only to the extent that it exceeds principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2019 and December 31, 2018 totaled $47,000 and $94,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors are used to determine the charge-off amount.

22

The following table summarizes information regarding impaired loans by portfolio class as of March 31, 2019 and December 31, 2018.

	As of March 31, 2019						As of December 31, 2018
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	1,214	$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531		585		-		544		592		-
Real estate - construction		-		-		-		27		1,123		-
Real estate - mortgage		1,309		1,970		-		1,180		1,912		-
Acquired with credit deterioration		944		1,050		-		971		1,061		-
Personal		14		14		-		17		17		-
Total:
Real estate - commercial		1,214	$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531		585		-		544		592		-
Real estate - construction		-		-		-		27		1,123		-
Real estate - mortgage		1,309		1,970		-		1,180		1,912		-
Acquired with credit deterioration		944		1,050		-		971		1,061		-
Personal		14		14		-		17		17		-
	$	4,012	$	5,231	$	-	$	3,648	$	6,008	$	-

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2019 and 2018 are summarized in the tables below.

	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
(Dollars in thousands)	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
	$	3,833	$	8	$	12	$	5,880	$	5	$	1

23

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2019 and December 31, 2018.

(Dollars in thousands)	March 31, 2019		December 31, 2018
Nonaccrual loans:
Real estate - commercial	$	892	$	908
Real estate - construction		-		29
Real estate - mortgage		885		753
Personal		14		17
Total	$	1,791	$	1,707

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2019 and December 31, 2018.

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
	Days Past		Days Past		than 90		Total Past				Total		Days and
(Dollars in thousands)	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of March 31, 2019
Commercial, financial and agricultural	$	11		-		-	$	11	$	49,362	$	49,373	$	-
Real estate - commercial:
Real estate - commercial		80		121		892		1,093		138,172		139,265		-
Acquired with credit deterioration		-		137		-		137		394		531		-
Real estate - construction		332		-		-		332		36,815		37,147		-
Real estate - mortgage:
Real estate - mortgage		228		-		494		722		156,970		157,692		-
Acquired with credit deterioration		139		-		6		145		799		944		6
Obligations of states and political subdivisions		-		-		-		-		19,870		19,870		-
Personal		72		25		14		111		10,046		10,157		-
Total	$	862	$	283	$	1,406	$	2,551	$	412,428	$	414,979	$	6

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
	Days Past		Days Past		than 90		Total Past				Total		Days and
(Dollars in thousands)	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of December 31, 2018
Commercial, financial and agricultural	$	6	$	-	$	-	$	6	$	46,557	$	46,563	$	-
Real estate - commercial:
Real estate - commercial		-		-		1,214		1,214		139,890		141,104		306
Acquired with credit deterioration		140		-		-		140		51		191		-
Real estate - construction		32		-		29		61		36,627		36,688		-
Real estate - mortgage:
Real estate - mortgage		824		561		175		1,560		161,651		163,211		23
Acquired with credit deterioration		259		-		7		266		71		337		7
Obligations of states and political subdivisions		-		-		-		-		19,129		19,129		-
Personal		24		15		17		56		10,352		10,408		-
Total	$	1,285	$	576	$	1,442	$	3,303	$	414,328	$	417,631	$	336

(1) These loans are guaranteed, or well-secured, and there is an effective means of collection in process.

24

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at March 31, 2019 and December 31, 2018.

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Recorded Investment
As of March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial		1	$	306	$	326	$	324
Real estate - mortgage		8		498		527		426
Non-accruing troubled debt restructurings:
Real estate - mortgage		1		25		25		16
		10	$	829	$	878	$	766

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Recorded Investment
As of December 31, 2018
Accruing troubled debt restructurings:
Real estate - mortgage		8	$	522	$	550	$	428
Non-accruing troubled debt restructurings:
Real estate - mortgage		1		25		25		17
		9	$	547	$	575	$	445

The Company’s troubled debt restructurings are also impaired loans, which may result in a specific allocation and subsequent charge-off if appropriate. As of March 31, 2019, there were no specific reserves carried for troubled debt restructured loans. There were also no defaults of troubled debt restructurings that took place during the three months ended March 31, 2019 or 2018 within 12 months of restructure. On December 31, 2018, there were no specific reserves carried for the troubled debt restructurings, nor any charge-offs related to the troubled debt restructured loans. The amended terms of the restructured loans vary, and may include interest rates that have been reduced, principal payments that have been reduced or deferred for a period of time and/or maturity dates that have been extended.

There were no loan terms modified resulting in troubled debt restructuring during the three months ended March 31, 2018. The following table lists the loans whose terms were modified resulting in a troubled debt restructuring during the three months ended March 31, 2019.

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
(Dollars in thousands)	Contracts		Investment		Investment		Recorded Investment
Three Months Ended March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial		1	$	306	$	326	$	324
Real estate - mortgage		1		9		9		8
		2	$	315	$	335	$	332

25

The following tables summarize the activity in the allowance for loan losses and related investments in loans receivable.

As of, and for the periods ended, March 31, 2019

											Obligations of
	Commercial,										states and
(Dollars in thousands)	financial and		Real estate -			Real estate -		Real estate -			political
	agricultural		commercial			construction		mortgage			subdivisions		Personal			Total
Allowance for loan losses:
Beginning balance, January 1, 2019	$	275	$	1,074		$	558	$	1,035		$	20	$	72		$	3,034
Charge-offs		-		(15	)		-		(47	)		-		(11	)		(73	)
Recoveries		2		7			-		5			-		4			18
Provisions		6		(23	)		14		12			1		5			15
Ending balance, March 31, 2019	$	283	$	1,043		$	572	$	1,005		$	21	$	70		$	2,994
collectively evaluated for impairment	$	283	$	1,043		$	572	$	1,005		$	21	$	70		$	2,994
Loans receivable:
Ending balance	$	49,373	$	139,796		$	37,147	$	158,636		$	19,870	$	10,157		$	414,979
individually evaluated for impairment		-	$	1,214		$	-	$	1,309		$	-	$	14			2,537
acquired with credit deterioration		-		531			-		944			-	$	-			1,475
collectively evaluated for impairment	$	49,373	$	138,051		$	37,147	$	156,383		$	19,870	$	10,143		$	410,967

As of, and for the periods ended, March 31, 2018

											Obligations of
	Commercial,										states and
(Dollars in thousands)	financial and		Real estate -			Real estate -		Real estate -			political
	agricultural		commercial			construction		mortgage			subdivisions		Personal			Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273	$	1,022		$	288	$	1,285		$	-	$	71		$	2,939
Charge-offs		-		(51	)		-		(11	)		-		(11	)		(73	)
Recoveries		3		5			-		-			-		3			11
Provisions		43		83			52		(15	)		-		(5	)		158
Ending balance, March 31, 2018	$	319	$	1,059		$	340	$	1,259		$	-	$	58		$	3,035
collectively evaluated for impairment	$	319	$	1,059		$	340	$	1,259		$	-	$	58		$	3,035
Loans receivable:
Ending balance	$	51,262	$	138,470		$	33,329	$	143,580		$	13,428	$	9,111		$	389,180
individually evaluated for impairment		2		899			-		2,099			-		-			3,000
acquired with credit deterioration		-		170			-		329			-		-			499
collectively evaluated for impairment	$	51,260	$	137,401		$	33,329	$	141,152		$	13,428	$	9,111		$	385,681

As of December 31, 2018

												Obligations of
	Commercial,											states and
(Dollars in thousands)	financial and			Real estate -			Real estate -		Real estate -			political
	agricultural			commercial			construction		mortgage			subdivisions		Personal			Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273		$	1,022		$	288	$	1,285		$	-	$	71		$	2,939
Charge-offs		-			(60	)		-		(183	)		-		(42	)		(285	)
Recoveries		10			5			-		12			-		16			43
Provisions		(8	)		107			270		(79	)		20		27			337
Ending balance, December 31, 2018	$	275		$	1,074		$	558	$	1,035		$	20	$	72		$	3,034
collectively evaluated for impairment	$	275		$	1,074		$	558	$	1,035		$	20	$	72		$	3,034
Loans receivable:
Ending balance	$	46,563		$	141,295		$	36,688	$	163,548		$	19,129	$	10,408		$	417,631
individually evaluated for impairment		-			909			27		1,180			-		17			2,133
acquired with credit deterioration		-			544			-		971			-		-			1,515
collectively evaluated for impairment	$	46,563		$	139,842		$	36,661	$	161,397		$	19,129	$	10,391		$	413,983

26

8. Goodwill and other intangible assets

Goodwill

On September 8, 2006, the Company acquired a branch office in Richfield, PA. Goodwill associated with this transaction is carried at $2,046,000. On November 30, 2015, the Company acquired FNBPA Bancorp, Inc. and as a result, carries goodwill of $3,402,000 relating to the acquisition. In addition, the Company acquired the remainder of the outstanding common stock of Liverpool Community Bank on April 30, 2018, and as a result, carries goodwill of $3,599,000 relating to the acquisition.

Total goodwill at March 31, 2019 and December 31, 2018 was $9,047,000 and $9,139,000, respectively. Goodwill is not amortized but is tested annually for impairment or more frequently if certain events occur which might indicate goodwill has been impaired. There was no impairment of goodwill during the three month periods ended March 31, 2019 or 2018.

Intangible Assets

On November 30, 2015, a core deposit intangible in the amount of $303,000 associated with the FNBPA Bancorp, Inc. acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digits basis. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three months ended March 31, 2019 was $10,000.

On April 30, 2018, a core deposit intangible in the amount of $289,000 associated with the Liverpool Community Bank acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digit basis. Amortization expense recognized for the intangible related to the Liverpool Community Bank acquisition in the three months ended March 31, 2019 was $12,000.

The following table shows the amortization schedule for each of the intangible assets recorded.

	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
(Dollars in thousands)	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2018		108		-
Amortization expense recorded in the twelve months ended December 31, 2018		44		35
Unamortized balance as of December 31, 2018		151		254
Amortization expense recorded in the three months ended March 31, 2019		10		12
Unamortized balance as of March 31, 2019	$	141	$	242
Scheduled remaining amortization expense for years ended:
December 31, 2019	$	28	$	37
December 31, 2020		33		44
December 31, 2021		27		39
December 31, 2022		22		33
December 31, 2023		16		28
After December 31, 2023		15		61

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9. Unconsolidated Subsidiary

The Company no longer has an investment in an unconsolidated subsidiary following its acquisition of the remainder of the outstanding common stock of Liverpool on April 30, 2018. Prior to the acquisition, the Company owned 39.16% of the outstanding common stock of Liverpool. The investment was accounted for under the equity method of accounting. The Company increased its investment in LCB for its share of earnings and decreased its investment by any dividends received from LCB. The investment was evaluated quarterly for impairment. A loss in value of the investment which is determined to be other than a temporary decline would have been recognized as a loss in the period in which such determination was made. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of LCB to sustain an earnings capacity that would justify the current carrying value of the investment. There was no impairment of the investment relating to LCB prior to the acquisition on April 30, 2018.

10. Fair Value Measurement

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. Additional guidance is provided on determining when the volume and level of activity for the asset or liability has significantly decreased. The guidance also includes guidance on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed, and significant adjustments to the related prices may be necessary to estimate fair value in accordance with fair value measurement and disclosure guidance.

This guidance clarifies that, when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The guidance provides a list of circumstances that may indicate that a transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

Fair value measurement and disclosure guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

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Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

An asset’s or liability’s placement in the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Equities Securities – The fair value of equity securities is based upon quoted prices in active markets and is reported using Level 1 inputs.

Securities Available for Sale – Debt securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurement from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Equity securities classified as available for sale are reported at fair value using Level 1 and Level 2 inputs.

Impaired Loans – Certain impaired loans are reported on a non-recurring basis at the fair value of the underlying collateral since repayment is expected solely from the collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Other Real Estate Owned – Certain assets included in other real estate owned are carried at fair value as a result of impairment and accordingly are presented as measured on a non-recurring basis. Values are estimated using Level 3 inputs, based on appraisals that consider the sales prices of property in the proximate vicinity.

Mortgage Servicing Rights – The fair value of servicing assets is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date and are considered Level 3 inputs.

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The following tables summarize financial assets and financial liabilities measured at fair value as of March 31, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no transfers of assets between fair value Level 1 and Level 2 during the three months ended March 31, 2019 or 2018.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	March 31,		for Identical		Observable		Unobservable
	2019		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,671	$	-	$	23,671	$	-
Obligations of state and political subdivisions		6,720		-		6,720		-
Mortgage-backed securities		109,817		-		109,817		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,044	$	-	$	-	$	1,044
Other real estate owned		149		-		-		149
Mortgage servicing rights		193		-		-		193

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2018		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,266	$	-	$	23,266	$	-
Obligations of state and political subdivisions		18,181		-		18,181		-
Mortgage-backed securities		100,506		-		100,506		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,104	$	-	$	-	$	1,104
Other real estate owned		149		-		-		149
Mortgage servicing rights		200		-		-		200

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs have been used to determine fair value:

(Dollars in thousands)
March 31, 2019	Fair Value Estimate		Valuation Technique	Unobservable Input	Range		Weighted Average
Impaired loans	$	1,044	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)		0% - 15%		14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)		2%		2%
Mortgage servicing rights		193	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term		300% - 400%		370%

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(Dollars in thousands)
December 31, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range		Weighted Average
Impaired loans	$	1,104	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)		0% - 15%		14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)		2%		2%
Mortgage servicing rights		200	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term		300% - 400%		369%

(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, the fair value estimates reported herein are not necessarily indicative of the amounts the Company could have realized in sales transactions on the dates indicated. The estimated fair value amounts have been measured as of their respective year ends and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each quarter end.

The information presented below should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is provided only for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The following discussion describes the estimated fair value of the Company’s financial instruments as well as the significant methods and assumptions not previously disclosed used to determine these estimated fair values.

Carrying values approximate fair value for cash and due from banks, interest-bearing demand deposits with banks, restricted stock in the Federal Home Loan Bank, loans held for sale, interest receivable, mortgage servicing rights, non-interest bearing deposits, securities sold under agreements to repurchase, short-term borrowings and interest payable. Other than cash and due from banks, which are considered Level 1 inputs, and mortgage servicing rights, which are Level 3 inputs, these instruments are Level 2 inputs.

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The estimated fair values of the Company’s financial instruments are as follows:

	Financial Instruments
	March 31, 2019				December 31, 2018
(Dollars in thousands)	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,002	$	15,002	$	15,617	$	15,617
Interest bearing deposits with banks		5,539		5,539		110		110
Federal funds sold		3,736		3,736		729		729
Interest bearing time deposits with banks		2,800		2,792		3,290		3,290
Securities		141,335		141,335		141,953		141,953
Restricted investment in FHLB stock		2,535		2,535		2,441		2,441
Loans, net of allowance for loan losses		411,985		412,579		414,597		415,195
Mortgage servicing rights		193		193		200		200
Accrued interest receivable		1,709		1,709		1,681		1,681
Financial liabilities:
Non-interest bearing deposits	$	128,670	$	128,670	$	126,057		126,057
Interest bearing deposits		395,186		394,889		395,665		395,226
Securities sold under agreements to repurchase		2,683		2,683		2,911		2,911
Short-term borrowings		-		-		11,600		11,600
Long-term debt		25,000		25,058		15,000		14,958
Other interest bearing liabilities		1,572		1,573		1,596		1,597
Accrued interest payable		415		415		289		289
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Letters of credit		-		-		-		-

The following tables present the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments not previously disclosed as of March 31, 2019 and December 31, 2018. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
March 31, 2019
Financial instruments - Assets
Interest bearing time deposits with banks	$	2,800	$	2,792	$	-	$	2,792	$	-
Loans, net of allowance for loan losses		411,985		412,579		-		-		412,579
Financial instruments - Liabilities
Interest bearing deposits	$	395,186	$	394,889	$	-	$	394,889	$	-
Long-term debt		25,000		25,058		-		25,058		-
Other interest bearing liabilities		1,572		1,573		-		1,573		-

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					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,290	$	3,290	$	-	$	3,290	$	-
Loans, net of allowance for loan losses		414,597		415,195		-		-		415,195
Financial instruments - Liabilities
Interest bearing deposits	$	395,665	$	395,226	$	-	$	395,226	$	-
Long-term debt		15,000		14,958		-		14,958		-
Other interest bearing liabilities		1,596		1,597		-		1,597		-

11. Defined Benefit Retirement Plan

The Company sponsors a defined benefit retirement plan, The Juniata Valley Bank Retirement Plan (“JVB Plan”), which covers substantially all of its employees employed prior to December 31, 2007. As of January 1, 2008, the JVB Plan was amended to close the plan to new entrants. All active participants as of December 31, 2007 became 100% vested in their accrued benefit and, as long as they remained eligible, continued to accrue benefits until December 31, 2012. The benefits are based on years of service and the employee’s compensation. Effective December 31, 2012, the JVB Plan was amended to cease future service accruals after that date (i.e., it was frozen).

As a result of the FNBPA acquisition, as of November 30, 2015, the Company assumed sponsorship of a second defined benefit retirement plan, the Retirement Plan for the First National Bank of Port Allegany (“FNB Plan”), which covers substantially all former FNBPA employees that were employed prior to September 30, 2008. The FNBPA Plan was amended as of December 31, 2015 to cease future service accruals to previously unfrozen participants and is now considered to be “frozen”. Effective December 31, 2016, the FNB Plan was merged into the JVB Plan, which was amended to provide the same benefits to the class of participants previously included in the FNB Plan.

In 2017, Juniata initiated a strategy to reduce the liability associated with its defined benefit pension plan. The first step of the initiative consisted of the purchase of a single premium group annuity for a group of Juniata’s retirees, transferring the associated pension liability to the issuer of the annuity. This step reduced Juniata’s overall pension liability by approximately 12%, which resulted in a pre-tax charge to earnings of $377,000 in the fourth quarter of 2017. This pre-tax charge represents an acceleration of pension expenses that would otherwise have impacted Juniata’s earnings in the future.

The Company initiated and completed the second step of this strategy during the third quarter of 2018 by making a lump sum payment offer to a small group of terminated vested participants in the Company’s defined benefit plan. This second step further reduced Juniata’s remaining pension liability by approximately 9%, which resulted in a pre-tax charge to earnings of $210,000 in the third quarter of 2018. The pre-tax charge represents a further acceleration of pension expenses that would otherwise have impacted Juniata’s future earnings. The Company also made a $1,350,000 contribution to the defined benefit pension plan during the third quarter of 2018.

The Company’s funding policy with respect to the JVB Plan is to contribute annually no more than the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide for benefits attributed to service through December 31, 2012. The Company did not make a contribution in the three months ended March 31, 2019 and March 31, 2018.

Juniata’s Board of Directors resolved to terminate the JVB Plan, effective November 30, 2018. All participants have been properly notified and settlement of all obligations is expected to occur by the third quarter of 2019.

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Pension expense included the following components for the three months ended March 31, 2019 and 2018:

	Three Months Ended
(Dollars in thousands)	March 31,
	2019			2018
Components of net periodic pension cost (benefit):
Interest cost	$	125		$	132
Expected return on plan assets		(124	)		(192	)
Recognized net actuarial loss		28			41
Net periodic pension cost (benefit)	$	29		$	(19	)
Amortization of net actuarial loss recognized in other comprehensive income	$	(28	)	$	(41	)
Total recognized in net periodic pension cost (benefit) and other comprehensive income	$	1		$	(60	)

12. Commitments, Contingent Liabilities and Guarantees

In the ordinary course of business, the Company makes commitments to extend credit to its customers through letters of credit, loan commitments and lines of credit. At March 31, 2019, the Company had $88,350,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $87,223,000 at December 31, 2018.

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments. The Company had outstanding $2,356,000 and $2,749,000 of financial and performance letters of credit commitments as of March 31, 2019 and December 31, 2018, respectively. Commercial letters of credit as of March 31, 2019 and December 31, 2018 totaled $9,867,000 and $8,925,000, respectively. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The amount of the liability as of March 31, 2019 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

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

13. REVENUE RECOGNITION

As disclosed in Note 2, as of January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, as well as subsequent ASUs that modified Topic 606. The Company elected to apply the ASU and all related ASU’s using the modified retrospective approach applied to all contracts initiated on or after the effective date, and for contracts which have remaining obligations as of the effective date, while prior period results continue to be reported under legacy U.S. GAAP. Based on this assessment, the Company concluded that Topic 606 did not materially change the method by which the Company currently recognizes revenue for these revenue streams, which is by recognizing revenues as they are earned based upon contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured.

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The Company generally acts in a principal capacity, on its own behalf, in most contracts with customers. In such transactions, revenue and related costs to provide these services are recognized on a gross basis in the financial statements. In some cases, the Company acts in an agent capacity, deriving revenue through assisting other entities in transactions with its customers. In such transactions, revenue and the related costs to provide the services are recognized on a net basis in the financial statements. These transactions primarily relate to non-deposit product commissions and fees derived from customer’s use of various interchange and ATM/debit card networks.

All of the Company’s revenue from contracts with customers in the scope of Topic 606 are recognized within non-interest income on the consolidated statements of income, except for the gain/loss on the sale of other real estate owned, which is included in other non-interest expense. Revenue streams not within the scope of Topic 606 included in non-interest income on the consolidated statements of income include earnings on bank-owned life insurance and annuities, income from unconsolidated subsidiary, fees derived from loan activity, mortgage banking income, gain/loss on sales and calls of securities, and the change in value of equity securities.

A description of the Company’s sources of revenue accounted for under Topic 606 are as follows:

Customer Service Fees – fees mainly represent fees from deposit customers for transaction based, account maintenance, and overdraft services. Transaction based fees include, but are not limited to, stop payment and overdraft fees. These fees are recognized at the time of the transaction when the performance obligation has been fulfilled. Account maintenance fees and account analysis fees are earned over the course of a month, representing the period of the performance obligation, and are recognized monthly.

Debit Card Fee Income – consists of interchange fees from cardholder transactions conducted through the card payment network. Cardholders use debit cards to conduct point-of-sale transactions that produce interchange fees. The Company acts in an agent capacity to offer processing services for debit cards to its customers. Fees are recognized with the processing of the transactions and netted against the related fees from such transactions.

