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 June 30, 2018

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

x Yes                    ¨ No

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

Large accelerated filer  ¨	Accelerated filer  x
Non-accelerated filer  ¨  (Do not check if a smaller reporting company)	Smaller reporting company   ¨
Emerging growth company   ¨

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

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

¨ Yes                    x No

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 August 9, 2018
Common Stock ($1.00 par value)	5,093,536 shares

TABLE OF CONTENTS

	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of June 30, 2018 (Unaudited) and December 31, 2017	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51
Item 4.	Controls and Procedures	53
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
	Signatures	56

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)	June 30, 2018			December 31, 2017
ASSETS
Cash and due from banks	$	15,956		$	9,839
Interest bearing deposits with banks		291			58
Federal funds sold		915			-
Cash and cash equivalents		17,162			9,897
Interest bearing time deposits with banks		3,780			350
Equity securities		1,166			-
Securities available for sale		143,237			153,824
Restricted investment in bank stock		2,498			3,104
Investment in unconsolidated subsidiary		-			4,812
Total loans		421,711			383,904
Less: Allowance for loan losses		(3,058	)		(2,939	)
Total loans, net of allowance for loan losses		418,653			380,965
Premises and equipment, net		8,675			8,887
Other real estate owned		355			355
Bank owned life insurance and annuities		15,761			14,972
Investment in low income housing partnerships		4,945			5,245
Core deposit and other intangible assets		453			195
Goodwill		9,139			5,448
Mortgage servicing rights		215			225
Accrued interest receivable and other assets		5,473			3,666
Total assets	$	631,512		$	591,945
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	122,101		$	115,911
Interest bearing		410,338			361,757
Total deposits		532,439			477,668
Securities sold under agreements to repurchase		3,843			9,769
Short-term borrowings		7,500			12,000
Long-term debt		15,000			25,000
Other interest bearing liabilities		1,587			1,593
Accrued interest payable and other liabilities		6,483			6,528
Total liabilities		566,852			532,558
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 -
5,134,249 shares at June 30, 2018;
4,811,611 shares at December 31, 2017
Outstanding -
5,093,536 shares at June 30, 2018;
4,767,656 shares at December 31, 2017		5,134			4,811
Surplus		24,779			18,565
Retained earnings		41,758			40,876
Accumulated other comprehensive loss		(6,238	)		(4,034	)
Cost of common stock in Treasury:
40,713 shares at June 30, 2018;
43,955 shares at December 31, 2017		(773	)		(831	)
Total stockholders' equity		64,660			59,387
Total liabilities and stockholders' equity	$	631,512		$	591,945

See Notes to Consolidated Financial Statements

3

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Income (Unaudited)

	Three Months Ended						Six Months Ended
(Dollars in thousands, except share data)	June 30,						June 30,
	2018			2017			2018			2017
Interest income:
Loans, including fees	$	5,041		$	4,514		$	9,592		$	8,884
Taxable securities		765			716			1,540			1,399
Tax-exempt securities		99			114			202			228
Other interest income		39			4			49			11
Total interest income		5,944			5,348			11,383			10,522
Interest expense:
Deposits		745			525			1,339			994
Securities sold under agreements to repurchase		17			6			32			9
Short-term borrowings		59			70			143			132
Long-term debt		60			94			153			179
Other interest bearing liabilities		9			7			17			15
Total interest expense		890			702			1,684			1,329
Net interest income		5,054			4,646			9,699			9,193
Provision for loan losses		41			135			199			240
Net interest income after provision for loan losses		5,013			4,511			9,500			8,953
Non-interest income:
Customer service fees		437			441			849			874
Debit card fee income		324			280			616			550
Earnings on bank-owned life insurance and annuities		86			92			167			176
Trust fees		123			143			225			227
Commissions from sales of non-deposit products		70			50			120			97
Income/gain from unconsolidated subsidiary		227			58			296			105
Fees derived from loan activity		77			59			172			104
Mortgage banking income		17			54			36			87
(Loss) gain on sales and calls of securities		-			4			(15	)		508
Change in value of equity securities		52			-			46			-
Other non-interest income		83			75			158			144
Total non-interest income		1,496			1,256			2,670			2,872
Non-interest expense:
Employee compensation expense		1,933			1,758			3,725			3,497
Employee benefits		523			581			1,087			1,235
Occupancy		294			292			612			587
Equipment		197			174			404			329
Data processing expense		488			461			904			878
Director compensation		53			63			107			123
Professional fees		177			141			354			283
Taxes, other than income		139			108			252			242
FDIC Insurance premiums		79			76			149			167
Gain on sales of other real estate owned		(10	)		(58	)		(10	)		(45	)
Amortization of intangible assets		20			18			31			35
Amortization of investment in low-income housing partnerships		200			119			400			239
Merger and acquisition expense		376			-			440			-
Other non-interest expense		437			496			856			928
Total non-interest expense		4,906			4,229			9,311			8,498
Income before income taxes		1,603			1,538			2,859			3,327
Income tax provision		34			244			(37	)		574
Net income	$	1,569		$	1,294		$	2,896		$	2,753
Earnings per share
Basic	$	0.31		$	0.27		$	0.59		$	0.58
Diluted	$	0.31		$	0.27		$	0.59		$	0.58
Cash dividends declared per share	$	0.22		$	0.22		$	0.44		$	0.44
Weighted average basic shares outstanding		4,987,137			4,768,681			4,879,361			4,762,632
Weighted average diluted shares outstanding		5,008,218			4,779,401			4,898,248			4,770,399