Trust Fees – include asset management and estate fees. Asset management fees are generally based on a fee schedule, based upon the market value of the assets under management, and recognized monthly when the service obligation is completed. Trust fees recognized during the three month periods ended March 31, 2019 and 2018 totaled $90,000 during both periods. Fees for estate management services are based on a specified fee schedule and generally recognized as the following performance obligations are fulfilled: (i) 25% of total estate fee recognized when all estate assets are collected and debts paid, (ii) 50% of the total fee is recognized when the inheritance tax return is filed, and (iii) remaining 25% is recognized when the first and final account is confirmed, settling the estate. Estate fees recognized during the three month periods ended March 31, 2019 and 2018 totaled $9,000 and $12,000, respectively.

Commissions From Sales Of Non-Deposit Products – include, but are not limited to, brokerage services, employer-based retirement solutions, individual retirement planning, insurance solutions, and fee-based investment advisory services. The Company acts in an agent capacity to offer these services to customers. Revenue is recognized, net of related fees, in the month in which the contract is fulfilled.

Other Non-Interest Income – includes certain revenue streams within the scope of Topic 606 comprised primarily of ATM surcharges, commissions on check orders, and wire transfer fees. ATM surcharges are the result of customers conducting ATM transactions that generate fee income. All of these fees, as well as wire transfer fees, are transaction based and are recognized at the time of the transaction. In addition, the Company acts in an agent capacity to offer checks to its customers and recognizes commissions, net of related fees, when the contract is fulfilled.

Gains/Losses On Sales Of Other Real Estate Owned – are recognized when control of the property transfers to the buyer, which generally occurs when the deed is executed.

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due from the customer. The company’s non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into longer-term revenue contracts with customer, and therefore, does not experience significant contract balances.

Contract Acquisition Costs

The Company expenses all contract acquisition costs as costs are incurred.

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14. LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plan or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), and all subsequent ASUs that modified Topic 842 using the optional transition method. For the Company, Topic 842 affected the accounting treatment for its four operating lease agreements in which the Company is the lessee.

The Company elected the package of practical expedients, which removed the requirements to reassess whether any expired or existing contracts contain leases, reassess the lease classification for any expired or existing leases, and reassess the initial direct costs for any existing leases. The Company also elected two other practical expedients allowing the combination of lease and nonlease components by class of underlying asset and using hindsight in determining the lease terms since most of the leases have an extension option.

The four operating leases, one of which is with a related party, are comprised of real estate property for branch and office space with terms extending through 2029. Operating leases were previously not recognized on the Company’s consolidated statements of condition, but with the adoption of Topic 842, operating lease agreements are recognized on the consolidated statements of condition as a ROU asset and a corresponding lease liability. As of March 31, 2019, the Company had operating lease ROU assets totaling $534,000 included in other assets and operating lease liabilities totaling $535,000 included in other liabilities.

The calculated amount of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability.

Topic 842 requires the use of the rate implicit in the lease as the discount rate if that rate is readily determinable. As this rate is rarely determinable, the Company utilized its incremental borrowing rate at lease inception, which is the rate the Company would have incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Because the four operating leases existed prior to the adoption of Topic 842 on January 1, 2019, the incremental borrowing rate for the remaining lease term at January 1, 2019 was used.

As of March 31, 2019, the weighted-average remaining operating lease term was 7.9 years and the weighted-average discount rate was 5.45%.

The Company elected, for the real estate class of underlying assets which is currently its only class, not to separate lease and nonlease components and to account for them as a single lease component. The Company has one operating lease agreement containing a monthly ATM surcharge, which is combined with the property rental payment as a result of electing the practical expedient. The Company’s total operating lease cost for the three months ended March 31, 2019 was $30,000, of which $6,000 was to a related party.

The future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2019 were as follows:

(Dollars in thousands)
Twelve Months Ended:
March 31, 2020	$	120
March 31, 2021		116
March 31, 2022		97
March 31, 2023		47
March 31, 2024		47
Thereafter		233
Total Future Minimum Lease Payments		660
Amounts Representing Interest		(125	)
Present Value of Net Future Minimum Lease Payments	$	535

15. Subsequent Events

On April 17, 2019, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on May 15, 2019, payable on May 31, 2019.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements:

The information contained in this Quarterly Report on Form 10-Q contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations thereunder) including statements that are not historical facts or that address trends or management's intentions, plans, beliefs, expectations or opinions. Any forward-looking statement made by us in this document is based only on information currently available to us 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, events or results and are subject to potential risks and uncertainties, many of which are outside of our control that could cause actual results to differ materially from this forward-looking information. Important factors that could cause our actual result and financial condition to differ materially from those indicated in the forward-looking statements include, without limitation:

· 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 loan and lease losses, and estimations of collateral values and various financial assets and liabilities;

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

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

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

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

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

· the Company’s ability to keep pace with technological changes;

· the Company’s ability to attract and retain talented personnel;

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

· the effects of changes in relevant accounting principles and guidelines on the presentation in the Company’s financial condition;

· acts of war or terrorism;

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

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

· the impact on earnings of the Company’s strategy to terminate its defined benefit retirement plan.

For a more complete discussion of certain risks, uncertainties and other factors affecting the Company, refer to the Company’s Risk Factors, contained in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, a copy of which may be obtained from the Company upon request and without charge (except for the exhibits thereto), and Item 1A of Part II of this Quarterly Report on Form 10-Q.

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Critical Accounting Policies:

Disclosure of the Company’s significant accounting policies is included in the notes to the consolidated financial statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Some of these policies require significant judgments, estimates, and assumptions to be made by management, most particularly in connection with determining the provision for loan losses and the appropriate level of the allowance for loan losses, as well as management’s evaluation of the available for sale debt securities portfolio for other-than-temporary impairment. Any policies adopted after this date are included in Note 2 of this Quarterly Report.

General:

The following discussion relates to the consolidated financial condition of the Company as of March 31, 2019, compared to December 31, 2018, and the consolidated results of operations for the three months ended March 31, 2019, compared to the same period in 2018. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.

Overview:

Juniata Valley Financial Corp. is a Pennsylvania corporation organized in 1983 to be the holding company of The Juniata Valley Bank. The Bank is a state-chartered bank headquartered in Mifflintown, Pennsylvania. Juniata Valley Financial Corp. and its subsidiary bank derive substantially all of their income from banking and bank-related services, including interest earned on residential real estate, commercial mortgage, commercial and consumer loans, interest earned on investment securities and fee income from deposit services and other financial services to its customers. On April 30, 2018, Juniata acquired the remainder of the outstanding common stock of the Liverpool Community Bank of which it previously owned 39.16%. As of the merger date, total assets increased by approximately $49,180,000, or 8%. Juniata now operates a total of 16 locations in Pennsylvania.

Financial Condition:

Total assets as of March 31, 2019, were $627,782,000, an increase of $2,546,000, or 0.4%, compared to December 31, 2018. Comparing the balances at March 31, 2019 and December 31, 2018, total cash and cash equivalents increased by $7,821,000 and deposits increased by $2,134,000, with majority of the deposit growth occurring in non-interest bearing deposits, while total loans declined by $2,652,000. During the same period, the Company utilized cash flows from the investment portfolio to reduce higher cost borrowings. This strategy led to a strategic decline in the investment portfolio of $1,745,000 and contributed to the decline in total borrowings.

The table below shows changes in deposit volumes by type of deposit between December 31, 2018 and March 31, 2019.

(Dollars in thousands)	March 31,		December 31,		Change
	2019		2018		$			%
Deposits:
Demand, non-interest bearing	$	128,670	$	126,057	$	2,613			2.1	%
Interest bearing demand and money market		146,789		147,413		(624	)		(0.4	)
Savings		98,971		99,236		(265	)		(0.3	)
Time deposits, $250,000 and more		8,390		8,368		22			0.3
Other time deposits		141,036		140,648		388			0.3
Total deposits	$	523,856	$	521,722	$	2,134			0.4	%

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Total loans decreased $2,652,000, or 0.6%, between December 31, 2018 and March 31, 2019. As shown in the table below, the majority of the decline was in commercial real estate and residential mortgage loans, which was partially offset by increases in commercial, financial and agricultural loans, obligations of states and political subdivisions, as well as real estate construction.

(Dollars in thousands)	March 31,		December 31,		Change
	2019		2018		$			%
Loans:
Commercial, financial and agricultural	$	49,373	$	46,563	$	2,810			6.0	%
Real estate - commercial		139,796		141,295		(1,499	)		(1.1	)
Real estate - construction		37,147		36,688		459			1.3
Real estate - mortgage		158,636		163,548		(4,912	)		(3.0	)
Obligations of states and political subdivisions		19,870		19,129		741			3.9
Personal		10,157		10,408		(251	)		(2.4	)
Total loans	$	414,979	$	417,631	$	(2,652	)		(0.6	)%

A summary of the activity in the allowance for loan losses for each of the three month periods ended March 31, 2019 and 2018 is presented below.

(Dollars in thousands)	Periods Ended March 31,
	2019			2018
Balance of allowance - January 1	$	3,034		$	2,939
Loans charged off		(73	)		(73	)
Recoveries of loans previously charged off		18			11
Net charge-offs		(55	)		(62	)
Provision for loan losses		15			158
Balance of allowance - end of period	$	2,994		$	3,035
Ratio of net charge-offs during period to average loans outstanding		0.01	%		0.02	%

As of March 31, 2019, 29 loans (exclusive of loans acquired with existing credit deterioration) with aggregate outstanding balances of $2,537,000 were individually evaluated for impairment. A collateral analysis was performed on each of these 29 loans in order to establish a portion of the reserve needed to carry the impaired loans at fair value. There were no loans determined to have insufficient collateral, thus, the establishment of a specific reserve was not required for any of the impaired loans.

As of March 31, 2019, there were $11,990,000 in special mention loans compared to $11,606,000 at December 31, 2018 and $12,720,000 in substandard loans compared to $12,389,000 at December 31, 2018.

Management believes that the reserves carried are adequate to cover potential future losses related to these relationships. Other than as described herein, management does not believe there are any trends, events or uncertainties that are reasonably expected to have a material impact on future results of operations, liquidity, or capital resources. Further, based on known information, management believes that the effects of current and past economic conditions and other unfavorable business conditions may influence certain borrowers’ abilities to comply with their repayment terms, and as such, continues to monitor the financial strength of these borrowers closely.

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The following is a summary of the Bank’s non-performing loans on March 31, 2019 compared to December 31, 2018.

(Dollar amounts in thousands)	As of and for the			As of and for the
	three months ended			year ended
	March 31, 2019			December 31, 2018
Non-performing loans
Non-accrual loans	$	1,791		$	1,707
Accruing loans past due 90 days or more, exclusive of loans acquired with credit deterioration		-			329
Restructured loans in default and non-accruing		-			39
Total	$	1,791		$	2,075
Average loans outstanding		421,298			409,362
Ratio of non-performing loans to average loans outstanding		0.43	%		0.51	%

Stockholders’ equity increased from December 31, 2018 to March 31, 2019 by $1,795,000, or 2.7%. The Company’s net income exceeded dividends paid by $293,000. The adjustment to accumulated other comprehensive loss to record the reclassification adjustment for losses on sales of debt securities and the amortization of the costs associated with the Company’s defined benefit retirement plan increased the Company’s equity by $67,000. The change in net unrealized gains from the change in market value of securities available for sale increased shareholders’ equity by $1,416,000 when comparing March 31, 2019 to December 31, 2018. Stock based compensation expense recorded pursuant to the Company’s Stock Option Plan added $19,000 to stockholders’ equity during the three month period.

Subsequent to March 31, 2019, the following event took place:

On April 17, 2019, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on May 15, 2019, payable on May 31, 2019.

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Comparison of the Three Months Ended March 31, 2019 and 2018

Operations Overview:

Net income for the first quarter of 2019 was $1,413,000, an increase of $86,000, or 6.5%, when compared to the first quarter of 2018, while basic and diluted earnings per share were $0.28 in both periods. Annualized return on average equity for the three months ended March 31, 2019 was 8.38%, compared to 9.15% for the same period in 2018. For the three months ended March 31, annualized return on average assets was 0.90% in 2019, compared to 0.89% in 2018. The comparability of the results of operations for the three months ended March 31, 2019 were impacted by the acquisition of Liverpool Community Bank on April 30, 2018. Further details are noted in the sections that follow.

Presented below are selected key ratios for the two periods:

	Three Months Ended
	March 31,
	2019			2018
Return on average assets (annualized)		0.90	%		0.89	%
Return on average equity (annualized)		8.38	%		9.15	%
Average equity to average assets		10.79	%		9.73	%
Non-interest income, excluding securities gains (losses), as a percentage of average assets (annualized)		0.74	%		0.80	%
Non-interest expense, excluding merger expenses, as a percentage of average assets (annualized)		3.09	%		2.91	%

The discussion that follows further explains changes in the components of net income when comparing the first quarter of 2019 with the first quarter of 2018.

Net Interest Income:

Net interest income, after the provision for loan losses, increased during the three months ended March 31, 2019 by $657,000, or 14.6%, when compared to the three months ended March 31, 2018. Both net interest income growth and a decline in the provision for loan losses contributed to the increase. Overall, average earning assets increased 5.0%, while average interest bearing liabilities increased 3.5%. Net interest margin, on a fully tax equivalent basis, increased from 3.45% during the three months ended March 31, 2018 to 3.65% during the three months ended March 31, 2019.

Average loan balances and interest on loans increased by $31,275,000 and $704,000, respectively, for the first quarter of 2019 compared to the same period in 2018. The increase in the average volume of loans outstanding and the 33 basis point increase in the weighted average yield on loans increased interest income by approximately $349,000 and $355,000, respectively.

Interest earned on investment securities increased $32,000 in the first quarter of 2019 compared to the first quarter of 2018, while the average balance of investment securities declined by $10,321,000, or 6.5%, during the period. The decline in the average balance decreased interest income by $50,000, while the increase in the overall pre-tax yield of 24 basis points on the investment securities portfolio added $82,000 to interest income.

Average earning assets increased $27,522,000, to $575,732,000, primarily due to the 8.0% increase in average loans. The yield on earning assets increased to 4.32% during the three months ended March 31, 2019 from 3.97% in the same period in 2018. The average balance of interest bearing liabilities and non-interest bearing liabilities increased over the period by $14,709,000 and $5,082,000, respectively, compared to the same 2018 period. In addition, the cost to fund interest bearing assets with interest bearing liabilities increased 22 basis points, to 0.99% during the first quarter of 2019 compared to the same period in 2018.

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The table below shows the net interest margin on a fully tax-equivalent basis for the three months ended March 31, 2019 and 2018.

Average Balance Sheets and Net Interest Income Analysis

	Three Months Ended							Three Months Ended
(Dollars in thousands)	March 31, 2019							March 31, 2018
	Average				Yield/			Average				Yield/			Increase (Decrease) Due To (6)
	Balance (1)		Interest		Rate			Balance (1)		Interest		Rate			Volume			Rate			Total
ASSETS
Interest earning assets:
Taxable loans (5)	$	386,432	$	4,950		5.12	%	$	361,270	$	4,325		4.79	%	$	301		$	324		$	625
Tax-exempt loans		34,866		305		3.50			28,753		226		3.14			48			31			79
Total loans		421,298		5,255		4.99			390,023		4,551		4.67			349			355			704
Taxable investment securities		135,364		849		2.51			136,158		775		2.28			(5	)		79			74
Tax-exempt investment securities		11,976		61		2.03			21,503		103		1.92			(45	)		3			(42	)
Total investment securities		147,340		910		2.47			157,661		878		2.23			(50	)		82			32
Interest bearing deposits		5,361		43		3.19			526		10		7.60			92			(59	)		33
Federal funds sold		1,733		10		2.22			-		-		0.00			-			10			10
Total interest earning assets		575,732		6,218		4.32			548,210		5,439		3.97			391			388			779
Other assets (7)		49,325							47,642
Total assets	$	625,057						$	595,852
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	144,582		299		0.83		$	122,948		141		0.46		$	25		$	133		$	158
Savings deposits		99,408		24		0.10			100,028		24		0.10			-			-			-
Time deposits		149,234		540		1.45			139,865		429		1.23			29			82			111
Short-term and long-term borrowings and other interest bearing liabilities		36,121		196		2.17			51,795		200		1.54			(61	)		57			(4	)
Total interest bearing liabilities		429,345		1,059		0.99			414,636		794		0.77			(7	)		272			265
Non-interest bearing liabilities:
Demand deposits		123,214							116,739
Other		5,084							6,477
Stockholders' equity		67,414							58,000
Total liabilities and stockholders' equity	$	625,057						$	595,852
Net interest income and net interest rate spread			$	5,159		3.33	%			$	4,645		3.20	%	$	398		$	116		$	514
Net interest margin on interest earning assets (3)						3.58	%						3.39	%
Net interest income and net interest margin-Tax equivalent basis (4)			$	5,256		3.65	%			$	4,732		3.45	%

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. In order to make the net yield comparable on a fully taxable basis, a tax equivalent adjustment is applied against the tax-exempt income utilizing a federal tax rate of 21%.

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

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

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

Provision for Loan Losses:

In the first quarter of 2019, the provision for loan losses was $15,000, compared to a provision of $158,000 in the first quarter of 2018, with the decline due to continued improvement in non-performing and classified loans. Management regularly reviews the adequacy of the allowance for loan losses and makes assessments as to specific loan impairment, charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. See the earlier discussion in the Financial Condition section explaining the information used to determine the provision.

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Non-interest Income:

Non-interest income in the first quarter of 2019 was $1,094,000 compared to $1,174,000 in the first quarter of 2018, a decline of $80,000, or 6.8%.

Most significantly impacting the comparative three month periods was a decline in income from unconsolidated subsidiary of $69,000. The equity method of accounting for the Liverpool investment ended with the acquisition by Juniata of the remaining outstanding Liverpool shares on April 30, 2018. Since then, all income and expense items generated by the Liverpool office have been included as part of Juniata’s operations in the appropriate line items in the financial statements. Also contributing to the decline in non-interest income was a net loss on sales and calls of securities of $56,000 in the first quarter of 2019 compared to a net loss of $15,000 in the first quarter of 2018, driven by the strategic repositioning of the investment portfolio in 2019 in an effort to improve the yield on the portfolio for a greater future return. Fees derived from loan activity during the period also declined compared to the first quarter of 2018 due to lower title insurance premiums. Partially offsetting these declines during the period were increases of $26,000 in customer service and debit card fee income and $21,000 in commissions from sales of non-deposit products, as well as a $15,000 increase in the value of equity securities in the first quarter of 2019 compared to the same period last year.

As a percentage of average assets, annualized non-interest income, exclusive of net losses on the sale of securities, was 0.74% in the first quarter of 2019 compared to 0.80% in the first quarter of 2018.

Non-interest Expense:

Non-interest expense was $4,835,000 for the three months ended March 31, 2019 versus $4,405,000 for the same period in 2018, an increase of $430,000.

Non-interest expense increased in the first quarter of 2019 compared to the same period in 2018, primarily driven by Juniata’s growth resulting from the Liverpool acquisition. Employee compensation and benefits expense increased by $353,000 in the first quarter of 2019 due to the addition of the LCB staff as well as the annual salary increase from the employee incentive program. Occupancy and equipment expenses as well as data processing expense increased by $38,000 and $45,000, respectively, in the 2019 period compared to the 2018 period primarily due to the acquisition of Liverpool. Partially offsetting these increases was a decline in merger and acquisition expense of $64,000, as no similar expenses were recorded in the 2019 period, as well as a decline of $14,000 in FDIC insurance premiums due to a lower assessment, primarily resulting from continued asset quality improvement.

As a percentage of average assets, annualized non-interest expense was 3.09% in the first quarter of 2019 compared to 2.96% in the first quarter of 2018. Excluding merger and acquisition expenses, annualized non-interest expense as a percentage of average assets was 2.91% in the first quarter of 2018.

Provision for income taxes:

An income tax benefit of $10,000 was recorded in the first quarter of 2019 compared to a benefit of $71,000 recorded in the first quarter of 2018. The Company qualifies for a federal tax credit for a low-income housing project investment, and the tax provisions for each period reflect the application of the tax credit. For the first quarters of 2019 and 2018, the tax credits were $226,000 and $225,000, respectively, offsetting $216,000 in regular tax expense in the 2019 period and $154,000 of regular tax expense in the 2018 period. For the first quarter of 2019, the tax credit lowered the effective tax rate from 15.4% to (0.7%) as compared to the same period in 2018, when the tax credit lowered the effective tax rate from 12.2% to (5.7%).

Liquidity:

The objective of liquidity management is to ensure that sufficient funding is available, at a reasonable cost, to meet the ongoing operational cash needs of the Company and to take advantage of income producing opportunities as they arise. While the desired level of liquidity will vary depending upon a variety of factors, it is the primary goal of the Company to maintain a high level of liquidity in all economic environments. Principal sources of asset liquidity are provided by loans and securities maturing in one year or less, and other short-term investments, such as federal funds sold and cash and due from banks. Liability liquidity, which is more difficult to measure, can be met by attracting deposits and maintaining the core deposit base. The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity when other sources are unable to fill these needs. During the three months ended March 31, 2019, overnight borrowings from the Federal Home Loan Bank averaged $1,977,000. As of March 31, 2019, the Company had no short-term borrowings, but had $25,000,000 in long-term debt with the Federal Home Loan Bank, and a remaining unused borrowing capacity with the Federal Home Loan Bank of $155,699,000.

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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 gives the Company the ability to pay interest on corporate checking accounts.

In view of the sources previously mentioned, management believes that the Company's liquidity is capable of providing the funds needed to meet operational cash needs.

Off-Balance Sheet Arrangements:

The Company’s consolidated financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk, credit risk, and interest rate risk. These commitments consist mainly of loans approved but not yet funded, unused lines of credit and outstanding letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments. The Company had $2,356,000 and $2,749,000 of financial and performance letters of credit commitments outstanding as of March 31, 2019 and December 31, 2018, respectively. Commercial letters of credit as of March 31, 2019 and December 31, 2018 totaled $9,867,000 and $8,925,000, respectively. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of March 31, 2019 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

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

Interest Rate Sensitivity:

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

Capital Adequacy:

Bank regulatory authorities in the United States issue risk-based capital standards. These capital standards relate a banking company’s capital to the risk profile of its assets and provide the basis by which all banking companies and banks are evaluated in terms of capital adequacy. Effective January 1, 2015, the risk-based capital rules were modified subject to a transition period for several aspects of the final rules, including the new minimum capital ratio requirements, the capital conservation buffer and the regulatory capital adjustments and deductions. The new framework is commonly called “BASEL III”. The final rules revised federal regulatory agencies’ risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the Basel III framework. The final rules apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more, and top-tier savings and loan holding companies (“banking organizations”). Among other things, the rules established a common equity tier 1 (CET1) minimum capital requirement (4.5% of risk-weighted assets) and a higher minimum tier 1 capital requirement (from 4.0% to 6.0% of risk-weighted assets), and assign higher risk weightings (150%) to exposures that are more than 90 days past due or are on nonaccrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property. The new minimum regulatory capital requirements established by BASEL III were fully phased in on January 1, 2019.

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

At March 31, 2019, the Bank exceeded the fully phased in regulatory requirements to be considered a "well capitalized" financial institution under Basel III. The Bank’s CET1 and Tier 1 Capital ratio was 14.49%, its Total Capital ratio was 15.22% and its Tier 1 leverage was 9.74%. On a consolidated basis, the Company’s CET1 and Tier 1 Capital ratio was 14.83%, and Total Capital ratio and Tier 1 leverage ratio was 15.55% and 9.96%, respectively. Thus, the Company and the Bank also maintain capital sufficient to cover the additional 2.5% capital conservation buffer.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of March 31, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined by the Securities Exchange Act of 1934 (“Exchange Act”), Rule 13a-15(e). Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2019 due to a material weakness in the Company’s internal control over financial reporting as previously described in the Company’s Annual Report on Form 10-K for the period ended December 31, 2018.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness was related to management not designing and maintaining controls over the annual review process for evaluating risk ratings on commercial loans. Management is in the process of remediating this material weakness by expanding and formally documenting policies and procedures pertaining to the ongoing process for evaluating risk ratings on commercial loans and officially testing the key controls.

At December 31, 2018, a material weakness related to management not designing and maintaining controls over the accounting for income taxes was also described in the Company’s 2018 Annual Report on Form 10-K. As of March 31, 2019, the Company has corrected this material weakness, ensuring unusual, complex, non-recurring tax items are reviewed by independent tax experts.

Attached as Exhibits 31 and 32 to this quarterly report are certifications of the Chief Executive Officer and the Chief Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act. This portion of the Company’s quarterly report includes the information concerning the controls evaluation referred to in the certifications and should be read in conjunction with the certifications for a more complete understanding of the topics presented.

Changes in Internal Control Over Financial Reporting

There were no significant changes in the Company’s internal control over financial reporting during the fiscal quarter ended March 31, 2019, that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In the opinion of management of the Company, there are no legal or governmental proceedings pending to which the Company or its subsidiary is a party or to which its property is subject, which, if determined adversely to the Company or its subsidiary, would be material in relation to the Company’s or its subsidiary’s financial condition. There are no proceedings pending other than ordinary routine litigation incident to the business of the Company or its subsidiary. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Company or its subsidiary by government authorities.

Item 1A. RISK FACTORS

There have been no material changes to the risk factors that were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company has an active share repurchase program in place, to which there is no expiration date. As of May 10, 2019, the number of shares that may yet be purchased under the program was 169,774. Transactions pursuant to the repurchase program in the three month period ended March 31, 2019 are shown below.

					Total Number of
					Shares Purchased as		Maximum Number of
	Total Number		Average		Part of Publicly		Shares that May Yet Be
	of Shares		Price Paid		Announced Plans or		Purchased Under the
Period	Purchased		per Share		Programs		Plans or Programs (1)
January 1-31, 2019		-	$	-		-		170,574
February 1-28, 2019		150		-		150		170,424
March 1-31, 2019		650		-		650		169,774
Totals		800				800		169,774

No repurchase plan or program expired during the quarter. The Company has no stock repurchase plan or program that it has determined to terminate prior to expiration or under which it does not intend to make further purchases.

Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At March 31, 2019, $34,619,000 of undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

Item 4. MINE SAFETY DISCLOSURES

Not applicable

Item 5. OTHER INFORMATION

None

46

Item 6. EXHIBITS

3.1	-	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Current Report on Form 8-K filed with the SEC on November 12, 2015)
3.2	-	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the SEC on February 27, 2019)
31.1	-	Rule 13a – 14(a)/15d – 14(a) Certification of President and Chief Executive Officer
31.2	-	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer
32.1	-	Section 1350 Certification of President and Chief Executive Officer
32.2	-	Section 1350 Certification of Chief Financial Officer

101.LAB	-	XBRL Taxonomy Extension Label Linkbase
101.PRE	-	XBRL Taxonomy Extension Presentation Linkbase
101.INS	-	XBRL Instance Document
101.SCH	-	XBRL Taxonomy Extension Schema
101.CAL	-	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	-	XBRL Taxonomy Extension Definition Linkbase

47

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Juniata Valley Financial Corp.

(Registrant)

Date:	May 10, 2019	By:	/s/ Marcie A. Barber
			Marcie A. Barber, President
			Chief Executive Officer
			(Principal Executive Officer)
Date:	May 10, 2019	By:	/s/ JoAnn N. McMinn
			JoAnn N. McMinn
			Chief Financial Officer
			(Principal Accounting Officer and
			Principal Financial Officer)

48

EX-31.1

Exhibit 31.1 Rule 13a – 14(a)/15d – 14(a) Certification of President and Chief Executive Officer

I, Marcie A. Barber, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Juniata Valley Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d – 15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 10, 2019	By:	/s/ Marcie A. Barber
			Marcie A. Barber, President
			Chief Executive Officer

EX-31.2

Exhibit 31.2 Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer

I, JoAnn N. McMinn, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Juniata Valley Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d – 15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 10, 2019	By:	/s/ JoAnn N. McMinn
			JoAnn N. McMinn
			Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION of PRESIDENT AND CHIEF EXECUTIVE OFFICER

The undersigned herby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q, that:

· the report fully complies with the requirements of Sections 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

· the information contained in the report fairly presents, in all material respects, the Company’s consolidated financial condition and results of operations.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the report or as a separate disclosure document.

/s/ Marcie A. Barber
Marcie A. Barber
President and Chief Executive Officer
Dated:	May 10, 2019

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION of CHIEF FINANCIAL OFFICER

The undersigned herby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q, that:

· the report fully complies with the requirements of Sections 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

· the information contained in the report fairly presents, in all material respects, the Company’s consolidated financial condition and results of operations.

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the report or as a separate disclosure document.

/s/ JoAnn N. McMinn
JoAnn N. McMinn
Chief Financial Officer
Dated:	May 10, 2019

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 10, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019
Entity Registrant Name	JUNIATA VALLEY FINANCIAL CORP
Entity Central Index Key	0000714712
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		5,100,248

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 15,002	$ 15,617
Interest bearing deposits with banks	5,539	110
Federal funds sold	3,736	729
Cash and cash equivalents	24,277	16,456
Interest bearing time deposits with banks	2,800	3,290
Equity securities	1,127	1,118
Securities available for sale	140,208	141,953
Restricted investment in bank stock	2,535	2,441
Total loans	414,979	417,631
Less: Allowance for loan losses	(2,994)	(3,034)
Total loans, net of allowance for loan losses	411,985	414,597
Premises and equipment, net	8,644	8,744
Other real estate owned	744	744
Bank owned life insurance and annuities	16,013	15,938
Investment in low income housing partnerships	4,435	4,545
Core deposit and other intangible assets	383	405
Goodwill	9,047	9,139
Mortgage servicing rights	193	200
Accrued interest receivable and other assets	5,391	5,666
Total assets	627,782	625,236
Liabilities:
Deposits: Non-interest bearing	128,670	126,057
Deposits: Interest bearing	395,186	395,665
Total deposits	523,856	521,722
Securities sold under agreements to repurchase	2,683	2,911
Short-term borrowings		11,600
Long-term debt	25,000	15,000
Other interest bearing liabilities	1,572	1,596
Accrued interest payable and other liabilities	5,498	5,029
Total liabilities	558,609	557,858
Stockholders' Equity:
Preferred stock, no par value: Authorized - 500,000 shares, none issued
Common stock, par value $1.00 per share: Authorized 20,000,000 shares Issued - 5,141,749 shares at March 31, 2019 ; 5,134,249 shares at December 31, 2018 Outstanding - 5,098,748 shares at March 31, 2019; 5,092,048 shares at December 31, 2018	5,142	5,134
Surplus	24,832	24,821
Retained earnings	42,818	42,525
Accumulated other comprehensive loss	(2,816)	(4,299)
Cost of common stock in Treasury: 43,001 shares at March 31, 2019; 42,201 shares at December 31, 2018	(803)	(803)
Total stockholders' equity	69,173	67,378
Total liabilities and stockholders' equity	$ 627,782	$ 625,236

XML

Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Consolidated Statements of Financial Condition [Abstract]
Preferred stock, no par value	$ 0	$ 0
Preferred stock, authorized	500,000	500,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 1.00	$ 1.00
Common Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Shares Issued	5,141,749	5,134,249
Common Stock, Shares, Outstanding	5,098,748	5,092,048
Treasury Stock, Shares	43,001	42,201

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest income:
Loans, including fees	$ 5,255	$ 4,551
Taxable securities	849	775
Tax-exempt securities	61	103
Other interest income	53	10
Total interest income	6,218	5,439
Interest expense:
Deposits	863	594
Securities sold under agreements to repurchase	11	15
Short-term borrowings	13	84
Long-term debt	161	93
Other interest bearing liabilities	11	8
Total interest expense	1,059	794
Net interest income	5,159	4,645
Provision for loan losses	15	158
Net interest income after provision for loan losses	5,144	4,487
Non-interest income:
Earnings on bank-owned life insurance and annuities	69	81
Income from unconsolidated subsidiary		69
Loss on sales and calls of securities	(56)	(15)
Change in value of equity securities	9	(6)
Other non-interest income	85	75
Total non-interest income	1,094	1,174
Non-interest expense:
Employee compensation expense	1,968	1,792
Employee benefits	741	564
Occupancy	349	318
Equipment	214	207
Data processing expense	461	416
Director compensation	51	54
Professional fees	197	177
Taxes, other than income	134	113
FDIC Insurance premiums	56	70
Amortization of intangible assets	22	11
Amortization of investment in low-income housing partnerships	200	200
Merger and acquisition expense		64
Other non-interest expense	442	419
Total non-interest expense	4,835	4,405
Income before income taxes	1,403	1,256
Income tax benefit	(10)	(71)
Net income	$ 1,413	$ 1,327
Earnings per share
Basic	$ 0.28	$ 0.28
Diluted	0.28	0.28
Cash dividends declared per share	$ 0.22	$ 0.22
Weighted average basic shares outstanding	5,095,132	4,770,389
Weighted average diluted shares outstanding	5,117,024	4,787,769
Customer Service Fees [Member]
Non-interest income:
Non-interest income	$ 422	$ 412
Debit Card fee Income [Member]
Non-interest income:
Non-interest income	308	292
Trust Fees [Member]
Non-interest income:
Non-interest income	99	102
Commissions from Sales of Non-Deposit Products [Member]
Non-interest income:
Non-interest income	71	50
Fees Derived From Loan Activity [Member]
Non-interest income:
Non-interest income	70	95
Mortgage Banking Income [Member]
Non-interest income:
Non-interest income	$ 17	$ 19

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income: Before Tax Amount		$ 1,403	$ 1,256
Net Income: Tax Effect		10	71
Net income: Net-of-Tax Amount		1,413	1,327
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period: Before Tax Amount		1,793	(2,167)
Unrealized holding gains (losses) arising during the period: Tax Effect		(377)	456
Unrealized holding gains (losses) arising during the period: Net-of-Tax Amount		1,416	(1,711)
Unrealized holding gains from unconsolidated subsidiary: Before Tax Amount			(11)
Unrealized holding gains from unconsolidated subsidiary: Net-of-Tax Amount			(11)
Less reclassification adjustment for losses included in net income for sales of debt securities: Before Tax Amount	[1],[2]	56	15
Less reclassification adjustment for losses (gains) included in net income for sales of debt securities: Tax Effect	[1],[2]	(12)	(4)
Less reclassification adjustment for losses (gains) included in net income for sales of debt securities: Net-of-Tax Amount	[1],[2]	44	11
Amortization of pension net actuarial cost: Before Tax Amount	[2],[3]	29	41
Amortization of net pension actuarial cost: Tax Effect	[2],[3]	(6)	(9)
Amortization of net pension actuarial cost: Net-of-Tax Amount	[2],[3]	23	32
Other comprehensive income (loss): Before Tax Amount		1,878	(2,122)
Other comprehensive income (loss): Tax Effect		(395)	443
Other comprehensive income (loss): Net-of-Tax Amount		1,483	(1,679)
Total comprehensive income: Before Tax Amount		3,281	(866)
Total comprehensive income: Tax Effect		(385)	514
Total comprehensive income: Net-of-Tax Amount		$ 2,896	$ (352)

[1] Amounts are included in (loss) gain on sales and calls of securities on the consolidated statements of income as a separate element within total non-interest income.

[2] Income tax amounts are included in the provision for income taxes on the consolidated statements of income.

[3] Amounts are included in the computation of net periodic benefit cost and are included in employee benefits expense on the consolidated statements of income as a separate element within total non-interest expense.

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total
Beginning balance at Dec. 31, 2017	$ 4,811	$ 18,565	$ 40,876	$ (4,034)	$ (831)	$ 59,387
Beginning balance, shares at Dec. 31, 2017	4,767,656
Net income			1,327			1,327
Other comprehensive loss				(1,679)		(1,679)
Reclassification for ASU 2016-01			156	(156)
Cash dividends per share			(1,049)			(1,049)
Stock-based compensation		18				18
Purchase of treasury stock					(40)	(40)
Purchase of treasury stock, shares	(1,928)
Treasury stock issued for stock plans		(3)			38	35
Treasury stock issued for stock plans, shares	2,000
Common stock issued for stock plans	$ 5	(5)
Common stock issued for stock plans, shares	5,220
Ending balance at Mar. 31, 2018	$ 4,816	18,575	41,310	(5,869)	(833)	57,999
Ending balance, shares at Mar. 31, 2018	4,772,948
Beginning balance at Dec. 31, 2018	$ 5,134	24,821	42,525	(4,299)	(803)	$ 67,378
Beginning balance, shares at Dec. 31, 2018	5,092,048					5,092,048
Net income			1,413			$ 1,413
Other comprehensive loss				1,483		1,483
Cash dividends per share			(1,120)			(1,120)
Stock-based compensation		19				19
Forfeiture of restricted stock, Shares	(800)
Common stock issued for stock plans	$ 8	(8)
Common stock issued for stock plans, shares	7,500
Ending balance at Mar. 31, 2019	$ 5,142	$ 24,832	$ 42,818	$ (2,816)	$ (803)	$ 69,173
Ending balance, shares at Mar. 31, 2019	5,098,748					5,098,748

XML

Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidated Statements of in Stockholders' Equity [Abstract]
Cash Dividends at per share	$ 0.22	$ 0.22

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Operating activities:
Net income	$ 1,413	$ 1,327
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	15	158	$ 337
Depreciation	196	204
Net amortization of securities premiums	133	145
Net amortization of loan origination fees	20	15
Deferred net loan origination costs	(47)	(55)
Amortization of core deposit intangible asset	22	11
Amortization of investment in low income housing partnership	200	200
Net (amortization) accretion of purchase fair value adjustments	(31)	13
Net realized loss on sales and calls of available for sale securities	56	15
Change in value of equity securities	(9)	6
Earnings on bank owned life insurance and annuities	(69)	(81)
Deferred income tax expense (benefit)	24	(56)
Equity gain in unconsolidated subsidiary, net of dividends of $0 and $25, respectively		(44)
Stock-based compensation expense	19	18
Proceeds from mortgage loans sold to others	24	23
Mortgage banking income	(17)	(19)
Decrease (increase) in accrued interest receivable and other assets	483	(706)
Increase (decrease) in accrued interest payable and other liabilities	(61)	(447)
Net cash provided by operating activities	2,371	727
Investing activities:
Purchases of: Securities available for sale	(11,214)	(4,119)
Purchases of: Premises and equipment	(96)	(41)
Purchases of: Bank owned life insurance and annuities	(6)	(6)
Proceeds from: Sales of securities available for sale	11,107	4,285
Proceeds from: Maturities of and principal repayments on securities available for sale	3,512	2,779
Proceeds from: (Purchase) redemption of FHLB stock	(94)	200
Investment in low income housing partnerships	(90)	(100)
Net decrease in interest bearing time deposits with banks	490
Net decrease (increase) in loans	2,654	(5,342)
Net cash provided by (used in) investing activities	6,263	(2,344)
Financing activities:
Net increase in deposits	2,135	10,455
Net decrease in short-term borrowings and securities sold under agreements to repurchase	(11,828)	(5,529)
Issuance of long-term debt	15,000
Repayment of long-term debt	(5,000)
Cash dividends	(1,120)	(1,049)
Purchase of treasury stock		(40)
Treasury stock issued for employee stock plans		35
Net cash (used in) provided by financing activities	(813)	3,872
Net increase in cash and cash equivalents	7,821	2,255
Cash and cash equivalents at beginning of year	16,456	9,897	9,897
Cash and cash equivalents at end of period	24,277	12,152	$ 16,456
Supplemental information:
Interest paid	$ 933	792
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned		22
Transfer of loans to repossessed vehicles		$ 12

XML

Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidated Statements of Cash Flows(Parenthetical) [Abstract]
Equity method investment, dividends	$ 0	$ 25

XML

Basis of Presentation and Accounting Policies

3 Months Ended

Mar. 31, 2019

Basis of Presentation and Accounting Policies [Abstract]

Basis of Presentation and Accounting Policies

1. Basis of Presentation and Accounting Policies

The consolidated financial statements include the accounts of Juniata Valley Financial Corp. (the “Company” or “Juniata”) and its wholly owned subsidiary, The Juniata Valley Bank (the “Bank” or “JVB”). All significant intercompany accounts and transactions have been eliminated.

On April 30, 2018, the Company, which previously owned 39.16% of Liverpool Community Bank (“Liverpool” or “LBC”), completed the acquisition of the remainder of Liverpool’s outstanding common stock. Liverpool was merged with and into the Bank. Refer to Note 3 for more information.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates and such differences could be material to the financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and notes thereto included in Juniata Valley Financial Corp.’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2018.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of March 31, 2019 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

XML

Recent Accounting Standards Update

3 Months Ended

Mar. 31, 2019

Recent Accounting Standards Update [Abstract]

Recent Accounting Standards Update

2. RECENT ACCOUNTING STANDARDS UPDATES (“ASU”)

Adoption of New Accounting Standards

ASU 2016-02, Leases

Issued: February 2016

Summary: The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

In July 2018, the FASB issued ASU-2018-10, Codification Improvements to Topic 842, Leases. ASU 2018-10 clarifies the intended application of certain narrow aspects of the guidance in ASU 2016-02. The amendments are similar in nature to those in the FASB’s ongoing project to make improvements to clarify the Codification or correct unintended application of the guidance. Key amendments in this ASU include:

· Updating the definition of the rate implicit in the lease to clarify that the rate cannot be less than zero;

· Clarifying application of guidance for lessors when determining impairment of net investment in the lease;

· Clarifying whether lessors and lessees should recognize certain transition adjustments to earnings rather than through equity;

· Clarifying certain transition guidance for amounts previously recognized in business combinations.

In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to elect not to separate nonlease components from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both the timing and pattern of transfer of the nonlease component(s) and associated lease component are the same, and the lease component, if accounted for separately, would be classified as an operating lease. If the nonlease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic 606. Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic 842.

Effective Date:ASU 2016-02 was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The effective date of the amendments in ASU 2018-10 and ASU 2018-11 were the same as the effective date for ASU 2016-02.

The Company adopted ASU 2016-02 on January 1, 2019 using the optional transition method. The Company also elected the following practical expedients: the package of practical expedients, combining lease and nonlease components by class of underlying asset, and using hindsight in determining the lease terms. The adoption of this standard resulted in the recording of a ROU asset and lease liability of $556,000 as of January 1, 2019 for the Company’s four operating lease obligations. The adoption of this standard did not have a material impact on the Company’s operations, cash flows or capital ratios, nor has it caused the Company to no longer be well capitalized. See Note 14 for more information.

Newly Issued, Not Yet Effective Standards

ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

Issued: August 2018

Summary: ASU 2018-14 modifies the disclosure requirements under ASC 715-20 for employers that sponsor defined benefit pension or other postretirement plans. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments are effective for public business entities for fiscal years ending after December 15, 2020. For all other entities, the amendments are effective for annual reporting periods ending after December 15, 2021. Early adoption is permitted. This Update will have no impact on the Company’s consolidated financial position and results of operations because Juniata’s Board of Directors resolved to terminate the Company’s defined benefit retirement plan, The Juniata Valley Bank Retirement Plan, effective November 30, 2018. All participants have been properly notified and settlement of all obligations is expected to occur in the third quarter of 2019. See Note 11 for additional information.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

Issued: August 2018

Summary: ASU 2018-13 modifies the disclosure requirements for fair value measurements required under ASC 820. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments become effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted upon issuance of this ASU. An entity is permitted to early adopt all disclosure requirements in the ASU or early adopt only the removed and modified disclosures and delay adoption of the additional disclosures until their effective date. This Update is not expected to have an impact on the Company’s consolidated financial position or results of operations.

ASU 2017-04, Simplifying the Test for Goodwill Impairment

Issued: January 2017

Summary: ASU 2017-04 eliminates the requirement of Step 2 in the current guidance to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value in Step 1 of the current guidance.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2019. The adoption of this Update is not expected to have an impact on the Company’s consolidated financial position and results of operations.

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Issued: June 2016

Summary: ASU 2016-13 requires credit losses on most financial assets to be measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument.

The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above.

Further, the ASU made certain targeted amendments to the existing impairment model for available for sale debt securities. For an available for sale debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.

Effective Date:The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. While the Company’s senior management is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures, it expects the ALLL to increase upon adoption given that the allowance will be required to cover the full remaining expected life of the portfolio, rather than the incurred loss under current U.S. GAAP. The extent of this increase is still being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming an internal taskforce, gathering pertinent data, participating in training courses, and partnering with a software provider that specializes in ALLL analysis, as well as assessing the sufficiency of data currently available through its core database.

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Merger

3 Months Ended

Mar. 31, 2019

Merger [Abstract]

Merger

3.MERGER

On April 30, 2018, the Company completed the acquisition of Liverpool Community Bank, a Pennsylvania state-chartered bank with one branch location in Liverpool, Perry County. Liverpool was merged with and into The Juniata Valley Bank. As of the merger date, Liverpool had assets of $45,360,000, loans of $32,091,000, and equity of $9,246,000.