See Notes to Consolidated Financial Statements

4

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended June 30,
	2018									2017
	Before						Net of			Before						Net of
(Dollars in thousands)	Tax			Tax			Tax			Tax			Tax			Tax
	Amount			Effect			Amount			Amount			Effect			Amount
Net income	$	1,603		$	(34	)	$	1,569		$	1,538		$	(244	)	$	1,294
Other comprehensive (loss) income:
Unrealized (losses) gains on available for sale securities:
Unrealized holding (losses) gains arising during the period		(528	)		111			(417	)		644			(219	)		425
Unrealized holding gains from unconsolidated subsidiary		16			-			16			6			-			6
Less reclassification adjustment for (gains) losses included in net income for sales of debt securities (1) (3)		-			-			-			(4	)		2			(2	)
Amortization of pension net actuarial cost (2) (3)		40			(8	)		32			57			(19	)		38
Other comprehensive (loss) income		(472	)		103			(369	)		703			(236	)		467
Total comprehensive income	$	1,131		$	69		$	1,200		$	2,241		$	(480	)	$	1,761

	Six Months Ended June 30,
	2018									2017
	Before						Net of			Before						Net of
(Dollars in thousands)	Tax			Tax			Tax			Tax			Tax			Tax
	Amount			Effect			Amount			Amount			Effect			Amount
Net income	$	2,859		$	37		$	2,896		$	3,327		$	(574	)	$	2,753
Other comprehensive (loss) income:
Unrealized (losses) gains on available for sale securities:
Unrealized holding (losses) gains arising during the period		(2,695	)		566			(2,129	)		902			(307	)		595
Unrealized holding gains from unconsolidated subsidiary		5			-			5			15			-			15
Less reclassification adjustment for losses (gains) included in net income for sales of debt securities (1) (3)		15			(3	)		12			(508	)		173			(335	)
Amortization of pension net actuarial cost (2) (3)		81			(17	)		64			113			(38	)		75
Other comprehensive (loss) income		(2,594	)		546			(2,048	)		522			(172	)		350
Total comprehensive income	$	265		$	583		$	848		$	3,849		$	(746	)	$	3,103

(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)

For the Six Months Ended June 30, 2018

	Number											Accumulated
	of											Other						Total
(Dollars in thousands, except share data)	Shares			Common					Retained			Comprehensive			Treasury			Stockholders'
	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										2,896									2,896
Other comprehensive loss													(2,048	)					(2,048	)
Reclassification for ASU 2016-01										156			(156	)					-
Cash dividends at $0.44 per share										(2,170	)								(2,170	)
Stock-based compensation							39												39
Purchase of treasury stock		(1,928	)													(40	)		(40	)
Treasury stock issued for stock plans		5,170					(7	)								98			91
Common stock issued for stock plans		7,354			8		34												42
Common stock issued for acquisition		315,284			315		6,148												6,463
Balance, June 30, 2018		5,093,536		$	5,134	$	24,779		$	41,758		$	(6,238	)	$	(773	)	$	64,660

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders' Equity (Unaudited)

For the Six Months Ended June 30, 2017

	Number											Accumulated
	of											Other						Total
(Dollars in thousands, except share data)	Shares			Common					Retained			Comprehensive			Treasury			Stockholders'
	Outstanding			Stock		Surplus			Earnings			Loss			Stock			Equity
Balance, January 1, 2017		4,755,630		$	4,805	$	18,476		$	39,945		$	(3,209	)	$	(927	)	$	59,090
Net income										2,753									2,753
Other comprehensive loss													350						350
Cash dividends at $0.44 per share										(2,097	)								(2,097	)
Stock-based compensation							38												38
Purchase of treasury stock		(4,289	)													(86	)		(86	)
Treasury stock issued for stock plans		9,704					(10	)								182			172
Common stock issued for stock plans		6,611			6		28												34
Balance, June 30, 2017		4,767,656		$	4,811	$	18,532		$	40,601		$	(2,859	)	$	(831	)	$	60,254

See Notes to Consolidated Financial Statements

6

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)	Six Months Ended June 30,
	2018			2017
Operating activities:
Net income	$	2,896		$	2,753
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		199			240
Depreciation		403			321
Net amortization of securities premiums		283			318
Net amortization of loan origination fees		35			39
Deferred net loan origination costs		(197	)		(225	)
Amortization of core deposit intangible asset		31			35
Amortization of investment in low income housing partnership		400			239
Net amortization of purchase fair value adjustments		(28	)		(1	)
Net realized loss (gain) on sales and calls of available for sale securities		15			(508	)
Change in value of equity securities		(46	)		-
Net gain on sales and valuation of other real estate owned		(10	)		(45	)
Earnings on bank owned life insurance and annuities		(167	)		(176	)
Deferred income tax benefit		(108	)		(75	)
Equity loss (gain) in unconsolidated subsidiary, net of dividends of $75 and $36, respectively		194			(69	)
Equity gain from acquisition of unconsolidated subsidiary		(415	)		-
Stock-based compensation expense		39			38
Mortgage loans originated for sale		-			(1,579	)
Proceeds from mortgage loans sold to others		46			1,544
Mortgage banking income		(36	)		(87	)
(Increase) decrease in accrued interest receivable and other assets		(764	)		210
Decrease in accrued interest payable and other liabilities		(208	)		(672	)
Net cash provided by operating activities		2,562			2,300
Investing activities:
Purchases of:
Securities available for sale		(4,119	)		(21,620	)
Premises and equipment		(66	)		(271	)
Bank owned life insurance and annuities		(18	)		(13	)
Proceeds from:
Sales of securities available for sale		4,285			11,634
Maturities of and principal repayments on securities available for sale		6,324			7,495
Redemption of FHLB stock		730			260
Sale of other real estate owned		77			554
Sale of other assets		13			26
Net cash received from acquisition		7,561			-
Investment in low income housing partnerships		(100	)		(1,591	)
Net decrease in interest bearing time deposits with banks		245			-
Net increase in loans		(6,447	)		(14,355	)
Net cash provided by (used in) investing activities		8,485			(17,881	)
Financing activities:
Net increase in deposits		18,721			20,045
Net (decrease) increase in short-term borrowings and securities sold under agreements to repurchase		(10,426	)		1,543
Repayment of long-term debt		(10,000	)		-
Cash dividends		(2,170	)		(2,097	)
Purchase of treasury stock		(40	)		(86	)
Treasury stock issued for employee stock plans		91			-
Common stock issued for employee stock plans		42			206
Net cash (used in) provided by financing activities		(3,782	)		19,611
Net increase in cash and cash equivalents		7,265			4,030
Cash and cash equivalents at beginning of year		9,897			9,559
Cash and cash equivalents at end of period	$	17,162		$	13,589

7

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)	Six Months Ended June 30,
	2018		2017
Supplemental information:
Interest paid	$	1,686	$	1,365
Income taxes paid		14		360
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned	$	86	$	529
Transfer of loans to repossessed vehicles		12		-
Supplemental schedule of assets and liabilities in connection with merger:
Assets acquired:
Investment in time deposits with banks	$	3,675
Loans		31,331
Premises and equipment		125
Accrued interest receivable		123
Core deposit and other intangible assets		289
Bank owned life insurance		632
FHLB stock		124
Other assets		267
	$	36,566
Liabilities assumed:
Deposits	$	36,052
Accrued interest payable and other liabilities		266
	$	36,318

See Notes to Consolidated Financial Statements

8

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 completed the acquisition of Liverpool Community Bank (“Liverpool” or “LCB”). 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 for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete consolidated financial statements. Certain items in prior financial statements have been reclassified to conform to the current presentation. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018. 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, 2017.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2018 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

Adoption of New Accounting Standards

ASU 2014-09, Revenue from Contracts with Customers (606)

Issued: May 2014

Summary: The amendments in this Update establish a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance. The revenue standard’s core principle requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU 2015-14 deferred the effective date of the new revenue recognition standard by one year. As such, it was effective for public entities in fiscal years beginning after December 15, 2017.

The Company adopted the ASU 2014-09 on January 1, 2018 and elected the modified retrospective transition method. Because the amended guidance does not apply to revenue associated with financial instruments accounted for under other U.S. GAAP, the Company assessed the effect the guidance had on the recognition processes of certain recurring revenue streams related to non-interest income, in addition to when it is appropriate to recognize a gain/loss on the transfer of nonfinancial assets, such as other real estate owned. The Company did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance. Additional disclosures related to revenue recognition appear in Note 13.

9

ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

Issued: February 2018

Summary: The Update allows entities to reclassify from accumulated other comprehensive income (“AOCI”) to retained earnings the 'stranded' tax effects of accounting for income tax rate changes on items accounted for in AOCI that were impacted by tax reform enacted in December 2017. Because the impact of tax rate changes is recorded in income, items accounted for in AOCI could be left with a stranded tax effect appearing as though those items do not reflect the appropriate tax rate. The FASB's changes were intended to improve the usefulness of information reported to financial statement users.

Effective Date: The changes are effective for years beginning after December 31, 2018, with early adoption permitted. The Company elected to adopt the changes in the first quarter of 2018, as of December 31, 2017. The amount transferred from AOCI to retained earnings totaled $588,000 and represented the impact of the Company’s corporate tax rate change from 34% to 21% at the date of enactment of the tax reform for the unrealized gains and losses on securities and the defined benefit plan accounted for in AOCI.

ASU 2016-01, Measurement of Financial Instruments

Issued: January 2016

Summary: The amendments in this Update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this Update also require an entity to present separately in AOCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the Update emphasizes the existing requirement to use exit prices to measure fair value for disclosure purposes and clarifies that entities should not make use of a practicability exception in determining the fair value of loans. Accordingly, we refined the calculations used to determine the disclosed fair value of our loans as part of adopting this standard. The redefined calculation did not have a significant impact on our fair value disclosures.

Effective Date: For public entities, the amendments in the Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company currently holds a small portfolio of equity investments for which the fair value fluctuates with market activity. The Company adopted ASU 2016-01 on January 1, 2018. As of this date, the Company had $197,000 in unrealized gains on equity securities (see Note 6). The adoption of this Update resulted in a reclassification of $156,000 from other comprehensive loss to retained earnings. The Company recorded $52,000 for the three months ended June 30, 2018 and $46,000 for the six months ended June 30, 2018 on the consolidated statements of income for the change in fair value of equity securities.

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

Issued: February 2018

Summary: The FASB issued this Update to clarify certain aspects of the guidance on recognizing and measuring financial assets and liabilities in ASU 2016-01:

· Clarification regarding the ability to discontinue application of the measurement alternative for equity securities without a readily determinable fair value;

· Clarification of the measurement date for fair value adjustments to the carrying amount of equity securities without a readily determinable fair value for which the measurement alternative is elected;

· Clarification of the unit of account for fair value adjustments to forward contracts and purchased options on equity securities without a readily determinable fair value for which the measurement alternative is expected to be elected;

· Presentation requirements for certain hybrid financial liabilities for which the fair value option is elected;

· Measurement of financial liabilities denominated in a foreign currency for which the fair value option is elected; and

· Transition guidance for equity securities without a readily determinable fair value.

10

The amendments in ASU 2018-03 are effective for public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years beginning after June 15, 2018. For all other entities, the effective date is the same as the effective date for ASU 2016-01. All entities may early adopt the amendments, including adoption in an interim period, provided they have already adopted ASU 2016-01. The Company adopted this Update in conjunction with the adoption of ASU 2016-01 on January 1, 2018. The adoption had no material impact to the Company’s consolidated financial position or results of operations.

ASU 2017-09, Scope of Modification Accounting

Issued: May 2017

Summary: ASU 2017-09 clarifies Topic 718 such that an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award unless all of the following criteria are met:

1. The fair value of the modified award is the same as the fair value of the original award immediately before the modification. The standard indicates that if the modification does not affect any of the inputs to the valuation technique used to value the award, the entity is not required to estimate the value immediately before and after the modification.