Prior to the acquisition, Juniata owned 1,214, or 39.16%, of the 3,100 outstanding common shares of Liverpool. The merger was accounted for using the acquisition method of accounting, in accordance with the provisions of ASC 805, Business Combinations. Juniata obtained control over Liverpool in a step acquisition by acquiring the previously unowned interest in Liverpool. As such, Juniata was required to remeasure its previously held equity interest in Liverpool at its acquisition date fair value and recognize the resulting gain in earnings. The purchase price for the step acquisition was calculated as the aggregate of the consideration transferred for the newly acquired interest (Step Two 60.84% interest) and the fair value of Juniata’s previously held equity interest (Step One 39.16% interest) in Liverpool.

On April 30, 2018, Juniata’s Step One adjusted basis in Liverpool was $5,037,000, which included a $415,000 equity gain from the acquisition, in addition to Juniata’s basis in Liverpool of $4,622,000 prior to the recording of the equity gain.

Liverpool shareholders (other than Juniata, whose Liverpool common stock owned of record or beneficially was cancelled) received either: (i) 202.6286 shares of common stock of Juniata or (ii) $4,050.00 in cash in exchange for each share of Liverpool common stock subject to the limitation that cash would be paid for no more than 20% and no less than 15% of Liverpool’s outstanding common stock. As a result, Juniata issued 315,284 shares of common stock with an acquisition date fair value of approximately $6,463,000, based on Juniata’s closing stock price of $20.50 on April 30, 2018, and cash of $1,362,000, including cash in lieu of fractional shares for a total Step Two purchase price consideration of $7,825,000. The total purchase price of the merger, including both the Step One adjusted basis and Step Two purchase price consideration, was $12,862,000.  

The assets and liabilities of Liverpool were recorded on the consolidated balance sheet at their estimated fair value as of April 30, 2018, and its results of operations have been included in the consolidated income statement since such date.

The purchase price included goodwill and a core deposit intangible of $3,691,000 and $289,000, respectively. The core deposit intangible is being amortized over a ten-year period using a sum of the year’s digits basis. The goodwill is not being amortized but is tested annually for impairment, or more frequently if circumstances require. ASC 805 allows for adjustments to the estimated fair value of assets and liabilities, and the resulting goodwill for a period of up to one year after the merger date for new information that becomes available reflecting circumstances at the merger date. During the three months ended March 31, 2019, Juniata recorded a $92,000 adjustment to goodwill relating to the tax treatment of Liverpool’s acquired net operating loss resulting in goodwill related to the Liverpool acquisition of $3,599,000 as illustrated in the table below.

Allocation of the purchase price was as follows:

(Dollars in thousands)	Recorded at				Recorded at
	April 30, 2018		Change		March 31, 2019
Step One Purchase Price Consideration
April 30, 2018 JUVF basis in LCB (before gain)	$	4,622	$	-	$	4,622
Increase in Step One basis from equity gain in acquisition		415		-		415
Total Step One adjusted basis		5,037		-		5,037
Step Two Purchase Price Consideration
Purchase price assigned to LCB common shares exchanged for 315,284 JUVF
common shares	$	6,463	$	-	$	6,463
Purchase price assigned to LCB common shares exchanged for cash including
cash in lieu of fractional shares		1,362		-		1,362
Total Step Two purchase price consideration		7,825		-		7,825
Total purchase price		12,862		-		12,862
LCB net assets acquired:
Tangible common equity		9,246		-		9,246
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(95)		-		(95)
Associated deferred income taxes		20		92		112
Fair value adjustment to net assets acquired, net of tax		(75)		92		17
Total LCB net assets acquired		9,171		92		9,263
Goodwill resulting from the merger	$	3,691	$	(92)	$	3,599

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed.

(Dollars in thousands)	Recorded at				Recorded at
	April 30, 2018		Change		March 31, 2019
Total purchase price	$	12,862	$	-	$	12,862
Net assets acquired:
Cash and cash equivalents		8,923		-		8,923
Investments in time deposits with banks		3,675		-		3,675
Loans		31,331		-		31,331
Premises and equipment		125		-		125
Accrued interest receivable		123		-		123
Core deposit and other intangibles		289		-		289
Bank owned life insurance		632		-		632
FHLB stock		124		-		124
Other assets		267		92		359
Deposits		(36,052)		-		(36,052)
Accrued interest payable		(17)		-		(17)
Other liabilities		(249)		-		(249)
		9,171		92		9,263
Goodwill	$	3,691	$	(92)	$	3,599

The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $32,091,000.  The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at April 30, 2018	$	32,091
Market rate adjustment		272
Credit fair value adjustment on pools of homogeneous loans		(496)
Credit fair value adjustment on purchased credit impaired loans		(622)
Reversal of existing deferred fees and premiums		86
Fair value of purchased loans at April 30, 2018	$	31,331

The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the stated rates of the acquired loans. The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from the loan inception to the acquisition date. The credit adjustment on impaired loans is derived in accordance with ASC 310-30 and represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective loan.

Summarized below is the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018.

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	2,022
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,273)
Expected cash flows at acquisition		749
Interest component of expected cash flows (accretable discount)		(177)
Fair value of acquired loans	$	572

The following table presents unaudited pro forma information as if the merger between Juniata and Liverpool had been completed on January 1, 2017. The pro forma information does not necessarily reflect the results of operations that would have occurred had Juniata merged with Liverpool at the beginning of 2017. Due to Juniata’s former 39.16% ownership in Liverpool, the income previously recorded in the three months ended March 31, 2018 that was attributable to the partial ownership of Liverpool has been excluded, in addition to merger-related costs incurred in 2018 and the resulting tax impacts. Supplemental pro forma earnings for the three months ended March 31, 2018 were adjusted to exclude $69,000 from the income from unconsolidated subsidiary, $64,000 in merger-related expenses and the resulting $1,000 tax expense. A 21% tax rate was assumed. The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies or other factors.

(Dollars in thousands; except share data)
	March 31, 2018
Net interest income after loan loss provision	$	4,962
Noninterest income		1,147
Noninterest expense		4,462
Net income available to common shareholders		1,637
Net income per common share		0.32

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss

4.  Accumulated other Comprehensive loss

Components of accumulated other comprehensive loss, net of tax, consisted of the following:

(Dollars in thousands)
	March 31, 2019		December 31, 2018
Unrealized losses on available for sale securities	$	(1,186)	$	(2,647)
Unrecognized expense for defined benefit pension		(1,630)		(1,652)
Accumulated other comprehensive loss	$	(2,816)	$	(4,299)

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Earnings Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

5.  Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share:

(Dollars in thousands, except earnings per share data)	Three Months Ended March 31,
	2019		2018
Net income	$	1,413	$	1,327
Weighted-average common shares outstanding		5,095		4,770
Basic earnings per share	$	0.28	$	0.28
Weighted-average common shares outstanding	$	5,095	$	4,770
Common stock equivalents due to effect of stock options		22		17
Total weighted-average common shares and equivalents		5,117		4,787
Diluted earnings per share	$	0.28	$	0.28

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Securities

3 Months Ended

Mar. 31, 2019

Securities [Abstract]

Securities

6.  Securities

Equity Securities

Equity securities owned by the Company consist of common stock of various financial services providers. Upon the adoption of ASU 2016-01 on January 1, 2018, all of the Company’ equity securities are within the scope of ASC Topic 321, Investments – Equity Securities. Topic 321 requires all equity securities within its scope to be measured at fair value with changes in fair value recognized in net income. As of March 31, 2019, the Company had $1,127,000 in equity securities recorded at fair value and $1,118,000 in equity securities recorded at fair value at December 31, 2018. The Company recorded a net gain of $9,000 during the three months ended March 31, 2019 and a net loss of $6,000 during the three months ended March 31, 2018 on the consolidated statements of income for the change in fair value of equity securities.

Securities Available for Sale

Securities classified as available for sale, which include marketable investment securities, are within the scope of ASC Topic 320, Investments – Debt Securities. Topic 320 requires all debt securities within its scope to be stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of other comprehensive income (loss). Securities classified as available for sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Interest and dividends are recognized as income when earned. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains or losses on the disposition of securities available for sale are based on the net proceeds and the adjusted carrying amount of the securities sold, determined on a specific identification basis.

The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored agencies (approximately 17% of the investment portfolio), mortgage-backed securities issued by Government-sponsored agencies and backed by residential mortgages (approximately 78%) and municipal bonds (approximately 5%) as of March 31, 2019. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates within 5 years.

The amortized cost and fair value of securities available for sale as of March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

		March 31, 2019
(Dollars in thousands)						Gross		Gross
		Amortized		Fair		Unrealized		Unrealized
Securities Available for Sale		Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,999	$	20,708	$	-	$	(291)
After five years but within ten years		2,999		2,963		-		(36)
		23,998		23,671		-		(327)
Obligations of state and political subdivisions
Within one year		823		824		1		-
After one year but within five years		3,688		3,692		10		(6)
After five years but within ten years		2,226		2,204		-		(22)
		6,737		6,720		11		(28)
Mortgage-backed securities		110,981		109,817		355		(1,519)
Total securities available for sale	$	141,716	$	140,208	$	366	$	(1,874)

		December 31, 2018
(Dollars in thousands)						Gross		Gross
		Amortized		Fair		Unrealized		Unrealized
Securities Available for Sale		Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,998	$	20,355	$	-	$	(643)
After five years but within ten years		2,999		2,911		-		(88)
		23,997		23,266		-		(731)
Obligations of state and political subdivisions
Within one year		826		826		-		-
After one year but within five years		14,751		14,686		13		(78)
After five years but within ten years		2,779		2,669		-		(110)
		18,356		18,181		13		(188)
Mortgage-backed securities		102,957		100,506		172		(2,623)
Total	$	145,310	$	141,953	$	185	$	(3,542)

Certain obligations of the U.S. Government and state and political subdivisions are pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law. The carrying value of the pledged assets was $39,537,000 and $50,157,000 at March 31, 2019 and December 31, 2018, respectively.

In addition to cash received from the scheduled maturities of investment securities, some securities available for sale are sold or called at current market values during the course of normal operations.

The following table summarizes proceeds received from sales or calls of available for sale investment securities transactions and the resulting realized gains and losses.

	Three Months Ended
(Dollars in thousands)	March 31,
	2019		2018
Gross proceeds from sales and calls of securities	$	11,107	$	4,285
Securities available for sale:
Gross realized gains from sold and called securities	$	5	$	-
Gross realized losses from sold and called securities		(61)		(15)
Net losses from sales and calls of securities	$	(56)	$	(15)

Topic 320 clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. Management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are taken before an assessment is made as to whether the entity will recover the cost basis of the investment. In instances when a determination is made that an other-than-temporary impairment exists and the entity does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, the other-than-temporary impairment is separated into the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income (loss).

The following tables show gross unrealized losses and fair values of securities available for sale, aggregated by category and length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2019 and December 31, 2018:

	Unrealized Losses at March 31, 2019
	Less Than 12 Months					12 Months or More					Total
	Number					Number					Number
(Dollars in thousands)	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S.
Government agencies
and corporations	-	$	-	$	-	14	$	23,671	$	(327)	14	$	23,671	$	(327)
Obligations of state and
political subdivisions	-		-		-	4		2,786		(28)	4		2,786		(28)
Mortgage-backed
securities	-		-		-	44		76,640		(1,519)	44		76,640		(1,519)
Total temporarily
impaired
securities	-	$	-	$	-	62	$	103,097	$	(1,874)	62	$	103,097	$	(1,874)

	Unrealized Losses at December 31, 2018
	Less Than 12 Months					12 Months or More					Total
	Number					Number					Number
(Dollars in thousands)	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S.
Government agencies
and corporations	-	$	-	$	-	14	$	23,267	$	(731)	14	$	23,267	$	(731)
Obligations of state and
political subdivisions	8		5,055		(10)	13		8,242		(178)	21		13,297		(188)
Mortgage-backed
securities	3		6,726		(32)	43		77,170		(2,591)	46		83,896		(2,623)
Total temporarily
impaired
securities	11	$	11,781	$	(42)	70	$	108,679	$	(3,500)	81	$	120,460	$	(3,542)

At March 31, 2019, 14 U.S. Government agency and corporation securities had unrealized losses that, in the aggregate, did not exceed 1.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more.

At March 31, 2019, 4 obligations of state and political subdivisions had unrealized losses that, in the aggregate, did not exceed 1.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more.

At March 31, 2019, 44 mortgage-backed securities had an unrealized loss that did not exceed 2.0% of the amortized cost of the securities portfolio. All of these securities have been in a continuous loss position for 12 months or more. The mortgage-backed securities in the Company’s portfolio are government sponsored enterprise (GSE) pass-through instruments issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), which guarantees the timely payment of principal on these investments.

The unrealized losses noted above are considered to be temporary impairments. The decline in the values of the debt securities is due only to interest rate fluctuations, rather than erosion of issuer credit quality. As a result, the payment of contractual cash flows, including principal repayment, is not at risk. Because the Company does not intend to sell the securities, does not believe the Company will be required to sell the securities before recovery and expects to recover the entire amortized cost basis, none of the debt securities are deemed to be other-than-temporarily impaired for the periods ended, March 31, 2019, March 31, 2018 and December 31, 2018, respectively.

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Loans and Related Allowance for Credit Losses

3 Months Ended

Mar. 31, 2019

Loans and Related Allowance for Credit Losses [Abstract]

Loans and Related Allowance for Credit Losses

7.  Loans and Related Allowance for Credit Losses

Loans that the Company originated and has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the outstanding unpaid principal balances, net of any deferred fees or costs and the allowance for loan losses. Loans acquired through a business combination are discussed under the heading “Acquired Loans”. Interest income on all loans, other than nonaccrual loans, is accrued over the term of the loans based on the amount of principal outstanding. Unearned income is amortized to income over the life of the loans, using the interest method.

The loan portfolio is segmented into commercial and consumer loans. Commercial loans are comprised of the following classes of loans: (1) commercial, financial and agricultural, (2) commercial real estate, (3) real estate construction, a portion of (4) mortgage loans and (5) obligations of states and political subdivisions. Consumer loans are comprised of a portion of (4) mortgage loans and (6) personal loans. 

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 as long as (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 in the current year is reversed against current period income, and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, accruals are resumed on loans only when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Company originates loans in the portfolio with the intent to hold them until maturity. At the time the Company no longer intends to hold loans to maturity based on asset/liability management practices, the Company transfers loans from its portfolio to held for sale at fair value. Any write-down recorded upon transfer is charged against the allowance for loan losses. Any write-downs recorded after the initial transfers are recorded as a charge to other non-interest expense. Gains or losses recognized upon sale are included in gains on sales of loans which is a component of non-interest income.

Loans Held for Sale

The Company has originated residential mortgage loans with the intent to sell. These individual loans are normally funded by the buyer immediately. The Company maintains servicing rights on these loans. Mortgage servicing rights are recognized as an asset upon the sale of a mortgage loan. A portion of the cost of the loan is allocated to the servicing right based upon relative fair value. Servicing rights are intangible assets and are carried at estimated fair value. Adjustments to fair value are recorded as non-interest income and included in mortgage banking income in the consolidated statements of income.

In a business combination, the Company may acquire loans which it intends to sell. These loans are assigned a fair value by obtaining actual bids on the loans and adjusting for contingencies in the bids. These loans are carried at lower of cost or market value until sold, adjusted periodically if conditions change before the subsequent sale. Adjustments to fair value and gains or losses recognized upon sale are included in gains on sales of loans which is a component of non-interest income.

Commercial, Financial and Agricultural Lending

The Company originates commercial, financial and agricultural loans primarily to businesses located in its primary market area and surrounding areas.  These loans are used for various business purposes, which include short-term loans and lines of credit to finance machinery and equipment purchases, inventory and accounts receivable. Generally, the maximum term for loans extended on machinery and equipment is shorter and does not exceed the projected useful life of such machinery and equipment. Most business lines of credit are written with a five year maturity, subject to an annual credit review.

Commercial loans are generally secured with short-term assets; however, in many cases, additional collateral, such as real estate, is provided as additional security for the loan.  Loan-to-value maximum values have been established by the Company and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports, accounts receivable aging reports, collateral appraisals, and other methods.

In underwriting commercial loans, an analysis of the borrower’s character, capacity to repay the loan, the adequacy of the borrower’s capital and collateral, as well as an evaluation of conditions affecting the borrower, is performed. Analysis of the borrower’s past, present and future cash flows is also an important aspect of the Company’s analysis.

Concentration analysis assists in identifying industry specific risk inherent in commercial, financial and agricultural lending. Mitigants include the identification of secondary and tertiary sources of repayment and appropriate increases in oversight.  

Commercial, financial and agricultural loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions.

Commercial Real Estate Lending

The Company engages in commercial real estate lending in its primary market area and surrounding areas. The Company’s commercial real estate portfolio is secured primarily by residential housing, commercial buildings, raw land and hotels. Generally, commercial real estate loans have terms that do not exceed 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property and are typically secured by personal guarantees of the borrowers.

As economic conditions deteriorate, the Company reduces its exposure in real estate loans with higher risk characteristics.  In underwriting these loans, the Company performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers.

Commercial real estate loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions.

Real Estate Construction Lending

The Company engages in real estate construction lending in its primary market area and surrounding areas. The Company’s real estate construction lending consists of commercial and residential site development loans, as well as commercial building construction and residential housing construction loans. 

The Company’s commercial real estate construction loans are generally secured with the subject property, and advances are made in conformity with a pre-determined draw schedule supported by independent inspections.  Terms of construction loans depend on the specifics of the project, such as estimated absorption rates, estimated time to complete, etc. 

In underwriting commercial real estate construction loans, the Company performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, and other resources. Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent appraisers.

Real estate construction loans generally present a higher level of risk than certain other types of loans, particularly during slow economic conditions. The difficulty of estimating total construction costs adds to the risk as well.

Mortgage Lending

The Company’s real estate mortgage portfolio is comprised of consumer residential mortgages and business loans secured by one-to-four family properties. One-to-four family residential mortgage loan originations, including home equity installment and home equity lines of credit loans, are generated by the Company’s marketing efforts, its present customers, walk-in customers and referrals. These loans originate primarily within the Company’s market area or with customers primarily from the market area.

The Company offers fixed-rate and adjustable rate mortgage loans with terms up to a maximum of 25-years for both permanent structures and those under construction. The Company’s one-to-four family residential mortgage originations are secured primarily by properties located in its primary market area and surrounding areas. The majority of the Company’s residential mortgage loans originate with a loan-to-value of 80% or less. Home equity installment loans are secured by the borrower’s primary residence with a maximum loan-to-value of 95% and a maximum term of 15 years. Home equity lines of credit are secured by the borrower’s primary residence with a maximum loan-to-value of 90% and a maximum term of 20 years.

In underwriting one-to-four family residential real estate loans, the Company evaluates the borrower’s ability to make monthly payments, the borrower’s repayment history and the value of the property securing the loan. The ability to repay is determined by the borrower’s employment history, current financial conditions, and credit background. The analysis is based primarily on the customer’s ability to repay and secondarily on the collateral or security. Most properties securing real estate loans made by the Company are appraised by independent fee appraisers. The Company generally requires mortgage loan borrowers to obtain an attorney’s title opinion or title insurance, and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. The Company does not engage in sub-prime residential mortgage originations.

Residential mortgage loans and home equity loans generally present a lower level of risk than certain other types of consumer loans because they are secured by the borrower’s primary residence. Risk is increased when the Company is in a subordinate position for the loan collateral.

Obligations of States and Political Subdivisions

The Company lends to local municipalities and other tax-exempt organizations. These loans are primarily tax-anticipation notes and, as such, carry little risk. Historically, the Company has never had a loss on any loan of this type.

Personal Lending

The Company offers a variety of secured and unsecured personal loans, including vehicle loans, mobile home loans and loans secured by savings deposits as well as other types of personal loans.

Personal loan terms vary according to the type and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis of the borrower’s willingness and financial ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower’s employment history, current financial conditions and credit background.

Personal loans may entail greater credit risk than do residential mortgage loans, particularly in the case of personal loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, any repossessed collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

Allowance for Credit Losses

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses (“allowance”) represents management’s estimate of losses inherent in the loan portfolio as of the consolidated statement of financial condition date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded lending commitments and is recorded in other liabilities on the consolidated statement of financial condition, when necessary. The amount of the reserve for unfunded lending commitments is not material to the consolidated financial statements. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

For financial reporting purposes, the provision for loan losses charged to current operating income is based on management's estimates, and actual losses may vary from estimates. These estimates are reviewed and adjusted at least quarterly and are reported in earnings in the periods in which they become known.

Loans included in any class are considered for charge-off when:

· principal or interest has been in default for 120 days or more and for which no payment has been received during the previous four months;

· all collateral securing the loan has been liquidated and a deficiency balance remains;

· a bankruptcy notice is received for an unsecured loan;

· a confirming loss event has occurred; or

· the loan is deemed to be uncollectible for any other reason.

The allowance for loan losses is maintained at a level considered adequate to offset probable losses on the Company’s existing loans. The analysis of the allowance for loan losses relies heavily on changes in observable trends that may indicate potential credit weaknesses. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and may require the Company to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the level of the allowance for loan losses as of March 31, 2019 was adequate.

There are two components of the allowance: 1) specific allowances allocated to loans evaluated for impairment under ASC Section 310-10-35; and 2) allowances calculated for pools of loans evaluated collectively for impairment under ASC Subtopic 450-20 (Contingencies).

A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loans and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.

The estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral. For commercial loans secured with real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the current appraisal and the condition of the property. Appraised values may be discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include the estimated costs to sell the property. For commercial loans secured by non-real estate collateral, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging, equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The Company generally does not separately identify individual consumer segment loans for impairment disclosures unless such loans are subject to a restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the Company grants borrowers’ concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a below-market interest rate based on the loan’s risk characteristics or an extension of a loan’s stated maturity date. Nonaccrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a sustained period of time after modification. Loans classified as troubled debt restructurings are designated as impaired.

The component of the allowance for pooled loan contingencies relates to other loans that have been segmented into risk rated categories. In accordance with ASC Subtopic 450-20, when measuring estimated credit losses, these loans are grouped into homogenous pools with similar characteristics and evaluated collectively considering both quantitative measures, such as historical loss, and qualitative measures, in the form of environmental adjustments.