2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the modification.

3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the modification.

Effective Date: The amendments were effective for all entities for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted ASU 2017-09 on January 1, 2018 and it had no material impact on the Company’s consolidated financial position or results of operations.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities

Issued: March 2017

Summary: ASU 2017-08 shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, rather than amortizing over the full contractual term. The ASU does not change the accounting for securities held at a discount.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company chose to early adopt this standard, and the financial statements as of, and for the year ended, December 31, 2017 reflected the impact of premium amortization on callable debt securities to the earliest call date. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Issued: March 2017

Summary: ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization.

Effective Date: The amendments were effective for public business entities for fiscal years beginning after December 15, 2017. The Company adopted this Update on January 1, 2018, and it had no impact on the Company’s consolidated financial position and results of operations because the Company’s defined benefit plan is frozen; therefore, there is no service cost component to consider. The cost for other components related to the defined benefit plan are recorded in employee benefits expense on the consolidated statements of income.

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ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments

Issued: August 2016

Summary: ASU 2016-15 clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are intended to reduce diversity in practice.

Effective Date: The amendments were effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this Update on January 1, 2018 and it did not have a material impact on the Company’s consolidated financial position or results of operations.

Newly Issued, Not Yet Effective Standards

ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities

Issued: August 2017

Summary: ASU 2017-12 improves Topic 815 by simplifying and expanding the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies its application through targeted improvements in key practice areas. This includes expanding the list of items eligible to be hedged and amending the methods used to measure the effectiveness of hedging relationships. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. These changes are intended to allow preparers more flexibility and to enhance the transparency of how hedging results are presented and disclosed. Further, the new standard provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period.

Effective Date: The amendments are effective for public business entities, for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the amendments for existing hedging relationships on the date of adoption. This Update will have no impact on the Company’s consolidated financial position and 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.

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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 (AFS) debt securities. For an AFS 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 currently 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 partnered with a software provider specializing in ALLL analysis and is assessing the sufficiency of data currently available through its core database.

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.

Effective Date: The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has determined that the provisions of ASU 2016-02 will result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities; however, the Company does not expect this new standard to have a material impact on the Company’s financial position, results of operations or cash flows because the Company owns most of its facilities and this ASU will apply primarily to its four small operating leases. The Company is currently evaluating the projected present value at the adoption date.

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.

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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. 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.

Included in the purchase price was goodwill and a core deposit intangible of $3,691,000 and $289,000, respectively. The core deposit intangible will be amortized over a ten-year period using a sum of the year’s digits basis. The goodwill will not be amortized but will be measured annually for impairment, or more frequently if circumstances require.

Allocation of the purchase price was as follows:

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

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

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

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As of April 30, 2018, the merger date, goodwill was recorded at $3,691,000. 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 that reflects circumstances at the merger date.

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.

The information about the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018 is as follows:

(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 and six months ended June 30, 2018 and 2017 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 June 30, 2018 were adjusted to exclude $227,000 from the income/gain from unconsolidated subsidiary, $376,000 in merger-related expenses, and the resulting $31,000 tax benefit. Supplemental pro forma earnings for the six months ended June 30, 2018 were adjusted to exclude $296,000 from the income/gain from unconsolidated subsidiary, $440,000 in merger-related expenses, and the resulting tax benefit of $30,000. The results for the comparable 2017 periods were adjusted to include the aforementioned merger-related expenses; however, those results exclude the income from unconsolidated subsidiary previously recorded in the three and six months ended June 30, 2017 of $58,000 and $105,000, respectively. The resulting tax benefits included in the three and six months ended June 30, 2017 was $91,000 and $114,000, respectively. A 21% tax rate was assumed in both the 2018 and 2017 periods. 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.

	(Unaudited)				(Unaudited)
(Dollars in thousands; except share data)	Three Months ended June 30,				Six Months ended June 30,
	2018		2017		2018		2017
Net interest income after loan loss provision	$	5,487	$	4,986	$	10,449	$	9,903
Noninterest income		1,312		1,240		2,460		2,852
Noninterest expense		4,649		4,725		9,111		9,179
Net income available to common shareholders		2,001		1,265		3,637		2,950
Net income per common share		0.39		0.25		0.71		0.58

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4. Accumulated other Comprehensive loss

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

(Dollars in thousands)
	June 30, 2018			December 31, 2017
Unrealized losses on available for sale securities	$	(3,952	)	$	(1,683	)
Unrecognized expense for defined benefit pension		(2,286	)		(2,351	)
Accumulated other comprehensive loss	$	(6,238	)	$	(4,034	)

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 June 30,
	2018		2017
Net income	$	1,569	$	1,294
Weighted-average common shares outstanding		4,987		4,769
Basic earnings per share	$	0.31	$	0.27
Weighted-average common shares outstanding		4,987		4,769
Common stock equivalents due to effect of stock options		21		10
Total weighted-average common shares and equivalents		5,008		4,779
Diluted earnings per share	$	0.31	$	0.27

	Six Months Ended June 30,
	2018		2017
Net income	$	2,896	$	2,753
Weighted-average common shares outstanding		4,879		4,763
Basic earnings per share	$	0.59	$	0.58
Weighted-average common shares outstanding		4,879		4,763
Common stock equivalents due to effect of stock options		19		7
Total weighted-average common shares and equivalents		4,898		4,770
Diluted earnings per share	$	0.59	$	0.58

6. Securities

On January 1, 2018, the Company adopted ASU 2016-01, Measurement of Financial Assets Instruments. Upon adoption, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in net income. For periods prior to January 1, 2018, equity securities were classified as available for sale and stated at fair value with unrealized gains and losses reported as a separate component of AOCI, net of tax. At December 31, 2017, the fair value of equity securities classified as available for sale was $1,119,000. The adoption of ASU 2016-01 resulted in a reclassification of $156,000 in net unrealized gains from AOCI to retained earnings. As of June 30, 2018, the Company had $1,166,000 in equity investments recorded at fair value.

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The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored agencies (approximately 24% of the investment portfolio), mortgage-backed securities issued by Government-sponsored agencies and backed by residential mortgages (approximately 62%) and municipal bonds (approximately 14%) as of June 30, 2018. 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 June 30, 2018 and December 31, 2017, 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.

	June 30, 2018
(Dollars in thousands)					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
	Cost		Value		Gains		Losses
Securities Available for Sale
Type and Maturity
Obligations of U.S. Government agencies and corporations
Within one year	$	6,000	$	5,984	$	-	$	(16	)
After one year but within five years		20,997		20,168		-		(829	)
After five years but within ten years		7,998		7,562		-		(436	)
		34,995		33,714		-		(1,281	)
Obligations of state and political subdivisions
Within one year		837		836		-		(1	)
After one year but within five years		14,537		14,407		14		(144	)
After five years but within ten years		5,243		5,043		6		(206	)
		20,617		20,286		20		(351	)
Mortgage-backed securities		92,633		89,237		-		(3,396	)
Total securities available for sale	$	148,245	$	143,237	$	20	$	(5,028	)

	December 31, 2017
(Dollars in thousands)					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
	Cost		Value		Gains		Losses
Securities Available for Sale
Type and Maturity
Obligations of U.S. Government agencies and corporations
Within one year	$	6,000	$	5,969	$	-	$	(31	)
After one year but within five years		15,000		14,689		-		(311	)
After five years but within ten years		13,998		13,556		-		(442	)
		34,998		34,214		-		(784	)
Obligations of state and political subdivisions
Within one year		2,521		2,516		-		(5	)
After one year but within five years		13,959		13,955		50		(54	)
After five years but within ten years		8,611		8,510		18		(119	)
		25,091		24,981		68		(178	)
Mortgage-backed securities		94,945		93,510		38		(1,473	)
Equity securities		922		1,119		197		-
Total	$	155,956	$	153,824	$	303	$	(2,435	)

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 $56,280,000 and $47,825,000 at June 30, 2018 and December 31, 2017, respectively.

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

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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					Six Months Ended
(Dollars in thousands)	June 30,					June 30,
	2018		2017			2018			2017
Gross proceeds from sales and calls of securities	$	-	$	5,056		$	4,285		$	11,634
Securities available for sale:
Gross realized gains from sold and called securities	$	-	$	3		$	-		$	509
Gross realized losses from sold and called securities		-		(2	)		(15	)		(4	)
Gross gains from business combinations		-		3			-			3
Net (losses) gains	$	-	$	4		$	(15	)	$	508

As of January 1, 2018, upon the adoption of ASU 2016-01, all of the Company’ equity securities are within the scope of ASC Topic 321, Investments – Equity Securities. ASC 321 requires all equity investments within its scope to be measured at fair value with changes in fair value recognized in net income. The Company recorded $52,000 for the three months ended June 30, 2018 and $46,000 for the six months ended June 30, 2018 on the consolidated statements of income for the change in fair value of equity securities.

ASC Topic 320, Investments – Debt and Equity Securities, 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 June 30, 2018 and December 31, 2017:

	Unrealized Losses at June 30, 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		5	$	10,652	$	(346	)		15	$	23,062	$	(935	)		20	$	33,714	$	(1,281	)
Obligations of state and political subdivisions		18		10,773		(142	)		6		3,759		(209	)		24		14,532		(351	)
Mortgage-backed securities		25		51,933		(1,594	)		21		37,304		(1,802	)		46		89,237		(3,396	)
Total temporarily impaired securities		48	$	73,358	$	(2,082	)		42	$	64,125	$	(2,946	)		90	$	137,483	$	(5,028	)

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	Unrealized Losses at December 31, 2017
	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		5	$	10,845	$	(157	)		15	$	23,369	$	(627	)		20	$	34,214	$	(784	)
Obligations of state and political subdivisions		23		10,491		(70	)		6		3,862		(108	)		29		14,353		(178	)
Mortgage-backed securities		23		51,050		(518	)		20		38,740		(955	)		43		89,790		(1,473	)
Total debt securities		51		72,386		(745	)		41		65,971		(1,690	)		92		138,357		(2,435	)
Equity securities		1		9		-			1		4		-			2		13		-
Total temporarily impaired securities		52	$	72,395	$	(745	)		42	$	65,975	$	(1,690	)		94	$	138,370	$	(2,435	)

At June 30, 2018, 20 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. Fifteen of these securities have been in a continuous loss position for 12 months or more.

At June 30, 2018, 24 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. Six of these securities has been in a continuous loss position for 12 months or more.

At June 30, 2018, 46 mortgage-backed securities had an unrealized loss that did not exceed 3.0% of the amortized cost of the securities portfolio. Twenty-one of these securities has 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, June 30, 2018, June 30, 2017 and December 31, 2017, respectively.

Equity securities owned by the Company consist of common stock of various financial services providers. Management identified no other-than-temporary impairment as of, or for the periods ended December 31, 2017 and June 30, 2017.

7. Loans and Related Allowance for Credit Losses

Loans that the Company 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. 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.

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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.

20

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.

21

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 June 30, 2018 was adequate.