Some portfolio segments are further disaggregated and evaluated collectively for impairment based on "class segments," which are largely based on the type of collateral underlying each loan. For commercial, financial and agricultural loans, class segments include commercial loans secured by other-than real estate collateral. Real estate – commercial class segments include loans secured by farmland, multi-family properties, owner-occupied non-farm, non-residential properties and other nonfarm non-residential properties. Real estate – mortgage includes loans secured by first and junior liens on residential real estate. Construction loan class segments include loans secured by commercial real estate, loans to commercial borrowers secured by residential real estate and loans to individuals secured by residential real estate. Personal loan class segments include direct consumer installment loans, indirect automobile loans and other revolving and unsecured loans to individuals.

Quantitative factor determination:

An average annual loss rate is calculated for each pool through an analysis of historical losses over a five-year look-back period.  Using data for each loan, a loss emergence period is determined within each segmented class pool. The loss emergence period reflects the approximate length of time from the point when a loss is incurred (the loss trigger event) to the point of loss confirmation (the date of eventual charge-off). The loss emergence period is applied to the average annual loss to produce the qualitative factor for each pooled class segment.

Qualitative factor determination:

Historical loss rates computed in the quantitative component reflects an estimate of the level of incurred losses in the portfolio based on historical experience. Management considers that the current conditions may deviate from those that prevailed over the historical look-back period. Thus, the quantitative rates are an imperfect estimate, necessitating an evaluation of qualitative considerations (i.e. environmental factors) to incorporate these risks.

Management considered qualitative, environmental risk factors including:

· National, regional and local economic and business conditions, and developments that affect the collectability of the portfolio, including the condition of various market segments;

· Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

· Changes in the nature and volume of the portfolio and terms of loans;

· Changes in the experience, ability and depth of lending and credit management and other relevant staff;

· Existence and effect of any concentrations of credit and changes in the level of such concentrations;

· Changes in the quality of the loan review system;

· Changes in lending policies and procedures including changes in underwriting standards and collection, charge-off and recovery practices;

· Changes in the value of underlying collateral for collateral-dependent loans; and

· Effect of external influences, including competition, legal and regulatory requirements.

Within each loan segment, an analysis was performed over a ten-year look-back period to discover peak historical losses, and with this data, management established ranges of risk from minimal to very high, for each risk factor, to produce a supportable anchor for risk assignment. Based on the framework for risk factor evaluation and range of adjustments established through the anchoring process, a risk assessment and corresponding adjustment was assigned for each portfolio segment as of March 31, 2019. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

The combination of quantitative and qualitative factors was applied to year-end balances in each pooled segment to establish the overall allowance.

Acquired Loans

Loans that Juniata acquires through business combinations are recorded at fair value with no carryover of the related allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows will require Juniata to evaluate the need for an additional allowance for credit losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount which Juniata will then reclassify as accretable discount that will be recognized into interest income over the remaining life of the loan.

Acquired loans that met the criteria for impaired or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent if Juniata expects to fully collect the new carrying value (i.e. fair value) of the loans. As such, Juniata may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment.

Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30, but for which a discount is attributable at least in part to credit quality, are also accounted for in accordance with this guidance. As a result, related discounts are recognized subsequently through accretion based on the contractual cash flows of the acquired loans.

Loan Portfolio Classification

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2019 and December 31, 2018.

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of March 31, 2019
Commercial, financial and agricultural	$	44,320	$	4,097	$	956	$	-	$	49,373
Real estate - commercial		124,394		7,566		6,944		892		139,796
Real estate - construction		34,638		303		2,206		-		37,147
Real estate - mortgage		155,860		24		2,600		152		158,636
Obligations of states and political subdivisions		19,870		-		-		-		19,870
Personal		10,143		-		14		-		10,157
Total	$	389,225	$	11,990	$	12,720	$	1,044	$	414,979

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2018
Commercial, financial and agricultural	$	42,757	$	2,992	$	814	$	-	$	46,563
Real estate - commercial		125,352		8,590		6,459		894		141,295
Real estate - construction		34,131		-		2,528		29		36,688
Real estate - mortgage		160,774		24		2,569		181		163,548
Obligations of states and political subdivisions		19,129		-		-		-		19,129
Personal		10,389		-		19		-		10,408
Total	$	392,532	$	11,606	$	12,389	$	1,104	$	417,631

The Company has certain loans in its portfolio that are considered to be impaired. It is the policy of the Company to recognize income on impaired loans that have been transferred to nonaccrual status on a cash basis, only to the extent that it exceeds principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2019 and December 31, 2018 totaled $47,000 and $94,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors are used to determine the charge-off amount.

The following table summarizes information regarding impaired loans by portfolio class as of March 31, 2019 and December 31, 2018.

	As of March 31, 2019							As of December 31, 2018
				Unpaid						Unpaid
(Dollars in thousands)	Recorded			Principal		Related		Recorded		Principal		Related
	Investment			Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	1,214		$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531			585		-		544		592		-
Real estate - construction		-			-		-		27		1,123		-
Real estate - mortgage		1,309			1,970		-		1,180		1,912		-
Acquired with credit deterioration		944			1,050		-		971		1,061		-
Personal		14			14		-		17		17		-
Total:
Real estate - commercial	$	1,214	-	$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531			585		-		544		592		-
Real estate - construction		-			-		-		27		1,123		-
Real estate - mortgage		1,309			1,970		-		1,180		1,912		-
Acquired with credit deterioration		944			1,050		-		971		1,061		-
Personal		14			14		-		17		17		-
	$	4,012		$	5,231	$	-	$	3,648	$	6,008	$	-

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2019 and 2018 are summarized in the tables below.

	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
(Dollars in thousands)	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
	$	3,833	$	8	$	12	$	5,880	$	5	$	1

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2019 and December 31, 2018.

(Dollars in thousands)
	March 31, 2019		December 31, 2018
Nonaccrual loans:
Real estate - commercial	$	892	$	908
Real estate - construction		-		29
Real estate - mortgage		885		753
Personal		14		17
Total	$	1,791	$	1,707

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2019 and December 31, 2018.

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
(Dollars in thousands)	Days Past		Days Past		than 90		Total Past				Total		Days and
	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of March 31, 2019
Commercial, financial and agricultural	$	11		-		-	$	11	$	49,362	$	49,373	$	-
Real estate - commercial:
Real estate - commercial		80		121		892		1,093		138,172		139,265		-
Acquired with credit deterioration		-		137		-		137		394		531		-
Real estate - construction		332		-		-		332		36,815		37,147		-
Real estate - mortgage:
Real estate - mortgage		228		-		494		722		156,970		157,692		-
Acquired with credit deterioration		139		-		6		145		799		944		6
Obligations of states and political														-
subdivisions		-		-		-		-		19,870		19,870		-
Personal		72		25		14		111		10,046		10,157		-
Total	$	862	$	283	$	1,406	$	2,551	$	412,428	$	414,979	$	6

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
(Dollars in thousands)	Days Past		Days Past		than 90		Total Past				Total		Days and
	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of December 31, 2018
Commercial, financial and agricultural	$	6	$	-	$	-	$	6	$	46,557	$	46,563	$	-
Real estate - commercial:
Real estate - commercial		-		-		1,214		1,214		139,890		141,104		306
Acquired with credit deterioration		140		-		-		140		51		191		-
Real estate - construction		32		-		29		61		36,627		36,688		-
Real estate - mortgage:
Real estate - mortgage		824		561		175		1,560		161,651		163,211		23
Acquired with credit deterioration		259		-		7		266		71		337		7
Obligations of states and political
subdivisions		-		-		-		-		19,129		19,129		-
Personal		24		15		17		56		10,352		10,408		-
Total	$	1,285	$	576	$	1,442	$	3,303	$	414,328	$	417,631	$	336

(1) These loans are guaranteed, or well-secured, and there is an effective means of collection in process.

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at March 31, 2019 and December 31, 2018.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial	1	$	306	$	326	$	324
Real estate - mortgage	8		498		527		426
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		16
	10	$	829	$	878	$	766

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of December 31, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	8	$	522	$	550	$	428
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		17
	9	$	547	$	575	$	445

The Company’s troubled debt restructurings are also impaired loans, which may result in a specific allocation and subsequent charge-off if appropriate. As of March 31, 2019, there were no specific reserves carried for troubled debt restructured loans. There were also no defaults of troubled debt restructurings that took place during the three months ended March 31, 2019 or 2018 within 12 months of restructure. On December 31, 2018, there were no specific reserves carried for the troubled debt restructurings, nor any charge-offs related to the troubled debt restructured loans. The amended terms of the restructured loans vary, and may include interest rates that have been reduced, principal payments that have been reduced or deferred for a period of time and/or maturity dates that have been extended.

There were no loan terms modified resulting in troubled debt restructuring during the three months ended March 31, 2018. The following table lists the loans whose terms were modified resulting in a troubled debt restructuring during the three months ended March 31, 2019. 

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Three Months Ended March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial	1	$	306	$	326	$	324
Real estate - mortgage	1		9		9		8
	2	$	315	$	335	$	332

The following tables summarize the activity in the allowance for loan losses and related investments in loans receivable.

As of, and for the periods ended, March 31, 2019

													Obligations of
	Commercial,												states and
(Dollars in thousands)	financial and			Real estate -			Real estate -			Real estate -			political
	agricultural			commercial			construction			mortgage			subdivisions			Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2019	$	275		$	1,074		$	558		$	1,035		$	20		$	72	$	3,034
Charge-offs		-			(15)			-			(47)			-			(11)		(73)
Recoveries		2			7			-			5			-			4		18
Provisions		6			(23)			14			12			1			5		15
Ending balance, March 31, 2019	$	283		$	1,043		$	572		$	1,005		$	21		$	70	$	2,994
collectively evaluated for impairment	$	283		$	1,043		$	572		$	1,005		$	21		$	70	$	2,994
Loans receivable:
Ending balance	$	49,373		$	139,796		$	37,147		$	158,636		$	19,870		$	10,157	$	414,979
individually evaluated for impairment		-		$	1,214		$	-		$	1,309		$	-		$	14		2,537
acquired with credit deterioration		-	-	$	531	-	$	-	-	$	944	-	$	-	-	$	-		1,475
collectively evaluated for impairment	$	49,373		$	138,051		$	37,147		$	156,383		$	19,870		$	10,143	$	410,967

As of, and for the periods ended, March 31, 2018

									Obligations of
	Commercial,								states and
(Dollars in thousands)	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Charge-offs		-		(51)		-		(11)		-		(11)		(73)
Recoveries		3		5		-		-		-		3		11
Provisions		43		83		52		(15)		-		(5)		158
Ending balance, March 31, 2018	$	319	$	1,059	$	340	$	1,259	$	-	$	58	$	3,035
collectively evaluated for impairment	$	319	$	1,059	$	340	$	1,259	$	-	$	58	$	3,035
Loans receivable:
Ending balance	$	51,262	$	138,470	$	33,329	$	143,580	$	13,428	$	9,111	$	389,180
individually evaluated for impairment		2		899		-		2,099		-		-		3,000
acquired with credit deterioration		-		170		-		329		-		-		499
collectively evaluated for impairment	$	51,260	$	137,401	$	33,329	$	141,152	$	13,428	$	9,111	$	385,681

As of December 31, 2018

									Obligations of
	Commercial,								states and
(Dollars in thousands)	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Charge-offs		-		(60)		-		(183)		-		(42)		(285)
Recoveries		10		5		-		12		-		16		43
Provisions		(8)		107		270		(79)		20		27		337
Ending balance, December 31, 2018	$	275	$	1,074	$	558	$	1,035	$	20	$	72	$	3,034
collectively evaluated for impairment	$	275	$	1,074	$	558	$	1,035	$	20	$	72	$	3,034
Loans receivable:
Ending balance	$	46,563	$	141,295	$	36,688	$	163,548	$	19,129	$	10,408	$	417,631
individually evaluated for impairment		-		909		27		1,180		-		17		2,133
acquired with credit deterioration		-		544		-		971		-		-		1,515
collectively evaluated for impairment	$	46,563	$	139,842	$	36,661	$	161,397	$	19,129	$	10,391	$	413,983

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

8. Goodwill and other intangible assets

Goodwill

On September 8, 2006, the Company acquired a branch office in Richfield, PA. Goodwill associated with this transaction is carried at $2,046,000. On November 30, 2015, the Company acquired FNBPA Bancorp, Inc. and as a result, carries goodwill of $3,402,000 relating to the acquisition. In addition, the Company acquired the remainder of the outstanding common stock of Liverpool Community Bank on April 30, 2018, and as a result, carries goodwill of $3,599,000 relating to the acquisition.

Total goodwill at March 31, 2019 and December 31, 2018 was $9,047,000 and $9,139,000, respectively. Goodwill is not amortized but is tested annually for impairment or more frequently if certain events occur which might indicate goodwill has been impaired. There was no impairment of goodwill during the three month periods ended March 31, 2019 or 2018.

Intangible Assets

On November 30, 2015, a core deposit intangible in the amount of $303,000 associated with the FNBPA Bancorp, Inc. acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digits basis. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three months ended March 31, 2019 was $10,000.  

On April 30, 2018, a core deposit intangible in the amount of $289,000 associated with the Liverpool Community Bank acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digit basis. Amortization expense recognized for the intangible related to the Liverpool Community Bank acquisition in the three months ended March 31, 2019 was $12,000.  

The following table shows the amortization schedule for each of the intangible assets recorded.

	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
(Dollars in thousands)	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2018		108		-
Amortization expense recorded in the twelve months
ended December 31, 2018		44		35
Unamortized balance as of December 31, 2018		151		254
Amortization expense recorded in the
three months ended March 31, 2019		10		12
Unamortized balance as of March 31, 2019	$	141	$	242
Scheduled remaining amortization expense for years ended:
December 31, 2019	$	28	$	37
December 31, 2020		33		44
December 31, 2021		27		39
December 31, 2022		22		33
December 31, 2023		16		28
After December 31, 2023		15		61

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Unconsolidated Subsidiary

3 Months Ended

Mar. 31, 2019

Unconsolidated Subsidiary [Abstract]

Unconsolidated Subsidiary

9. Unconsolidated Subsidiary

The Company no longer has an investment in an unconsolidated subsidiary following its acquisition of the remainder of the outstanding common stock of Liverpool on April 30, 2018. Prior to the acquisition, the Company owned 39.16% of the outstanding common stock of Liverpool. The investment was accounted for under the equity method of accounting. The Company increased its investment in LCB for its share of earnings and decreased its investment by any dividends received from LCB. The investment was evaluated quarterly for impairment. A loss in value of the investment which is determined to be other than a temporary decline would have been recognized as a loss in the period in which such determination was made. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of LCB to sustain an earnings capacity that would justify the current carrying value of the investment. There was no impairment of the investment relating to LCB prior to the acquisition on April 30, 2018.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2019

Fair Value Measurement [Abstract]

Fair Value Measurement

10. Fair Value Measurement

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. Additional guidance is provided on determining when the volume and level of activity for the asset or liability has significantly decreased. The guidance also includes guidance on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed, and significant adjustments to the related prices may be necessary to estimate fair value in accordance with fair value measurement and disclosure guidance.

This guidance clarifies that, when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The guidance provides a list of circumstances that may indicate that a transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

Fair value measurement and disclosure guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

An asset’s or liability’s placement in the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Equities Securities – The fair value of equity securities is based upon quoted prices in active markets and is reported using Level 1 inputs.

Securities Available for Sale– Debt securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurement from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Equity securities classified as available for sale are reported at fair value using Level 1 and Level 2 inputs.

Impaired Loans– Certain impaired loans are reported on a non-recurring basis at the fair value of the underlying collateral since repayment is expected solely from the collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Other Real Estate Owned– Certain assets included in other real estate owned are carried at fair value as a result of impairment and accordingly are presented as measured on a non-recurring basis. Values are estimated using Level 3 inputs, based on appraisals that consider the sales prices of property in the proximate vicinity.

Mortgage Servicing Rights – The fair value of servicing assets is based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date and are considered Level 3 inputs.

The following tables summarize financial assets and financial liabilities measured at fair value as of March 31, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no transfers of assets between fair value Level 1 and Level 2 during the three months ended March 31, 2019 or 2018.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	March 31,		for Identical		Observable		Unobservable
	2019		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,671	$	-	$	23,671	$	-
Obligations of state and political subdivisions		6,720		-		6,720		-
Mortgage-backed securities		109,817		-		109,817		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,044	$	-	$	-	$	1,044
Other real estate owned		149		-		-		149
Mortgage servicing rights		193		-		-		193

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2018		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,266	$	-	$	23,266	$	-
Obligations of state and political subdivisions		18,181		-		18,181		-
Mortgage-backed securities		100,506		-		100,506		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,104	$	-	$	-	$	1,104
Other real estate owned		149		-		-		149
Mortgage servicing rights		200		-		-		200

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs have been used to determine fair value:

(Dollars in thousands)
March 31, 2019	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,044	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 15%	14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	2%	2%
Mortgage servicing rights		193	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	370%

(Dollars in thousands)
December 31, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,104	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 15%	14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	2%	2%
Mortgage servicing rights		200	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	369%

(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, the fair value estimates reported herein are not necessarily indicative of the amounts the Company could have realized in sales transactions on the dates indicated. The estimated fair value amounts have been measured as of their respective year ends and have not been re-evaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each quarter end.

The information presented below should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is provided only for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The following discussion describes the estimated fair value of the Company’s financial instruments as well as the significant methods and assumptions not previously disclosed used to determine these estimated fair values.

Carrying values approximate fair value for cash and due from banks, interest-bearing demand deposits with banks, restricted stock in the Federal Home Loan Bank, loans held for sale, interest receivable, mortgage servicing rights, non-interest bearing deposits, securities sold under agreements to repurchase, short-term borrowings and interest payable. Other than cash and due from banks, which are considered Level 1 inputs, and mortgage servicing rights, which are Level 3 inputs, these instruments are Level 2 inputs.

The estimated fair values of the Company’s financial instruments are as follows:

	Financial Instruments
		March 31, 2019				December 31, 2018
(Dollars in thousands)		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,002	$	15,002	$	15,617	$	15,617
Interest bearing deposits with banks		5,539		5,539		110		110
Federal funds sold		3,736		3,736		729		729
Interest bearing time deposits with banks		2,800		2,792		3,290		3,290
Securities		141,335		141,335		141,953		141,953
Restricted investment in FHLB stock		2,535		2,535		2,441		2,441
Loans, net of allowance for loan losses		411,985		412,579		414,597		415,195
Mortgage servicing rights		193		193		200		200
Accrued interest receivable		1,709		1,709		1,681		1,681
Financial liabilities:
Non-interest bearing deposits	$	128,670	$	128,670	$	126,057		126,057
Interest bearing deposits		395,186		394,889		395,665		395,226
Securities sold under agreements to repurchase		2,683		2,683		2,911		2,911
Short-term borrowings		-		-		11,600		11,600
Long-term debt		25,000		25,058		15,000		14,958
Other interest bearing liabilities		1,572		1,573		1,596		1,597
Accrued interest payable		415		415		289		289
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Letters of credit		-		-		-		-

The following tables present the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments not previously disclosed as of March 31, 2019 and December 31, 2018. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
March 31, 2019
Financial instruments - Assets
Interest bearing time deposits with banks	$	2,800	$	2,792	$	-	$	2,792	$	-
Loans, net of allowance for loan losses		411,985		412,579		-		-		412,579
Financial instruments - Liabilities
Interest bearing deposits	$	395,186	$	394,889	$	-	$	394,889	$	-
Long-term debt		25,000		25,058		-		25,058		-
Other interest bearing liabilities		1,572		1,573		-		1,573		-

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,290	$	3,290	$	-	$	3,290	$	-
Loans, net of allowance for loan losses		414,597		415,195		-		-		415,195
Financial instruments - Liabilities
Interest bearing deposits	$	395,665	$	395,226	$	-	$	395,226	$	-
Long-term debt		15,000		14,958		-		14,958		-
Other interest bearing liabilities		1,596		1,597		-		1,597		-

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Defined Benefit Retirement Plan

3 Months Ended

Mar. 31, 2019

Defined Benefit Retirement Plan [Abstract]

Defined Benefit Retirement Plan

11. Defined Benefit Retirement Plan

The Company sponsors a defined benefit retirement plan, The Juniata Valley Bank Retirement Plan (“JVB Plan”), which covers substantially all of its employees employed prior to December 31, 2007. As of January 1, 2008, the JVB Plan was amended to close the plan to new entrants. All active participants as of December 31, 2007 became 100% vested in their accrued benefit and, as long as they remained eligible, continued to accrue benefits until December 31, 2012. The benefits are based on years of service and the employee’s compensation. Effective December 31, 2012, the JVB Plan was amended to cease future service accruals after that date (i.e., it was frozen).

As a result of the FNBPA acquisition, as of November 30, 2015, the Company assumed sponsorship of a second defined benefit retirement plan, the Retirement Plan for the First National Bank of Port Allegany (“FNB Plan”), which covers substantially all former FNBPA employees that were employed prior to September 30, 2008. The FNBPA Plan was amended as of December 31, 2015 to cease future service accruals to previously unfrozen participants and is now considered to be “frozen”. Effective December 31, 2016, the FNB Plan was merged into the JVB Plan, which was amended to provide the same benefits to the class of participants previously included in the FNB Plan.

In 2017, Juniata initiated a strategy to reduce the liability associated with its defined benefit pension plan. The first step of the initiative consisted of the purchase of a single premium group annuity for a group of Juniata’s retirees, transferring the associated pension liability to the issuer of the annuity. This step reduced Juniata’s overall pension liability by approximately 12%, which resulted in a pre-tax charge to earnings of $377,000 in the fourth quarter of 2017. This pre-tax charge represents an acceleration of pension expenses that would otherwise have impacted Juniata’s earnings in the future.

The Company initiated and completed the second step of this strategy during the third quarter of 2018 by making a lump sum payment offer to a small group of terminated vested participants in the Company’s defined benefit plan. This second step further reduced Juniata’s remaining pension liability by approximately 9%, which resulted in a pre-tax charge to earnings of $210,000 in the third quarter of 2018. The pre-tax charge represents a further acceleration of pension expenses that would otherwise have impacted Juniata’s future earnings. The Company also made a $1,350,000 contribution to the defined benefit pension plan during the third quarter of 2018.

The Company’s funding policy with respect to the JVB Plan is to contribute annually no more than the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide for benefits attributed to service through December 31, 2012. The Company did not make a contribution in the three months ended March 31, 2019 and March 31, 2018.

Juniata’s Board of Directors resolved to terminate the JVB Plan, effective November 30, 2018. All participants have been properly notified and settlement of all obligations is expected to occur by the third quarter of 2019.