22

There are two components of the allowance: a specific component for loans that are deemed to be impaired and a general component for 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, aging accounts receivable, 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 such 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 contingencies relates to other loans that have been segmented into risk rated categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated quarterly or when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. As of June 30, 2018, Management expanded the Company’s internal credit quality risk ratings to include a pass/watch rating for loans whose performance may exhibit characteristics or conditions that could result in a downgrade to special mention in the future. The pass/watch rated loans are now reported within the pass rating classification. Prior to June 30, 2018, all watch and special mention rated loans were classified as special mention. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified as substandard have one or more well-defined weaknesses that jeopardize the liquidation of the debt. Substandard loans include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Specific reserves may be established for larger, individual classified loans as a result of this evaluation, as discussed above. Remaining loans are categorized into large groups of smaller balance homogeneous loans and are collectively evaluated for impairment. This computation is generally based on historical loss experience adjusted for qualitative factors. During 2017, the historical loss experience look-back period was changed from ten years to five years in conjunction with an increase in the number of homogeneous loan groups. Increasing the number of portfolio segments allows for a more granular approach to the analysis, and historical loss experience is more specific to the selected loan types. Management believes that evaluating a look-back period longer than five years is no longer appropriate since more recent information is generally considered to be the most relevant. As indicated above, the historical loss experience is averaged over a five-year look-back period for each of the defined portfolio segments. The qualitative risk factors are reviewed for relevancy each quarter and include:

23

· National, regional and local economic and business conditions, as well as the condition of various market segments, including the underlying collateral for collateral dependent loans;

· Nature and volume of the portfolio and terms of loans;

· Experience, ability and depth of lending and credit management and staff;

· Volume and severity of past due, classified and nonaccrual loans, as well as other loan modifications;

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

· Effect of external factors, including competition, legal and regulatory requirements; and

· Risk from change in the historical look-back period.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

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 June 30, 2018 and December 31, 2017. As of June 30, 2018, due to the expansion of the Company’s internal credit quality risk ratings, the amount reclassified from the special mention rating to the pass/watch rating, which is included within the pass rating classification below, was $32,603,000. Previously, both special mention and watch rated loans were reported under the special mention rating classification.

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of June 30, 2018
Commercial, financial and agricultural	$	56,005	$	123	$	2,360	$	-	$	58,488
Real estate - commercial		128,496		1,410		6,727		898		137,531
Real estate - construction		29,518		-		2,574		-		32,092
Real estate - mortgage		165,762		-		3,445		408		169,615
Obligations of states and political subdivisions		13,264		-		-		-		13,264
Personal		10,700		-		21		-		10,721
Total	$	403,745	$	1,533	$	15,127	$	1,306	$	421,711

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(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2017
Commercial, financial and agricultural	$	34,826	$	8,692	$	2,280	$	4	$	45,802
Real estate - commercial		114,299		17,928		7,189		953		140,369
Real estate - construction		22,470		3,297		2,636		-		28,403
Real estate - mortgage		139,861		3,551		2,859		617		146,888
Obligations of states and political subdivisions		12,088		956		-		-		13,044
Personal		9,360		32		6		-		9,398
Total	$	332,904	$	34,456	$	14,970	$	1,574	$	383,904

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. Charge off 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 June 30, 2018 and December 31, 2017.

	As of June 30, 2018						As of December 31, 2017
			Unpaid						Unpaid
(Dollars in thousands)	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-	$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913		1,304		-		5,031		5,957		-
Acquired with credit deterioration		532		594		-		191		247		-
Real estate - mortgage		1,969		3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130		1,188		-		337		384		-
Personal		17		17		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913		1,304		-		5,031		5,957		-
Acquired with credit deterioration		532		594		-		191		247		-
Real estate - mortgage		1,969		3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130		1,188		-		337		384		-
Personal		17		17		-		-		-		-
	$	4,561	$	6,684	$	-	$	8,259	$	10,803	$	-

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Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2018 and 2017 are summarized in the tables below.

	Three Months Ended June 30, 2018						Three Months Ended June 30, 2017
	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	$	1	$	-	$	-	$	386	$	6	$	-
Real estate - commercial		906		-		-		4,820		82		-
Acquired with credit deterioration		351		-		-		212		-		-
Real estate - construction		-		-		-		1,228		-		-
Real estate - mortgage		2,034		5		1		2,957		6		6
Acquired with credit deterioration		730		-		-		359		-		-
Personal		9		-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	18	$	-	$	-
Real estate - commercial		-		-		-		919		-		-
Real estate - mortgage		-		-		-		338		-		-
Total:
Commercial, financial and agricultural	$	1	$	-	$	-	$	404	$	6	$	-
Real estate - commercial		906		-		-		5,739		82		-
Acquired with credit deterioration		351		-		-		212		-		-
Real estate - construction		-		-		-		1,228		-		-
Real estate - mortgage		2,034		5		1		3,295		6		6
Acquired with credit deterioration		730		-		-		359		-		-
Personal		9		-		-		-		-		-
	$	4,031	$	5	$	1	$	11,237	$	94	$	6

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	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	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	$	234	$	-	$	-	$	391	$	13	$	-
Real estate - commercial		2,972		-		-		5,165		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,207		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	8	$	-	$	-
Real estate - commercial		-		-		-		460		-		-
Real estate - mortgage		-		-		-		356		-		-
Total:
Commercial, financial and agricultural	$	234	$	-	$	-	$	399	$	13	$	-
Real estate - commercial		2,972		-		-		5,625		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,563		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
	$	6,412	$	10	$	2	$	11,623	$	215	$	13

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2018 and December 31, 2017.

(Dollars in thousands)
	June 30, 2018		December 31, 2017
Nonaccrual loans:
Commercial, financial and agricultural	$	-	$	4
Real estate - commercial		913		953
Real estate - mortgage		1,568		1,917
Personal		17		-
Total	$	2,498	$	2,874

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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 June 30, 2018 and December 31, 2017.

													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
As of June 30, 2018
Commercial, financial and agricultural	$	50		-		-	$	50	$	58,438	$	58,488	$	-
Real estate - commercial:
Real estate - commercial		729		-		-		729		136,270		136,999		-
Acquired with credit deterioration		153		-		11		164		368		532		11
Real estate - construction		317		-		-		317		31,775		32,092		-
Real estate - mortgage:						-
Real estate - mortgage		1,820		225		-		2,045		166,440		168,485		-
Acquired with credit deterioration		342		-		59		401		729		1,130		59
Obligations of states and political subdivisions		-		-		-		-		13,264		13,264		-
Personal		25		5		-		30		10,691		10,721		-
Total	$	3,436	$	230	$	70	$	3,736	$	417,975	$	421,711	$	70

													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
As of December 31, 2017
Commercial, financial and agricultural	$	-	$	-	$	-	$	-	$	45,802	$	45,802	$	-
Real estate - commercial:
Real estate - commercial		16		23		-		39		140,139		140,178		-
Acquired with credit deterioration		-		-		28		28		163		191		28
Real estate - construction		-		-		-		-		28,403		28,403		-
Real estate - mortgage:
Real estate - mortgage		694		80		64		838		145,713		146,551		64
Acquired with credit deterioration		-		-		123		123		214		337		123
Obligations of states and political subdivisions		-		-		-		-		13,044		13,044		-
Personal		66		6		-		72		9,326		9,398		-
Total	$	776	$	109	$	215	$	1,100	$	382,804	$	383,904	$	215

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at June 30, 2018 and December 31, 2017.

			Pre-Modification		Post-Modification
(Dollars in thousands)	Number of		Outstanding Recorded		Outstanding Recorded
	Contracts		Investment		Investment		Recorded Investment
As of June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage		8	$	522	$	550	$	450
Non-accruing troubled debt restructurings:
Real estate - mortgage		1		25		25		19
		9	$	547	$	575	$	469

28

			Pre-Modification		Post-Modification
(Dollars in thousands)	Number of		Outstanding Recorded		Outstanding Recorded
	Contracts		Investment		Investment		Recorded Investment
As of December 31, 2017
Accruing troubled debt restructurings:
Real estate - mortgage		7	$	369	$	397	$	315
Non-accruing troubled debt restructurings:
Commercial, financial, agricultural		1		19		20		4
Real estate - mortgage		1		25		25		20
		9	$	413	$	442	$	339

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 June 30, 2018, 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 or six months ended June 30, 2018 or 2017 within 12 months of restructure. On December 31, 2017, there were no specific reserves carried for the troubled debt restructurings. There was one troubled debt restructured loan for $4,000 at December 31, 2017 for which an $8,000 charge-off was recorded in 2017. 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 was one loan whose terms were modified resulting in troubled debt restructuring during the three and six months ended June 30, 2018. There were no loan terms modified resulting in troubled debt restructuring during the three months ended June 30, 2017; however, there was one troubled debt restructuring during the six months ended June 30, 2018. The following tables list the loan whose terms were modified resulting in a troubled debt restructuring during the three and six month period ended June 30, 2018.

			Pre-Modification		Post-Modification
(Dollars in thousands)	Number of		Outstanding Recorded		Outstanding Recorded
	Contracts		Investment		Investment		Recorded Investment
Three Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage		1	$	153	$	153	$	153
		1	$	153	$	153	$	153

			Pre-Modification		Post-Modification
(Dollars in thousands)	Number of		Outstanding Recorded		Outstanding Recorded
	Contracts		Investment		Investment		Recorded Investment
Six Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage		1	$	153	$	153	$	153
		1	$	153	$	153	$	153

The following table lists the loan whose terms were modified resulting in a troubled debt restructuring during the six months ended June 30, 2017.

			Pre-Modification		Post-Modification
(Dollars in thousands)	Number of		Outstanding Recorded		Outstanding Recorded
	Contracts		Investment		Investment		Recorded Investment
Six Months Ended June 30, 2017
Accruing troubled debt restructurings:
Commercial, financial, agricultural		1	$	19	$	20	$	16
		1	$	19	$	20	$	16

29

Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at June 30, 2018 and December 31, 2017 totaled $788,000 and $1,285,000, respectively. 

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, June 30, 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, April 1, 2018	$	319	$	1,059	$	340		$	1,259		$	-	$	58		$	3,035
Charge-offs		-		-		-			(17	)		-		(12	)		(29	)
Recoveries		3		-		-			5			-		3			11
Provisions		26		3		(13	)		14			-		11			41
Ending balance, June 30, 2018	$	348	$	1,062	$	327		$	1,261		$	-	$	60		$	3,058

											Obligations of
	Commercial,										states and
	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	)		-		(28	)		-		(23	)		(102	)
Recoveries		6		5			-		5			-		6			22
Provisions		69		86			39		(1	)		-		6			199
Ending balance, June 30, 2018	$	348	$	1,062		$	327	$	1,261		$	-	$	60		$	3,058
collectively evaluated for impairment	$	348	$	1,062		$	327	$	1,261		$	-	$	60		$	3,058
Loans receivable:
Ending balance	$	58,488	$	137,531		$	32,092	$	169,615		$	13,264	$	10,721		$	421,711
individually evaluated for impairment		-	$	913		$	-	$	1,969		$	-	$	17			2,899
acquired with credit deterioration		-	$	532		$	-	$	1,130		$	-	$	-			1,662
collectively evaluated for impairment	$	58,488	$	136,086		$	32,092	$	166,516		$	13,264	$	10,704		$	417,150

30

As of, and for the periods ended, June 30, 2017

											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, April 1, 2017	$	368		$	1,068	$	126	$	1,160		$	-	$	83		$	2,805
Charge-offs		(37	)		-		-		(19	)		-		(11	)		(67	)
Recoveries		-			-		-		-			-		3			3
Provisions		71			57		46		(48	)		-		9			135
Ending balance, June 30, 2017	$	402		$	1,125	$	172	$	1,093		$	-	$	84		$	2,876