Pension expense included the following components for the three months ended March 31, 2019 and 2018:

	Three Months Ended
(Dollars in thousands)	March 31,
	2019		2018
Components of net periodic pension cost (benefit):
Interest cost	$	125	$	132
Expected return on plan assets		(124)		(192)
Recognized net actuarial loss		28		41
Net periodic pension cost (benefit)	$	29	$	(19)
Amortization of net actuarial loss recognized
in other comprehensive income	$	(28)	$	(41)
Total recognized in net periodic pension cost (benefit) and
other comprehensive income	$	1	$	(60)

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Commitments and Contingent Liabilities and Guarantees

3 Months Ended

Mar. 31, 2019

Commitments and Contingent Liabilities and Guarantees [Abstract]

Commitments and Contingent Liabilities and Guarantees

12.  Commitments, Contingent Liabilities and Guarantees

In the ordinary course of business, the Company makes commitments to extend credit to its customers through letters of credit, loan commitments and lines of credit. At March 31, 2019, the Company had $88,350,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $87,223,000 at December 31, 2018.

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments. The Company had outstanding $2,356,000 and $2,749,000 of financial and performance letters of credit commitments as of March 31, 2019 and December 31, 2018, respectively. Commercial letters of credit as of March 31, 2019 and December 31, 2018 totaled $9,867,000 and $8,925,000, respectively. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The amount of the liability as of March 31, 2019 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

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

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Revenue Recognition

3 Months Ended

Mar. 31, 2019

Revenue Recognition [Abstract]

Revenue Recognition

13.  REVENUE RECOGNITION

As disclosed in Note 2, as of January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, as well as subsequent ASUs that modified Topic 606. The Company elected to apply the ASU and all related ASU’s using the modified retrospective approach applied to all contracts initiated on or after the effective date, and for contracts which have remaining obligations as of the effective date, while prior period results continue to be reported under legacy U.S. GAAP. Based on this assessment, the Company concluded that Topic 606 did not materially change the method by which the Company currently recognizes revenue for these revenue streams, which is by recognizing revenues as they are earned based upon contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured.

The Company generally acts in a principal capacity, on its own behalf, in most contracts with customers. In such transactions, revenue and related costs to provide these services are recognized on a gross basis in the financial statements. In some cases, the Company acts in an agent capacity, deriving revenue through assisting other entities in transactions with its customers. In such transactions, revenue and the related costs to provide the services are recognized on a net basis in the financial statements. These transactions primarily relate to non-deposit product commissions and fees derived from customer’s use of various interchange and ATM/debit card networks.

All of the Company’s revenue from contracts with customers in the scope of Topic 606 are recognized within non-interest income on the consolidated statements of income, except for the gain/loss on the sale of other real estate owned, which is included in other non-interest expense. Revenue streams not within the scope of Topic 606 included in non-interest income on the consolidated statements of income include earnings on bank-owned life insurance and annuities, income from unconsolidated subsidiary, fees derived from loan activity, mortgage banking income, gain/loss on sales and calls of securities, and the change in value of equity securities.

A description of the Company’s sources of revenue accounted for under Topic 606 are as follows:

Customer Service Fees – fees mainly represent fees from deposit customers for transaction based, account maintenance, and overdraft services. Transaction based fees include, but are not limited to, stop payment and overdraft fees. These fees are recognized at the time of the transaction when the performance obligation has been fulfilled. Account maintenance fees and account analysis fees are earned over the course of a month, representing the period of the performance obligation, and are recognized monthly. 

Debit Card Fee Income – consists of interchange fees from cardholder transactions conducted through the card payment network. Cardholders use debit cards to conduct point-of-sale transactions that produce interchange fees. The Company acts in an agent capacity to offer processing services for debit cards to its customers. Fees are recognized with the processing of the transactions and netted against the related fees from such transactions.

Trust Fees – include asset management and estate fees. Asset management fees are generally based on a fee schedule, based upon the market value of the assets under management, and recognized monthly when the service obligation is completed. Trust fees recognized during the three month periods ended March 31, 2019 and 2018 totaled $90,000 during both periods. Fees for estate management services are based on a specified fee schedule and generally recognized as the following performance obligations are fulfilled: (i) 25% of total estate fee recognized when all estate assets are collected and debts paid, (ii) 50% of the total fee is recognized when the inheritance tax return is filed, and (iii) remaining 25% is recognized when the first and final account is confirmed, settling the estate. Estate fees recognized during the three month periods ended March 31, 2019 and 2018 totaled $9,000 and $12,000, respectively.

Commissions From Sales Of Non-Deposit Products – include, but are not limited to, brokerage services, employer-based retirement solutions, individual retirement planning, insurance solutions, and fee-based investment advisory services. The Company acts in an agent capacity to offer these services to customers. Revenue is recognized, net of related fees, in the month in which the contract is fulfilled.

Other Non-Interest Income – includes certain revenue streams within the scope of Topic 606 comprised primarily of ATM surcharges, commissions on check orders, and wire transfer fees. ATM surcharges are the result of customers conducting ATM transactions that generate fee income. All of these fees, as well as wire transfer fees, are transaction based and are recognized at the time of the transaction. In addition, the Company acts in an agent capacity to offer checks to its customers and recognizes commissions, net of related fees, when the contract is fulfilled.

Gains/Losses On Sales Of Other Real Estate Owned – are recognized when control of the property transfers to the buyer, which generally occurs when the deed is executed.

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due from the customer. The company’s non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into longer-term revenue contracts with customer, and therefore, does not experience significant contract balances.

Contract Acquisition Costs

The Company expenses all contract acquisition costs as costs are incurred.

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Leases

3 Months Ended

Mar. 31, 2019

Leases

Leases

14. LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plan or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), and all subsequent ASUs that modified Topic 842 using the optional transition method. For the Company, Topic 842 affected the accounting treatment for its four operating lease agreements in which the Company is the lessee.

The Company elected the package of practical expedients, which removed the requirements to reassess whether any expired or existing contracts contain leases, reassess the lease classification for any expired or existing leases, and reassess the initial direct costs for any existing leases. The Company also elected two other practical expedients allowing the combination of lease and nonlease components by class of underlying asset and using hindsight in determining the lease terms since most of the leases have an extension option.

The four operating leases, one of which is with a related party, are comprised of real estate property for branch and office space with terms extending through 2029. Operating leases were previously not recognized on the Company’s consolidated statements of condition, but with the adoption of Topic 842, operating lease agreements are recognized on the consolidated statements of condition as a ROU asset and a corresponding lease liability. As of March 31, 2019, the Company had operating lease ROU assets totaling $534,000 included in other assets and operating lease liabilities totaling $535,000 included in other liabilities.

The calculated amount of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability.

Topic 842 requires the use of the rate implicit in the lease as the discount rate if that rate is readily determinable. As this rate is rarely determinable, the Company utilized its incremental borrowing rate at lease inception, which is the rate the Company would have incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Because the four operating leases existed prior to the adoption of Topic 842 on January 1, 2019, the incremental borrowing rate for the remaining lease term at January 1, 2019 was used.

As of March 31, 2019, the weighted-average remaining operating lease term was 7.9 years and the weighted-average discount rate was 5.45%.

The Company elected, for the real estate class of underlying assets which is currently its only class, not to separate lease and nonlease components and to account for them as a single lease component. The Company has one operating lease agreement containing a monthly ATM surcharge, which is combined with the property rental payment as a result of electing the practical expedient. The Company’s total operating lease cost for the three months ended March 31, 2019 was $30,000, of which $6,000 was to a related party.

The future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2019 were as follows:

(Dollars in thousands)
Twelve Months Ended:
March 31, 2020	$	120
March 31, 2021		116
March 31, 2022		97
March 31, 2023		47
March 31, 2024		47
Thereafter		233
Total Future Minimum Lease Payments		660
Amounts Representing Interest		(125)
Present Value of Net Future Minimum Lease Payments	$	535

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

15.  Subsequent Events

On April 17, 2019, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on May 15, 2019, payable on May 31, 2019.  

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Recent Accounting Standards Update (Policy)

3 Months Ended

Mar. 31, 2019

Recent Accounting Standards Update [Abstract]

Adoption of New Accounting Standards

Adoption of New Accounting Standards

ASU 2016-02, Leases

Issued: February 2016

Summary: The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

In July 2018, the FASB issued ASU-2018-10, Codification Improvements to Topic 842, Leases. ASU 2018-10 clarifies the intended application of certain narrow aspects of the guidance in ASU 2016-02. The amendments are similar in nature to those in the FASB’s ongoing project to make improvements to clarify the Codification or correct unintended application of the guidance. Key amendments in this ASU include:

· Updating the definition of the rate implicit in the lease to clarify that the rate cannot be less than zero;

· Clarifying application of guidance for lessors when determining impairment of net investment in the lease;

· Clarifying whether lessors and lessees should recognize certain transition adjustments to earnings rather than through equity;

· Clarifying certain transition guidance for amounts previously recognized in business combinations.

In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. ASU 2018-11 provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

ASU 2018-11 also provides lessors with a practical expedient, by class of underlying asset, to elect not to separate nonlease components from the associated lease component and, instead, to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both the timing and pattern of transfer of the nonlease component(s) and associated lease component are the same, and the lease component, if accounted for separately, would be classified as an operating lease. If the nonlease component or components associated with the lease component are the predominant component of the combined component, an entity is required to account for the combined component in accordance with Topic 606. Otherwise, the entity must account for the combined component as an operating lease in accordance with Topic 842.

Effective Date:ASU 2016-02 was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The effective date of the amendments in ASU 2018-10 and ASU 2018-11 were the same as the effective date for ASU 2016-02.

The Company adopted ASU 2016-02 on January 1, 2019 using the optional transition method. The Company also elected the following practical expedients: the package of practical expedients, combining lease and nonlease components by class of underlying asset, and using hindsight in determining the lease terms. The adoption of this standard resulted in the recording of a ROU asset and lease liability of $556,000 as of January 1, 2019 for the Company’s four operating lease obligations. The adoption of this standard did not have a material impact on the Company’s operations, cash flows or capital ratios, nor has it caused the Company to no longer be well capitalized. See Note 14 for more information.

Newly Issued, Not Yet Effective Standards

ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

Issued: August 2018

Summary: ASU 2018-14 modifies the disclosure requirements under ASC 715-20 for employers that sponsor defined benefit pension or other postretirement plans. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments are effective for public business entities for fiscal years ending after December 15, 2020. For all other entities, the amendments are effective for annual reporting periods ending after December 15, 2021. Early adoption is permitted. This Update will have no impact on the Company’s consolidated financial position and results of operations because Juniata’s Board of Directors resolved to terminate the Company’s defined benefit retirement plan, The Juniata Valley Bank Retirement Plan, effective November 30, 2018. All participants have been properly notified and settlement of all obligations is expected to occur in the third quarter of 2019. See Note 11 for additional information.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

Issued: August 2018

Summary: ASU 2018-13 modifies the disclosure requirements for fair value measurements required under ASC 820. Those modifications include the removal and addition of disclosure requirements as well as clarifying specific disclosure requirements.

Effective Date: The amendments become effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted upon issuance of this ASU. An entity is permitted to early adopt all disclosure requirements in the ASU or early adopt only the removed and modified disclosures and delay adoption of the additional disclosures until their effective date. This Update is not expected to have an impact on the Company’s consolidated financial position or results of operations.

ASU 2017-04, Simplifying the Test for Goodwill Impairment

Issued: January 2017

Summary: ASU 2017-04 eliminates the requirement of Step 2 in the current guidance to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value in Step 1 of the current guidance.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2019. The adoption of this Update is not expected to have an impact on the Company’s consolidated financial position and results of operations.

ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

Issued: June 2016

Summary: ASU 2016-13 requires credit losses on most financial assets to be measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (“CECL”) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument.

The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above.

Further, the ASU made certain targeted amendments to the existing impairment model for available for sale debt securities. For an available for sale debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.

Effective Date:The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. While the Company’s senior management is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures, it expects the ALLL to increase upon adoption given that the allowance will be required to cover the full remaining expected life of the portfolio, rather than the incurred loss under current U.S. GAAP. The extent of this increase is still being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming an internal taskforce, gathering pertinent data, participating in training courses, and partnering with a software provider that specializes in ALLL analysis, as well as assessing the sufficiency of data currently available through its core database.

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Loans and Related Allowance for Credit Losses (Policy)

3 Months Ended

Mar. 31, 2019

Loans and Related Allowance for Credit Losses [Abstract]

Loans and Leases Receivable, Nonaccrual Loan and Lease Status

The Company has certain loans in its portfolio that are considered to be impaired. It is the policy of the Company to recognize income on impaired loans that have been transferred to nonaccrual status on a cash basis, only to the extent that it exceeds principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at March 31, 2019 and December 31, 2018 totaled $47,000 and $94,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors are used to determine the charge-off amount.

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Merger (Tables)

3 Months Ended

Mar. 31, 2019

Merger [Abstract]

Schedule of Purchase Price Allocation

Allocation of the purchase price was as follows:

(Dollars in thousands)	Recorded at				Recorded at
	April 30, 2018		Change		March 31, 2019
Step One Purchase Price Consideration
April 30, 2018 JUVF basis in LCB (before gain)	$	4,622	$	-	$	4,622
Increase in Step One basis from equity gain in acquisition		415		-		415
Total Step One adjusted basis		5,037		-		5,037
Step Two Purchase Price Consideration
Purchase price assigned to LCB common shares exchanged for 315,284 JUVF
common shares	$	6,463	$	-	$	6,463
Purchase price assigned to LCB common shares exchanged for cash including
cash in lieu of fractional shares		1,362		-		1,362
Total Step Two purchase price consideration		7,825		-		7,825
Total purchase price		12,862		-		12,862
LCB net assets acquired:
Tangible common equity		9,246		-		9,246
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments		(95)		-		(95)
Associated deferred income taxes		20		92		112
Fair value adjustment to net assets acquired, net of tax		(75)		92		17
Total LCB net assets acquired		9,171		92		9,263
Goodwill resulting from the merger	$	3,691	$	(92)	$	3,599

Summary of the Estimated Fair Value of the Assets Acquired and Liabilities Assumed

(Dollars in thousands)	Recorded at				Recorded at
	April 30, 2018		Change		March 31, 2019
Total purchase price	$	12,862	$	-	$	12,862
Net assets acquired:
Cash and cash equivalents		8,923		-		8,923
Investments in time deposits with banks		3,675		-		3,675
Loans		31,331		-		31,331
Premises and equipment		125		-		125
Accrued interest receivable		123		-		123
Core deposit and other intangibles		289		-		289
Bank owned life insurance		632		-		632
FHLB stock		124		-		124
Other assets		267		92		359
Deposits		(36,052)		-		(36,052)
Accrued interest payable		(17)		-		(17)
Other liabilities		(249)		-		(249)
		9,171		92		9,263
Goodwill	$	3,691	$	(92)	$	3,599

Schedule of Fair Value Adjustments for Acquired Loans

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at April 30, 2018	$	32,091
Market rate adjustment		272
Credit fair value adjustment on pools of homogeneous loans		(496)
Credit fair value adjustment on purchased credit impaired loans		(622)
Reversal of existing deferred fees and premiums		86
Fair value of purchased loans at April 30, 2018	$	31,331

Schedule of Acquired Impaired Loans

Summarized below is the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018.

(Dollars in thousands)
Contractually required principal and interest at acquisition	$	2,022
Contractual cash flows not expected to be collected (nonaccretable discount)		(1,273)
Expected cash flows at acquisition		749
Interest component of expected cash flows (accretable discount)		(177)
Fair value of acquired loans	$	572

Merger, Pro Forma Information

The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies or other factors.

(Dollars in thousands; except share data)
	March 31, 2018
Net interest income after loan loss provision	$	4,962
Noninterest income		1,147
Noninterest expense		4,462
Net income available to common shareholders		1,637
Net income per common share		0.32

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2019

Accumulated Other Comprehensive Loss [Abstract]

Components of Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss, net of tax, consisted of the following:

(Dollars in thousands)
	March 31, 2019		December 31, 2018
Unrealized losses on available for sale securities	$	(1,186)	$	(2,647)
Unrecognized expense for defined benefit pension		(1,630)		(1,652)
Accumulated other comprehensive loss	$	(2,816)	$	(4,299)

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

(Dollars in thousands, except earnings per share data)	Three Months Ended March 31,
	2019		2018
Net income	$	1,413	$	1,327
Weighted-average common shares outstanding		5,095		4,770
Basic earnings per share	$	0.28	$	0.28
Weighted-average common shares outstanding	$	5,095	$	4,770
Common stock equivalents due to effect of stock options		22		17
Total weighted-average common shares and equivalents		5,117		4,787
Diluted earnings per share	$	0.28	$	0.28

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Securities (Tables)

3 Months Ended

Mar. 31, 2019

Securities [Abstract]

Securities Available for Sale

The amortized cost and fair value of securities available for sale as of March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

		March 31, 2019
(Dollars in thousands)						Gross		Gross
		Amortized		Fair		Unrealized		Unrealized
Securities Available for Sale		Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,999	$	20,708	$	-	$	(291)
After five years but within ten years		2,999		2,963		-		(36)
		23,998		23,671		-		(327)
Obligations of state and political subdivisions
Within one year		823		824		1		-
After one year but within five years		3,688		3,692		10		(6)
After five years but within ten years		2,226		2,204		-		(22)
		6,737		6,720		11		(28)
Mortgage-backed securities		110,981		109,817		355		(1,519)
Total securities available for sale	$	141,716	$	140,208	$	366	$	(1,874)

		December 31, 2018
(Dollars in thousands)						Gross		Gross
		Amortized		Fair		Unrealized		Unrealized
Securities Available for Sale		Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government agencies and corporations
After one year but within five years	$	20,998	$	20,355	$	-	$	(643)
After five years but within ten years		2,999		2,911		-		(88)
		23,997		23,266		-		(731)
Obligations of state and political subdivisions
Within one year		826		826		-		-
After one year but within five years		14,751		14,686		13		(78)
After five years but within ten years		2,779		2,669		-		(110)
		18,356		18,181		13		(188)
Mortgage-backed securities		102,957		100,506		172		(2,623)
Total	$	145,310	$	141,953	$	185	$	(3,542)

Summary of Proceeds and Realized Gain/(Loss)

The following table summarizes proceeds received from sales or calls of available for sale investment securities transactions and the resulting realized gains and losses.

	Three Months Ended
(Dollars in thousands)	March 31,
	2019		2018
Gross proceeds from sales and calls of securities	$	11,107	$	4,285
Securities available for sale:
Gross realized gains from sold and called securities	$	5	$	-
Gross realized losses from sold and called securities		(61)		(15)
Net losses from sales and calls of securities	$	(56)	$	(15)

Schedule of Gross Unrealized Losses and Fair Value

The following tables show gross unrealized losses and fair values of securities available for sale, aggregated by category and length of time the individual securities have been in a continuous unrealized loss position, at March 31, 2019 and December 31, 2018:

	Unrealized Losses at March 31, 2019
	Less Than 12 Months					12 Months or More					Total
	Number					Number					Number
(Dollars in thousands)	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S.
Government agencies
and corporations	-	$	-	$	-	14	$	23,671	$	(327)	14	$	23,671	$	(327)
Obligations of state and
political subdivisions	-		-		-	4		2,786		(28)	4		2,786		(28)
Mortgage-backed
securities	-		-		-	44		76,640		(1,519)	44		76,640		(1,519)
Total temporarily
impaired
securities	-	$	-	$	-	62	$	103,097	$	(1,874)	62	$	103,097	$	(1,874)

	Unrealized Losses at December 31, 2018
	Less Than 12 Months					12 Months or More					Total
	Number					Number					Number
(Dollars in thousands)	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S.
Government agencies
and corporations	-	$	-	$	-	14	$	23,267	$	(731)	14	$	23,267	$	(731)
Obligations of state and
political subdivisions	8		5,055		(10)	13		8,242		(178)	21		13,297		(188)
Mortgage-backed
securities	3		6,726		(32)	43		77,170		(2,591)	46		83,896		(2,623)
Total temporarily
impaired
securities	11	$	11,781	$	(42)	70	$	108,679	$	(3,500)	81	$	120,460	$	(3,542)

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Loans and Related Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2019

Loans and Related Allowance for Credit Losses [Abstract]

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2019 and December 31, 2018.

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of March 31, 2019
Commercial, financial and agricultural	$	44,320	$	4,097	$	956	$	-	$	49,373
Real estate - commercial		124,394		7,566		6,944		892		139,796
Real estate - construction		34,638		303		2,206		-		37,147
Real estate - mortgage		155,860		24		2,600		152		158,636
Obligations of states and political subdivisions		19,870		-		-		-		19,870
Personal		10,143		-		14		-		10,157
Total	$	389,225	$	11,990	$	12,720	$	1,044	$	414,979

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2018
Commercial, financial and agricultural	$	42,757	$	2,992	$	814	$	-	$	46,563
Real estate - commercial		125,352		8,590		6,459		894		141,295
Real estate - construction		34,131		-		2,528		29		36,688
Real estate - mortgage		160,774		24		2,569		181		163,548
Obligations of states and political subdivisions		19,129		-		-		-		19,129
Personal		10,389		-		19		-		10,408
Total	$	392,532	$	11,606	$	12,389	$	1,104	$	417,631

Impaired Loans by Loan Portfolio Class

The following table summarizes information regarding impaired loans by portfolio class as of March 31, 2019 and December 31, 2018.

	As of March 31, 2019							As of December 31, 2018
				Unpaid						Unpaid
(Dollars in thousands)	Recorded			Principal		Related		Recorded		Principal		Related
	Investment			Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	1,214		$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531			585		-		544		592		-
Real estate - construction		-			-		-		27		1,123		-
Real estate - mortgage		1,309			1,970		-		1,180		1,912		-
Acquired with credit deterioration		944			1,050		-		971		1,061		-
Personal		14			14		-		17		17		-
Total:
Real estate - commercial	$	1,214	-	$	1,612	$	-	$	909	$	1,303	$	-
Acquired with credit deterioration		531			585		-		544		592		-
Real estate - construction		-			-		-		27		1,123		-
Real estate - mortgage		1,309			1,970		-		1,180		1,912		-
Acquired with credit deterioration		944			1,050		-		971		1,061		-
Personal		14			14		-		17		17		-
	$	4,012		$	5,231	$	-	$	3,648	$	6,008	$	-

Average Recorded Investment of Impaired Loans and Related Interest Income by Loan Portfolio Class

Average recorded investment of impaired loans and related interest income recognized for the three months ended March 31, 2019 and 2018 are summarized in the tables below.

	Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
(Dollars in thousands)	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	$	-	$	-	$	235	$	-	$	-
Real estate - commercial		1,062		3		-		2,965		-		-
Acquired with credit deterioration		538		-		-		181		-		-
Real estate - construction		14		-		-		-		-		-
Real estate - mortgage		1,245		5		12		2,166		5		1
Acquired with credit deterioration		958		-		-		333		-		-
Personal		16		-		-		-		-		-
	$	3,833	$	8	$	12	$	5,880	$	5	$	1

Nonaccrual Loans by Classes of the Loan Portfolio

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2019 and December 31, 2018.

(Dollars in thousands)
	March 31, 2019		December 31, 2018
Nonaccrual loans:
Real estate - commercial	$	892	$	908
Real estate - construction		-		29
Real estate - mortgage		885		753
Personal		14		17
Total	$	1,791	$	1,707

Loan Portfolio Summarized by the Past Due Status

The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2019 and December 31, 2018.

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
(Dollars in thousands)	Days Past		Days Past		than 90		Total Past				Total		Days and
	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of March 31, 2019
Commercial, financial and agricultural	$	11		-		-	$	11	$	49,362	$	49,373	$	-
Real estate - commercial:
Real estate - commercial		80		121		892		1,093		138,172		139,265		-
Acquired with credit deterioration		-		137		-		137		394		531		-
Real estate - construction		332		-		-		332		36,815		37,147		-
Real estate - mortgage:
Real estate - mortgage		228		-		494		722		156,970		157,692		-
Acquired with credit deterioration		139		-		6		145		799		944		6
Obligations of states and political														-
subdivisions		-		-		-		-		19,870		19,870		-
Personal		72		25		14		111		10,046		10,157		-
Total	$	862	$	283	$	1,406	$	2,551	$	412,428	$	414,979	$	6

													Loans Past
													Due Greater
	30-59		60-89		Greater								than 90
(Dollars in thousands)	Days Past		Days Past		than 90		Total Past				Total		Days and
	Due		Due		Days		Due		Current		Loans		Accruing (1)
As of December 31, 2018
Commercial, financial and agricultural	$	6	$	-	$	-	$	6	$	46,557	$	46,563	$	-
Real estate - commercial:
Real estate - commercial		-		-		1,214		1,214		139,890		141,104		306
Acquired with credit deterioration		140		-		-		140		51		191		-
Real estate - construction		32		-		29		61		36,627		36,688		-
Real estate - mortgage:
Real estate - mortgage		824		561		175		1,560		161,651		163,211		23
Acquired with credit deterioration		259		-		7		266		71		337		7
Obligations of states and political
subdivisions		-		-		-		-		19,129		19,129		-
Personal		24		15		17		56		10,352		10,408		-
Total	$	1,285	$	576	$	1,442	$	3,303	$	414,328	$	417,631	$	336

Troubled Debt Restructurings on Financing Receivables

(1) These loans are guaranteed, or well-secured, and there is an effective means of collection in process.

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at March 31, 2019 and December 31, 2018.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial	1	$	306	$	326	$	324
Real estate - mortgage	8		498		527		426
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		16
	10	$	829	$	878	$	766

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of December 31, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	8	$	522	$	550	$	428
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		17
	9	$	547	$	575	$	445

Summary of Loans Whose Terms Have Been Modified

The following table lists the loans whose terms were modified resulting in a troubled debt restructuring during the three months ended March 31, 2019. 

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Three Months Ended March 31, 2019
Accruing troubled debt restructurings:
Real estate - commercial	1	$	306	$	326	$	324
Real estate - mortgage	1		9		9		8
	2	$	315	$	335	$	332

Allowance for Loan Losses and Recorded Investments in Loans Receivable

The following tables summarize the activity in the allowance for loan losses and related investments in loans receivable.

As of, and for the periods ended, March 31, 2019

													Obligations of
	Commercial,												states and
(Dollars in thousands)	financial and			Real estate -			Real estate -			Real estate -			political
	agricultural			commercial			construction			mortgage			subdivisions			Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2019	$	275		$	1,074		$	558		$	1,035		$	20		$	72	$	3,034
Charge-offs		-			(15)			-			(47)			-			(11)		(73)
Recoveries		2			7			-			5			-			4		18
Provisions		6			(23)			14			12			1			5		15
Ending balance, March 31, 2019	$	283		$	1,043		$	572		$	1,005		$	21		$	70	$	2,994
collectively evaluated for impairment	$	283		$	1,043		$	572		$	1,005		$	21		$	70	$	2,994
Loans receivable:
Ending balance	$	49,373		$	139,796		$	37,147		$	158,636		$	19,870		$	10,157	$	414,979
individually evaluated for impairment		-		$	1,214		$	-		$	1,309		$	-		$	14		2,537
acquired with credit deterioration		-	-	$	531	-	$	-	-	$	944	-	$	-	-	$	-		1,475
collectively evaluated for impairment	$	49,373		$	138,051		$	37,147		$	156,383		$	19,870		$	10,143	$	410,967

As of, and for the periods ended, March 31, 2018

									Obligations of
	Commercial,								states and
(Dollars in thousands)	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Charge-offs		-		(51)		-		(11)		-		(11)		(73)
Recoveries		3		5		-		-		-		3		11
Provisions		43		83		52		(15)		-		(5)		158
Ending balance, March 31, 2018	$	319	$	1,059	$	340	$	1,259	$	-	$	58	$	3,035
collectively evaluated for impairment	$	319	$	1,059	$	340	$	1,259	$	-	$	58	$	3,035
Loans receivable:
Ending balance	$	51,262	$	138,470	$	33,329	$	143,580	$	13,428	$	9,111	$	389,180
individually evaluated for impairment		2		899		-		2,099		-		-		3,000
acquired with credit deterioration		-		170		-		329		-		-		499
collectively evaluated for impairment	$	51,260	$	137,401	$	33,329	$	141,152	$	13,428	$	9,111	$	385,681

As of December 31, 2018

									Obligations of
	Commercial,								states and
(Dollars in thousands)	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2018	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Charge-offs		-		(60)		-		(183)		-		(42)		(285)
Recoveries		10		5		-		12		-		16		43
Provisions		(8)		107		270		(79)		20		27		337
Ending balance, December 31, 2018	$	275	$	1,074	$	558	$	1,035	$	20	$	72	$	3,034
collectively evaluated for impairment	$	275	$	1,074	$	558	$	1,035	$	20	$	72	$	3,034
Loans receivable:
Ending balance	$	46,563	$	141,295	$	36,688	$	163,548	$	19,129	$	10,408	$	417,631
individually evaluated for impairment		-		909		27		1,180		-		17		2,133
acquired with credit deterioration		-		544		-		971		-		-		1,515
collectively evaluated for impairment	$	46,563	$	139,842	$	36,661	$	161,397	$	19,129	$	10,391	$	413,983

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Other Intangible Assets [Abstract]

Amortization Schedule for Intangible Assets

The following table shows the amortization schedule for each of the intangible assets recorded.

	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
(Dollars in thousands)	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2018		108		-
Amortization expense recorded in the twelve months
ended December 31, 2018		44		35
Unamortized balance as of December 31, 2018		151		254
Amortization expense recorded in the
three months ended March 31, 2019		10		12
Unamortized balance as of March 31, 2019	$	141	$	242
Scheduled remaining amortization expense for years ended:
December 31, 2019	$	28	$	37
December 31, 2020		33		44
December 31, 2021		27		39
December 31, 2022		22		33
December 31, 2023		16		28
After December 31, 2023		15		61

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Measurement [Abstract]

Fair Value Measurements by Level of Valuation Inputs

The following tables summarize financial assets and financial liabilities measured at fair value as of March 31, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no transfers of assets between fair value Level 1 and Level 2 during the three months ended March 31, 2019 or 2018.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	March 31,		for Identical		Observable		Unobservable
	2019		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,671	$	-	$	23,671	$	-
Obligations of state and political subdivisions		6,720		-		6,720		-
Mortgage-backed securities		109,817		-		109,817		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,044	$	-	$	-	$	1,044
Other real estate owned		149		-		-		149
Mortgage servicing rights		193		-		-		193

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2018		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	23,266	$	-	$	23,266	$	-
Obligations of state and political subdivisions		18,181		-		18,181		-
Mortgage-backed securities		100,506		-		100,506		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,104	$	-	$	-	$	1,104
Other real estate owned		149		-		-		149
Mortgage servicing rights		200		-		-		200

Quantitative Information for Assets Measured at Fair Value

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs have been used to determine fair value:

(Dollars in thousands)
March 31, 2019	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,044	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 15%	14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	2%	2%
Mortgage servicing rights		193	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	370%

(Dollars in thousands)
December 31, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,104	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 15%	14%
Other real estate owned		149	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	2%	2%
Mortgage servicing rights		200	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	369%

(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various Level 3 inputs which are not identifiable.

(2) Appraisals may be adjusted downward by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Estimated Fair Values of Financial Instruments

The estimated fair values of the Company’s financial instruments are as follows:

	Financial Instruments
		March 31, 2019				December 31, 2018
(Dollars in thousands)		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,002	$	15,002	$	15,617	$	15,617
Interest bearing deposits with banks		5,539		5,539		110		110
Federal funds sold		3,736		3,736		729		729
Interest bearing time deposits with banks		2,800		2,792		3,290		3,290
Securities		141,335		141,335		141,953		141,953
Restricted investment in FHLB stock		2,535		2,535		2,441		2,441
Loans, net of allowance for loan losses		411,985		412,579		414,597		415,195
Mortgage servicing rights		193		193		200		200
Accrued interest receivable		1,709		1,709		1,681		1,681
Financial liabilities:
Non-interest bearing deposits	$	128,670	$	128,670	$	126,057		126,057
Interest bearing deposits		395,186		394,889		395,665		395,226
Securities sold under agreements to repurchase		2,683		2,683		2,911		2,911
Short-term borrowings		-		-		11,600		11,600
Long-term debt		25,000		25,058		15,000		14,958
Other interest bearing liabilities		1,572		1,573		1,596		1,597
Accrued interest payable		415		415		289		289
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Letters of credit		-		-		-		-

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
March 31, 2019
Financial instruments - Assets
Interest bearing time deposits with banks	$	2,800	$	2,792	$	-	$	2,792	$	-
Loans, net of allowance for loan losses		411,985		412,579		-		-		412,579
Financial instruments - Liabilities
Interest bearing deposits	$	395,186	$	394,889	$	-	$	394,889	$	-
Long-term debt		25,000		25,058		-		25,058		-
Other interest bearing liabilities		1,572		1,573		-		1,573		-

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
					Active Markets		Other		Other
(Dollars in thousands)	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,290	$	3,290	$	-	$	3,290	$	-
Loans, net of allowance for loan losses		414,597		415,195		-		-		415,195
Financial instruments - Liabilities
Interest bearing deposits	$	395,665	$	395,226	$	-	$	395,226	$	-
Long-term debt		15,000		14,958		-		14,958		-
Other interest bearing liabilities		1,596		1,597		-		1,597		-

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Defined Benefit Retirement Plan (Tables)

3 Months Ended

Mar. 31, 2019

JVB Plan [Member]

Defined Benefit Plan Disclosure [Line Items]

Components of Net Periodic Pension Cost

Pension expense included the following components for the three months ended March 31, 2019 and 2018:

	Three Months Ended
(Dollars in thousands)	March 31,
	2019		2018
Components of net periodic pension cost (benefit):
Interest cost	$	125	$	132
Expected return on plan assets		(124)		(192)
Recognized net actuarial loss		28		41
Net periodic pension cost (benefit)	$	29	$	(19)
Amortization of net actuarial loss recognized
in other comprehensive income	$	(28)	$	(41)
Total recognized in net periodic pension cost (benefit) and
other comprehensive income	$	1	$	(60)

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases

Summary of future minimum payments for operating leases

The future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2019 were as follows:

(Dollars in thousands)
Twelve Months Ended:
March 31, 2020	$	120
March 31, 2021		116
March 31, 2022		97
March 31, 2023		47
March 31, 2024		47
Thereafter		233
Total Future Minimum Lease Payments		660
Amounts Representing Interest		(125)
Present Value of Net Future Minimum Lease Payments	$	535

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Basis of Presentation and Accounting Policies (Narrative) (Details) - Liverpool Community Bank [Member]		3 Months Ended
	Apr. 30, 2018	Mar. 31, 2019	Apr. 29, 2018
Percentage of equity interest in acquiree, before acquisition			39.16%
Business acquisition, name of acquired entity		Liverpool Community Bank
Acquisition date	Apr. 30, 2018

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Recent Accounting Standards Update (Narrative) (Details)		3 Months Ended
	Jan. 01, 2019 USD ($) item	Mar. 31, 2019 USD ($)
New Accounting Pronouncement, Early Adoption [Line Items]
Practical expedients package		true
Practical expedients, use of hindsight		true
ROU asset		$ 534,000
Lease liability		$ 535,000
ASU 2016-02 | Restatement
New Accounting Pronouncement, Early Adoption [Line Items]
ROU asset	$ 556,000
Lease liability	$ 556,000
Number of operating lease obligations | item	4

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Merger (Narrative) (Details) - USD ($)		3 Months Ended
	Apr. 30, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Apr. 29, 2018
Business Acquisition [Line Items]
Acquiree's common shares outstanding		5,098,748		5,092,048
Goodwill		$ 9,047,000		$ 9,139,000
Income from unconsolidated subsidiary			$ 69,000
Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Acquisition date	Apr. 30, 2018
Business acquisition, name of acquired entity		Liverpool Community Bank
Total assets of acquiree	$ 45,360,000
Loans receivables of acquiree	32,091,000
Equity of acquiree	$ 9,246,000
Percentage of equity interest in acquiree, before acquisition					39.16%
Percentage of equity interest acquired	60.84%
Number of acquiree's common shares owned					1,214
Equity owned before acquisition	$ 4,622,000
Juniata's basis in Liverpool	5,037,000
Fair value gain	$ 415,000
Per share price of Liverpool shares	$ 4,050.00
Acquiree's common shares outstanding					3,100
Number of Juniata's share for each Liverpool share	202.6286
Number of shares issued upon the closing of acquisition	315,284
Fair value of shares issued for acquisition	$ 6,463,000
Closing stock price	$ 20.50
Approximate cash transaction of business acquisition	$ 1,362,000
Juniata's Step One adjusted basis in Liverpool	12,862,000	$ 12,862,000
Step Two purchase price consideration	7,825,000
Goodwill	3,691,000	3,599,000
Goodwill adjustment related to merger		$ 92,000
Core deposit intangible assets acquired	289,000
Intangible assets amortization period		10 years
Gross amortized cost basis	$ 32,091,000
Income from unconsolidated subsidiary		$ 69,000
Merger related costs		64,000
Merger related tax expense (benefit)		$ (1,000)
Federal statutory tax rate		21.00%	21.00%
Minimum [Member] | Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Percentage of outstanding common stock to be purchased for cash	15.00%
Maximum [Member] | Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Percentage of outstanding common stock to be purchased for cash	20.00%

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Merger (Schedule of Purchase Price Allocation) (Details) - USD ($)		3 Months Ended
	Apr. 30, 2018	Mar. 31, 2019	Dec. 31, 2018
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Goodwill		$ 9,047,000	$ 9,139,000
Liverpool Community Bank [Member]
Business Acquisition [Line Items]
April 30, 2018 JUVF basis in LCB (before gain)	$ 4,622,000
Increase in Step One basis from equity gain in acquisition	415,000
Total Step One adjusted basis	5,037,000
Purchase price assigned to LCB common shares exchanged for 315,284 JUVF common shares	6,463,000
Purchase price assigned to LCB common shares exchanged for cash including cash in lieu of fractional shares	1,362,000
Total Step Two purchase price consideration	7,825,000
Total Step One adjusted basis	12,862,000	12,862,000
Net assets acquired:
Tangible common equity	9,246,000
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Total net assets acquired	9,171,000	9,263,000
Goodwill	$ 3,691,000	3,599,000
Number of shares issued upon the closing of acquisition	315,284
Change
Change in total LCB net assets acquired		92,000
Change in goodwill resulting from the merger		$ (92,000)

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Merger (Summary of the Estimated Fair Value of the Assets Acquired and Liabilities Assumed) (Details) - USD ($)		3 Months Ended
	Apr. 30, 2018	Mar. 31, 2019	Dec. 31, 2018
Net assets acquired:
Bank owned life insurance		$ 16,013,000	$ 15,938,000
Goodwill		9,047,000	$ 9,139,000
Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Total purchase price	$ 12,862,000	12,862,000
Net assets acquired:
Cash and cash equivalents	8,923,000	8,923,000
Investments in time deposits with banks	3,675,000	3,675,000
Loans	31,331,000	31,331,000
Premises and equipment	125,000	125,000
Accrued interest receivable	123,000	123,000
Core deposit and other intangibles	289,000	289,000
Bank owned life insurance	632,000	632,000
FHLB Stock	124,000	124,000
Other assets	267,000	359,000
Deposits	(36,052,000)	(36,052,000)
Accrued interest payable	(17,000)	(17,000)
Other liabilities	(249,000)	(249,000)
Total net assets acquired	9,171,000	9,263,000
Goodwill	$ 3,691,000	3,599,000
Change
Change in other assets		92,000
Change in total LCB net assets acquired		92,000
Change in goodwill resulting from the merger		$ (92,000)

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Merger (Schedule of Fair Value Adjustments for Acquired Loans) (Details) - Liverpool Community Bank [Member]	Apr. 30, 2018 USD ($)
Business Acquisition [Line Items]
Gross amortized cost basis at April 30, 2018	$ 32,091,000
Market rate adjustment	272,000
Credit fair value adjustment on pools of homogeneous loans	(496,000)
Credit fair value adjustment on impaired loans	(622,000)
Reversal of existing deferred fees and premiums	86,000
Fair value of purchased loans at April 30, 2018	$ 31,331,000

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Merger (Schedule of Acquired Impaired Loans) (Details) - Liverpool Community Bank [Member] $ in Thousands	Apr. 30, 2018 USD ($)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Contractually required principal and interest at acquisition	$ 2,022
Contractual cash flows not expected to be collected (nonaccretable discount)	(1,273)
Expected cash flows at acquisition	749
Interest component of expected cash flows (accretable discount)	(177)
Fair value of acquired loans	$ 572

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Merger (Merger, Pro Forma Information) (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares
Merger [Abstract]
Net interest income after loan loss provision	$ 4,962
Noninterest income	1,147
Noninterest expense	4,462
Net income available to common shareholders	$ 1,637
Consolidated net income per common share | $ / shares	$ 0.32

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Accumulated Other Comprehensive Loss (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Loss [Abstract]
Unrealized losses on available for sale securities	$ (1,186)	$ (2,647)
Unrecognized expense for defined benefit pension	(1,630)	(1,652)
Accumulated other comprehensive loss	$ (2,816)	$ (4,299)

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Earnings Per Share (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net income	$ 1,413	$ 1,327
Weighted-average common shares outstanding	5,095,132	4,770,389
Basic earnings per share	$ 0.28	$ 0.28
Common stock equivalents due to effect of stock options	22,000	17,000
Total weighted-average common shares and equivalents	5,117,024	4,787,769
Diluted earnings per share	$ 0.28	$ 0.28

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Securities (Narrative) (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($) security	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($) security
Securities in unrealized loss position | security	62		81
Equity securities	$ 1,127,000		$ 1,118,000
Unrealized gain (loss) on equity securities	9,000	$ (6,000)
Equity Securities [Member]
Equity securities	$ 1,127,000		$ 1,118,000
Obligations of U.S. Government Agencies and Corporations [Member]
Securities in unrealized loss position | security	14		14
Percentage of securities depreciated from their amortized cost basis	1.00%
Obligations of State and Political Subdivisions [Member]
Securities in unrealized loss position | security	4		21
Percentage of securities depreciated from their amortized cost basis	1.00%
U.S. Government Sponsored Agencies [Member]
Investment portfolio percentage	17.00%
Carrying value of pledged assets	$ 39,537,000		$ 50,157,000
Mortgage-Backed Securities [Member]
Investment portfolio percentage	78.00%
Securities in unrealized loss position | security	44		46
Other than temporary impairment	$ 0	$ 0	$ 0
Percentage of securities depreciated from their amortized cost basis	2.00%
Municipal Bonds [Member]
Investment portfolio percentage	5.00%
Debt instrument term	5 years

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Securities (Securities Available for Sale) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities, Total	$ 141,716	$ 145,310
Fair Value of AFS Securities, Total	140,208	141,953
Gross Unrealized Gains on AFS Securities, Total	366	185
Gross Unrealized Losses on AFS Securities, Total	(1,874)	(3,542)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	20,999	20,998
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	2,999	2,999
Amortized Cost of AFS Securities, Total	23,998	23,997
Fair Value of AFS Securities Maturing After One Year But Within Five Years	20,708	20,355
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	2,963	2,911
Fair Value of AFS Securities, Total	23,671	23,266
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(291)	(643)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(36)	(88)
Gross Unrealized Losses on AFS Securities, Total	(327)	(731)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing Within One Year	823	826
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	3,688	14,751
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	2,226	2,779
Amortized Cost of AFS Securities, Total	6,737	18,356
Fair Value of AFS Securities Maturing Within One Year	824	826
Fair Value of AFS Securities Maturing After One Year But Within Five Years	3,692	14,686
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	2,204	2,669
Fair Value of AFS Securities, Total	6,720	18,181
Gross Unrealized Gains on AFS Securities Maturing Within One Year	1
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	10	13
Gross Unrealized Gains on AFS Securities, Total	11	13
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(6)	(78)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(22)	(110)
Gross Unrealized Losses on AFS Securities, Total	(28)	(188)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Without Single Maturity Date	110,981	102,957
Fair Value of AFS Securities Without Single Maturity Date	109,817	100,506
Gross Unrealized Gains on AFS Securities Without Single Maturity Date	355	172
Gross Unrealized Losses on AFS Securities Without Single Maturity Date	$ (1,519)	$ (2,623)

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Securities (Summary of Proceeds and Realized Gain/(Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Securities [Abstract]
Reversal of existing deferred fees and premiums	$ 11,107	$ 4,285
Gross realized gains from sold and called securities	5
Gross realized losses from sold and called securities	(61)	(15)
Net (losses) gains	$ (56)	$ (15)

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Securities (Schedule of Unrealized Losses) (Details) $ in Thousands	Mar. 31, 2019 USD ($) security	Dec. 31, 2018 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security		11
Fair Value, Less Than 12 Months		$ 11,781
Unrealized Losses, Less Than 12 Months		$ (42)
Number of Securities, Twelve Months or More | security	62	70
Fair Value, 12 Months or More	$ 103,097	$ 108,679
Unrealized Losses, 12 Months or More	$ (1,874)	$ (3,500)
Number of Securities, Total | security	62	81
Fair Value, Total	$ 103,097	$ 120,460
Unrealized Losses, Total	$ (1,874)	$ (3,542)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Twelve Months or More | security	14	14
Fair Value, 12 Months or More	$ 23,671	$ 23,267
Unrealized Losses, 12 Months or More	$ (327)	$ (731)
Number of Securities, Total | security	14	14
Fair Value, Total	$ 23,671	$ 23,267
Unrealized Losses, Total	$ (327)	$ (731)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security		8
Fair Value, Less Than 12 Months		$ 5,055
Unrealized Losses, Less Than 12 Months		$ (10)
Number of Securities, Twelve Months or More | security	4	13
Fair Value, 12 Months or More	$ 2,786	$ 8,242
Unrealized Losses, 12 Months or More	$ (28)	$ (178)
Number of Securities, Total | security	4	21
Fair Value, Total	$ 2,786	$ 13,297
Unrealized Losses, Total	$ (28)	$ (188)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security		3
Fair Value, Less Than 12 Months		$ 6,726
Unrealized Losses, Less Than 12 Months		$ (32)
Number of Securities, Twelve Months or More | security	44	43
Fair Value, 12 Months or More	$ 76,640	$ 77,170
Unrealized Losses, 12 Months or More	$ (1,519)	$ (2,591)
Number of Securities, Total | security	44	46
Fair Value, Total	$ 76,640	$ 83,896
Unrealized Losses, Total	$ (1,519)	$ (2,623)

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Loans and Related Allowance for Credit Losses (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Period for loan to be nonaccrual	90 days
Business lines of credit, maturity period	5 years
Period for loans to be considered for charge off	120 days
Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum terms offered to loans	20 years
Maximum loan-to-value ratio	90.00%
Fixed Rate and Adjustable Rate Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum terms offered to loans	25 years
Home Equity Installment Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum terms offered to loans	15 years
Maximum loan-to-value ratio	95.00%
Real Estate Portfolio Segment [Member] | Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum terms offered to loans	20 years
Maximum loan-to-value ratio	80.00%
Real Estate Portfolio Segment [Member] | Mortgage Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum loan-to-value ratio	80.00%
Loan balance in the process of foreclosure	$ 47,000	$ 94,000

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Loans and Related Allowance for Credit Losses (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 414,979	$ 417,631	$ 389,180
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	389,225	392,532
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	11,990	11,606
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	12,720	12,389
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,044	1,104
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	49,373	46,563	51,262
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	44,320	42,757
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	4,097	2,992
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	956	814
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	139,796	141,295	138,470
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	124,394	125,352
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	7,566	8,590
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,944	6,459
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	892	894
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	37,147	36,688	33,329
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	34,638	34,131
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	303
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,206	2,528
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		29
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	158,636	163,548	143,580
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	155,860	160,774
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	24	24
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,600	2,569
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	152	181
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	19,870	19,129	13,428
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	19,870	19,129
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	10,157	10,408	$ 9,111
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	10,143	10,389
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 14	$ 19

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Loans and Related Allowance for Credit Losses (Impaired Loans by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Impaired [Line Items]
Recorded Investment, Total	$ 4,012	$ 3,648
Unpaid Principal Balance, Total	5,231	6,008
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	1,214	909
Impaired Loans with No Allowance: Unpaid Principal Balance	1,612	1,303
Recorded Investment, Total	1,214	909
Unpaid Principal Balance, Total	1,612	1,303
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	531	544
Impaired Loans with No Allowance: Unpaid Principal Balance	585	592
Recorded Investment, Total	531	544
Unpaid Principal Balance, Total	585	592
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment		27
Impaired Loans with No Allowance: Unpaid Principal Balance		1,123
Recorded Investment, Total		27
Unpaid Principal Balance, Total		1,123
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	1,309	1,180
Impaired Loans with No Allowance: Unpaid Principal Balance	1,970	1,912
Recorded Investment, Total	1,309	1,180
Unpaid Principal Balance, Total	1,970	1,912
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	944	971
Impaired Loans with No Allowance: Unpaid Principal Balance	1,050	1,061
Recorded Investment, Total	944	971
Unpaid Principal Balance, Total	1,050	1,061
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	14	17
Impaired Loans with No Allowance: Unpaid Principal Balance	14	17
Recorded Investment, Total	14	17
Unpaid Principal Balance, Total	$ 14	$ 17

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Loans and Related Allowance for Credit Losses (Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 3,833	$ 5,880
Interest Income Recognized, Total	8	5
Cash Basis Interest Income, Total	12	1
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment		235
Average Recorded Investment, Total		235
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	1,062	2,965
Impaired Loans with No Allowance: Interest Income Recognized	3
Average Recorded Investment, Total	1,062	2,965
Interest Income Recognized, Total	3
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	14
Average Recorded Investment, Total	14
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	1,245	2,166
Impaired Loans with No Allowance: Interest Income Recognized	5	5
Impaired Loans with No Allowance: Cash Basis Interest Income	12	1
Average Recorded Investment, Total	1,245	2,166
Interest Income Recognized, Total	5	5
Cash Basis Interest Income, Total	12	1
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	16
Average Recorded Investment, Total	16
Acquired with Credit Deterioration [Member] | Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	538	181
Average Recorded Investment, Total	538	181
Acquired with Credit Deterioration [Member] | Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	958	333
Average Recorded Investment, Total	$ 958	$ 333

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Loans and Related Allowance for Credit Losses (Nonaccrual Loans by Classes of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 1,791	$ 1,707
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	892	908
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status		29
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	885	753
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 14	$ 17

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Loans and Related Allowance for Credit Losses (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2,551	$ 3,303
Current	412,428	414,328
Total loans	414,979	417,631	$ 389,180
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	6	336
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	862	1,285
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	283	576
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,406	1,442
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	11	6
Current	49,362	46,557
Total loans	49,373	46,563	51,262
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	11	6
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	139,796	141,295	138,470
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,093	1,214
Current	138,172	139,890
Total loans	139,265	141,104
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		306
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	137	140
Current	394	51
Total loans	531	191
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | 30-59 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	80
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | 30-59 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		140
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | 60-89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	121
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | 60-89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	137
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Greater than 90 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	892	1,214
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	332	61
Current	36,815	36,627
Total loans	37,147	36,688	33,329
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	332	32
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		29
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	158,636	163,548	143,580
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	722	1,560
Current	156,970	161,651
Total loans	157,692	163,211
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		23
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	145	266
Current	799	71
Total loans	944	337
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	6	7
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | 30-59 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	228	824
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | 30-59 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	139	259
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | 60-89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		561
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Greater than 90 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	494	175
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Greater than 90 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	6	7
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	19,870	19,129
Total loans	19,870	19,129	13,428
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	111	56
Current	10,046	10,352
Total loans	10,157	10,408	$ 9,111
Personal Loan [Member] | Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	72	24
Personal Loan [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	25	15
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 14	$ 17

XML

Loans and Related Allowance for Credit Losses (Troubled Debt Restructurings on Financing Receivables) (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($) contract	Dec. 31, 2018 USD ($) contract
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	10	9
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 829	$ 547
Financing Receivable, Modifications, Post-Modification Recorded Investment	878	575
Financing Receivable, Modifications, Recorded Investment	$ 766	$ 445
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 306
Financing Receivable, Modifications, Post-Modification Recorded Investment	326
Financing Receivable, Modifications, Recorded Investment	$ 324
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	8	8
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 498	$ 522
Financing Receivable, Modifications, Post-Modification Recorded Investment	527	550
Financing Receivable, Modifications, Recorded Investment	$ 426	$ 428
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Non-Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	1	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 25	$ 25
Financing Receivable, Modifications, Post-Modification Recorded Investment	25	25
Financing Receivable, Modifications, Recorded Investment	$ 16	$ 17
Restructured Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	2
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 315
Financing Receivable, Modifications, Post-Modification Recorded Investment	335
Financing Receivable, Modifications, Recorded Investment	$ 332
Restructured Loan [Member] | Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 306
Financing Receivable, Modifications, Post-Modification Recorded Investment	326
Financing Receivable, Modifications, Recorded Investment	$ 324
Restructured Loan [Member] | Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 9
Financing Receivable, Modifications, Post-Modification Recorded Investment	9
Financing Receivable, Modifications, Recorded Investment	$ 8

XML

Loans and Related Allowance for Credit Losses (Allowance for Loan Losses and Related Investments in Loans Receivable) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 3,034	$ 2,939	$ 2,939
Charge-offs	(73)	(73)	(285)
Recoveries	18	11	43
Provision for loan losses	15	158	337
Allowance for loan losses: Ending balance	2,994	3,035	3,034
Ending balance: collectively evaluated for impairment	2,994	3,035	3,034
Loans: Ending Balance	414,979	389,180	417,631
Ending balance: individually evaluated for impairment	2,537	3,000	2,133
Ending balance: collectively evaluated for impairment	410,967	385,681	413,983
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	275	273	273
Recoveries	2	3	10
Provision for loan losses	6	43	(8)
Allowance for loan losses: Ending balance	283	319	275
Ending balance: collectively evaluated for impairment	283	319	275
Loans: Ending Balance	49,373	51,262	46,563
Ending balance: individually evaluated for impairment		2
Ending balance: collectively evaluated for impairment	49,373	51,260	46,563
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,074	1,022	1,022
Charge-offs	(15)	(51)	(60)
Recoveries	7	5	5
Provision for loan losses	(23)	83	107
Allowance for loan losses: Ending balance	1,043	1,059	1,074
Ending balance: collectively evaluated for impairment	1,043	1,059	1,074
Loans: Ending Balance	139,796	138,470	141,295
Ending balance: individually evaluated for impairment	1,214	899	909
Ending balance: collectively evaluated for impairment	138,051	137,401	139,842
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	558	288	288
Provision for loan losses	14	52	270
Allowance for loan losses: Ending balance	572	340	558
Ending balance: collectively evaluated for impairment	572	340	558
Loans: Ending Balance	37,147	33,329	36,688
Ending balance: individually evaluated for impairment			27
Ending balance: collectively evaluated for impairment	37,147	33,329	36,661
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,035	1,285	1,285
Charge-offs	(47)	(11)	(183)
Recoveries	5		12
Provision for loan losses	12	(15)	(79)
Allowance for loan losses: Ending balance	1,005	1,259	1,035
Ending balance: collectively evaluated for impairment	1,005	1,259	1,035
Loans: Ending Balance	158,636	143,580	163,548
Ending balance: individually evaluated for impairment	1,309	2,099	1,180
Ending balance: collectively evaluated for impairment	156,383	141,152	161,397
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	20
Provision for loan losses	1		20
Allowance for loan losses: Ending balance	21		20
Ending balance: collectively evaluated for impairment	21		20
Loans: Ending Balance	19,870	13,428	19,129
Ending balance: collectively evaluated for impairment	19,870	13,428	19,129
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	72	71	71
Charge-offs	(11)	(11)	(42)
Recoveries	4	3	16
Provision for loan losses	5	(5)	27
Allowance for loan losses: Ending balance	70	58	72
Ending balance: collectively evaluated for impairment	70	58	72
Loans: Ending Balance	10,157	9,111	10,408
Ending balance: individually evaluated for impairment	14		17
Ending balance: collectively evaluated for impairment	10,143	9,111	10,391
Acquired with Credit Deterioration [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance: individually evaluated for impairment	1,475	499	1,515
Acquired with Credit Deterioration [Member] | Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Ending Balance	531		191
Ending balance: individually evaluated for impairment	531	170	544
Acquired with Credit Deterioration [Member] | Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Ending Balance	944		337
Ending balance: individually evaluated for impairment	$ 944	$ 329	$ 971

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Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($)				3 Months Ended
	Apr. 30, 2018	Nov. 30, 2015	Sep. 08, 2006	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Goodwill included in acquisition price				$ 9,047,000		$ 9,139,000
Amortization of intangible assets				22,000	$ 11,000
Goodwill impairment loss				0	$ 0
Branch Office in Richfield, PA [Member]
Acquisition date			Sep. 08, 2006
Goodwill included in acquisition price				2,046,000		2,046,000
FNBPA Bancorp, Inc [Member]
Acquisition date		Nov. 30, 2015
Goodwill included in acquisition price				$ 3,402,000		$ 3,402,000
Intangible assets included in purchase price		$ 303,000
Intangible assets amortization period				10 years
Amortization of intangible assets				$ 10,000
Liverpool Community Bank [Member]
Acquisition date	Apr. 30, 2018
Goodwill included in acquisition price	$ 3,691,000			3,599,000
Intangible assets included in purchase price	289,000			$ 289,000
Intangible assets amortization period				10 years
Amortization of intangible assets				$ 12,000
Core deposit and other intangibles	$ 289,000

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Goodwill and Other Intangible Assets (Amortization Schedule for Intangible Assets) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Apr. 30, 2018	Nov. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 22,000	$ 11,000
FNBPA Bancorp, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date						$ 303,000
Amortization of intangible assets	10,000
FNBPA Bancorp, Inc [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date						$ 303,000
Amortization of intangible assets	10,000		$ 44,000	$ 108,000
Unamortized balance	141,000		151,000
Scheduled remaining amortization expense for years ended:
December 31, 2019	28,000
December 31, 2020	33,000
December 31, 2021	27,000
December 31, 2022	22,000
December 31, 2023	16,000
After December 31, 2023	15,000
Liverpool Community Bank [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date	289,000				$ 289,000
Amortization of intangible assets	12,000
Liverpool Community Bank [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date					$ 289,000
Amortization of intangible assets	12,000		35,000
Unamortized balance	242,000		$ 254,000
Scheduled remaining amortization expense for years ended:
December 31, 2019	37,000
December 31, 2020	44,000
December 31, 2021	39,000
December 31, 2022	33,000
December 31, 2023	28,000
After December 31, 2023	$ 61,000

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Unconsolidated Subsidiary (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Apr. 29, 2018
Schedule of Equity Method Investments [Line Items]
Goodwill impairment loss	$ 0	$ 0
Liverpool Community Bank [Member]
Schedule of Equity Method Investments [Line Items]
Percentage of outstanding stock held in Liverpool Community Bank			39.16%
Goodwill impairment loss	$ 0

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Fair Value Measurements (Fair Value Measurements by Level of Valuation Inputs) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	$ 140,208	$ 141,953
Impaired loans	4,012	3,648
Other real estate owned	744	744
Fair value assets, level 1 to level 2 transfer amount	0		$ 0
Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	23,671	23,266
Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	6,720	18,181
Fair Value, Measurements, Recurring [Member] | Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	23,671	23,266
Fair Value, Measurements, Recurring [Member] | Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	6,720	18,181
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	109,817	100,506
Fair Value, Measurements, Recurring [Member] | (Level 2) Significant Other Observable Inputs [Member] | Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	23,671	23,266
Fair Value, Measurements, Recurring [Member] | (Level 2) Significant Other Observable Inputs [Member] | Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	6,720	18,181
Fair Value, Measurements, Recurring [Member] | (Level 2) Significant Other Observable Inputs [Member] | Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	109,817	100,506
Measured at Fair Value on a Non-Recurring Basis [Member] | Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	1,044	1,104
Measured at Fair Value on a Non-Recurring Basis [Member] | Impaired Loans [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	1,044	1,104
Measured at Fair Value on a Non-Recurring Basis [Member] | Other Real Estate Owned [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other real estate owned	149	149
Measured at Fair Value on a Non-Recurring Basis [Member] | Other Real Estate Owned [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other real estate owned	149	149
Measured at Fair Value on a Non-Recurring Basis [Member] | Mortgage Servicing Rights [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	193	200
Measured at Fair Value on a Non-Recurring Basis [Member] | Mortgage Servicing Rights [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	$ 193	$ 200

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Fair Value Measurements (Quantitative Information for Assets Measured at Fair Value) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	$ 4,012,000	$ 3,648,000
Other real estate owned	744,000	744,000
Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	$ 1,044,000	$ 1,104,000
Impaired loans, measurement input	0.14	0.14
Other Real Estate Owned [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other real estate owned	$ 149,000	$ 149,000
Other real estate owned, measurement input	0.02	0.02
Mortgage Servicing Rights [Member] | Multiple of Annual Servicing Fee [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	$ 193,000	$ 200,000
Mortgage servicing rights, measurement input	3.70	3.69
Minimum [Member] | Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, measurement input	0.00	0.00
Minimum [Member] | Mortgage Servicing Rights [Member] | Multiple of Annual Servicing Fee [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights, measurement input	3	3
Maximum [Member] | Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, measurement input	0.15	0.15
Maximum [Member] | Mortgage Servicing Rights [Member] | Multiple of Annual Servicing Fee [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights, measurement input	4	4

XML

Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing deposits with banks	$ 5,539	$ 110
Federal funds sold	3,736	729
Interest bearing time deposits with banks	2,800	3,290
Equity securities	1,127	1,118
Available for sale securities	140,208	141,953
Restricted investment in FHLB stock	2,535	2,441
Deposits: Non-interest bearing	128,670	126,057
Deposits: Interest bearing	395,186	395,665
Long-term debt	25,000	15,000
Other interest bearing liabilities	1,572	1,596
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	15,002	15,617
Interest bearing deposits with banks	5,539	110
Federal funds sold	3,736	729
Interest bearing time deposits with banks	2,800	3,290
Available for sale securities	141,335	141,953
Restricted investment in FHLB stock	2,535	2,441
Loans, net of allowance for loan losses	411,985	414,597
Mortgage servicing rights	193	200
Accrued interest receivable	1,709	1,681
Deposits: Non-interest bearing	128,670	126,057
Deposits: Interest bearing	395,186	395,665
Securities sold under agreements to repurchase	2,683	2,911
Short-term borrowings		11,600
Long-term debt	25,000	15,000
Other interest bearing liabilities	1,572	1,596
Accrued interest payable	415	289
Commitments to extend credit
Letters of credit
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	15,002	15,617
Interest bearing deposits with banks	5,539	110
Federal funds sold	3,736	729
Interest bearing time deposits with banks	2,792	3,290
Available for sale securities	141,335	141,953
Restricted investment in FHLB stock	2,535	2,441
Loans, net of allowance for loan losses	412,579	415,195
Mortgage servicing rights	193	200
Accrued interest receivable	1,709	1,681
Deposits: Non-interest bearing	128,670	126,057
Deposits: Interest bearing	394,889	395,226
Securities sold under agreements to repurchase	2,683	2,911
Short-term borrowings		11,600
Long-term debt	25,058	14,958
Other interest bearing liabilities	1,573	1,597
Accrued interest payable	415	289
Commitments to extend credit
Letters of credit

XML

Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	$ 2,800	$ 3,290
Deposits: Interest bearing	395,186	395,665
Long-term debt	25,000	15,000
Other interest bearing liabilities	1,572	1,596
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	2,800	3,290
Loans, net of allowance for loan losses	411,985	414,597
Deposits: Interest bearing	395,186	395,665
Long-term debt	25,000	15,000
Other interest bearing liabilities	1,572	1,596
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	2,792	3,290
Loans, net of allowance for loan losses	412,579	415,195
Deposits: Interest bearing	394,889	395,226
Long-term debt	25,058	14,958
Other interest bearing liabilities	$ 1,573	1,597
Fair Value [Member] | (Level 2) Significant Other Observable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks		3,290
Deposits: Interest bearing		395,226
Long-term debt		14,958
Other interest bearing liabilities		1,597
Fair Value [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, net of allowance for loan losses		$ 415,195

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Defined Benefit Retirement Plan (Narrative) (Details) - USD ($)	3 Months Ended			12 Months Ended
	Mar. 31, 2019	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2007
Defined Benefit Plan Disclosure [Line Items]
Percentage of increase (decrease) in pension liability	9.00%		12.00%
Decrease in pension plan liability	$ 210,000		$ 377,000
Contribution to the defined benefit pension plan		$ 1,350,000
JVB Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of vested benefit				100.00%

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Defined Benefit Retirement Plan (Components of Net Periodic Pension Cost) (Details) - JVB Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 125	$ 132
Expected return on plan assets	(124)	(192)
Recognized net actuarial loss	28	41
Net periodic benefit cost	29	(19)
Amortization of net actuarial loss recognized in other comprehensive income	(28)	(41)
Total recognized in net periodic benefit cost and other comprehensive loss (income)	$ 1	$ (60)

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Commitments and Contingent Liabilities and Guarantees (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Letter of Credit expiration period	1 year
Commitments to Grant Loans [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	$ 88,350,000	$ 87,223,000
Outstanding Letters of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	2,356,000	2,749,000
Commercial Letter Of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	$ 9,867,000	$ 8,925,000

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Revenue Recognition (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Asset Management Services [Member]
Non-interest income	$ 90,000
Estate management services fees	90,000
Estate Management Services [Member]
Non-interest income	9,000	$ 12,000
Estate management services fees	$ 9,000	$ 12,000
Percentage of total estate fee recognized when all estate assets are collected and debts paid	25.00%
Percentage of total estate fee recognized when the inheritance tax return is filed	50.00%
Percentage of total estate fee recognized when the first and final account is confirmed	25.00%

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Leases - ROU Assets and Lease Liabilities (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Consolidated statements of condition classification of the Company's ROU assets and lease liabilities
Practical expedients package	true
Practical expedients, use of hindsight	true
Operating lease ROU assets	$ 534,000
Operating lease ROU assets	us-gaap:OtherAssets
Operating lease liabilities	$ 535,000
Operating lease liabilities	us-gaap:OtherLiabilities
Options to renew	true
Weighted-average remaining operating lease term	7 years 10 months 24 days
Weighted-average discount rate	5.45%
Total operating lease cost	$ 30,000

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Leases - Future Minimum Payments for Operating Leases (Details)	Mar. 31, 2019 USD ($)
Future minimum payments for operating leases
March 31, 2020	$ 120,000
March 31, 2021	116,000
March 31, 2022	97,000
March 31, 2023	47,000
March 31, 2024	47,000
Thereafter	233,000
Total Future Minimum Lease Payments	660,000
Amounts Representing Interest	(125,000)
Operating Lease, Liability	$ 535,000

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Subsequent Events (Narrative) (Details) - Subsequent Event [Member]	Apr. 17, 2019 $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Apr. 17, 2019
Dividends payable per share	$ 0.22
Dividends payable, date of record	May 15, 2019
Dividends payable, date to be paid	May 31, 2019