												Obligations of
	Commercial,											states and
	financial and			Real estate -		Real estate -			Real estate -			political
	agricultural			commercial		construction			mortgage			subdivisions		Personal			Total
Allowance for loan losses:
Beginning balance, January 1, 2017	$	318		$	948	$	231		$	1,143		$	-	$	83		$	2,723
Charge-offs		(37	)		-		-			(83	)		-		(17	)		(137	)
Recoveries		-			-		-			44			-		6			50
Provisions		121			177		(59	)		(11	)		-		12			240
Ending balance, June 30, 2017	$	402		$	1,125	$	172		$	1,093		$	-	$	84		$	2,876
individually evaluated for impairment		8			30		-			-			-		-			38
collectively evaluated for impairment	$	394		$	1,095	$	172		$	1,093		$	-	$	84		$	2,838
Loans receivable:
Ending balance	$	49,966		$	146,124	$	23,895		$	148,132		$	14,067	$	10,045		$	392,229
individually evaluated for impairment		362			5,749		-			3,068			-		-			9,179
acquired with credit deterioration		-			208		-			351			-		-			559
collectively evaluated for impairment	$	49,604		$	140,167	$	23,895		$	144,713		$	14,067	$	10,045		$	382,491

As of December 31, 2017

												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, 2017	$	318		$	948		$	231	$	1,143		$	-	$	83		$	2,723
Charge-offs		(46	)		(70	)		-		(149	)		-		(27	)		(292	)
Recoveries		5			2			-		45			-		17			69
Provisions		(4	)		142			57		246			-		(2	)		439
Ending balance, December 31, 2017	$	273		$	1,022		$	288	$	1,285		$	-	$	71		$	2,939
individually evaluated for impairment		-			-			-		-			-		-			-
collectively evaluated for impairment	$	273		$	1,022		$	288	$	1,285		$	-	$	71		$	2,939
Loans receivable:
Ending balance	$	45,802		$	140,369		$	28,403	$	146,888		$	13,044	$	9,398		$	383,904
individually evaluated for impairment		468			5,031			-		2,232			-		-			7,731
acquired with credit deterioration		-			191			-		337			-		-			528
collectively evaluated for impairment	$	45,334		$	135,147		$	28,403	$	144,319		$	13,044	$	9,398		$	375,645

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 Liverpool Community Bank on April 30, 2018, and as a result, carries goodwill of $3,691,000 relating to the acquisition.

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Total goodwill at June 30, 2018 and December 31, 2017 was $9,139,000 and $5,448,000, respectively. Goodwill is not amortized but is measured 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 or six month periods ended June 30, 2018 or 2017.

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. Other intangible assets in the amount of $40,000 were also identified and recorded as of November 30, 2015. The other intangible assets were amortized on a straight-line basis over two years, through November 30, 2017. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three and six months ended June 30, 2018 was $11,000 and $22,000, respectively.

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 both the three and six months ended June 30, 2018 was $9,000.

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

	FNBPA		FNBPA		LCB
	Acquisition		Acquisition		Acquisition
	Core		Other		Core
(Dollars in thousands)	Deposit		Intangible		Deposit
	Intangible		Assets		Intangible
Beginning Balance at Acquisition Date	$	303	$	40	$	289
Amortization expense recorded prior to January 1, 2017		59		22		-
Amortization expense recorded in the twelve months ended December 31, 2017		49		18		-
Unamortized balance as of December 31, 2017		195		-		-
Amortization expense recorded in the six months ended June 30, 2018		22		-		9
Unamortized balance as of June 30, 2018	$	173	$	-	$	280
Scheduled remaining amortization expense for years ended:
December 31, 2018	$	22			$	26
December 31, 2019		38				49
December 31, 2020		33				44
December 31, 2021		27				39
December 31, 2022		21				33
After December 31, 2022		32				89

9. Unconsolidated Subsidiary

The Company no longer has an investment in an unconsolidated subsidiary following its acquisition 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.

32

The following table illustrates the components of the income/gain from the unconsolidated subsidiary investment recorded for the three and six months ended June 30, 2018 and 2017.

	Three Months Ended					Six Months Ended
	June 30, 2018					June 30, 2018
	2018			2017		2018			2017
Income from unconsolidated subsidiary (excluding merger-related adjustments)
Dividend income	$	12		$	12	$	36		$	36
Equity income		-			46		45			69
Total income (excluding merger-related adjustments)		12			58		81			105
Merger-related adjustments for investment in unconsolidated subsidiary
Adjustment to LCB book value at April 30, 2018		(239	)		-		(239	)		-
Special merger-related dividend		39			-		39			-
Fair value gain		415			-		415			-
Total merger-related adjustments		215			-		215			-
Total income/gain from unconsolidated subsidiary	$	227		$	58	$	296		$	105

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:

33

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.

34

The following tables summarize financial assets and financial liabilities measured at fair value as of June 30, 2018 and December 31, 2017, 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 six months ended June 30, 2018 or 2017.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	June 30,		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	$	33,714	$	-	$	33,714	$	-
Obligations of state and political subdivisions		20,286		-		20,286		-
Mortgage-backed securities		89,237		-		89,237		-
Equity securities		1,166		1,166		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,306	$	-	$	-	$	1,306
Mortgage servicing rights		215		-		-		215

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2017		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	34,214	$	-	$	34,214	$	-
Obligations of state and political subdivisions		24,981		-		24,981		-
Mortgage-backed securities		93,510		-		93,510		-
Equity securities available-for-sale		1,119		1,119		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,574	$	-	$	-	$	1,574
Other real estate owned		27		-		-		27
Mortgage servicing rights		225		-		-		225

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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)
June 30, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,306	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 16%		15	%
Mortgage servicing rights		215	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%		371	%

(Dollars in thousands)
December 31, 2017	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,574	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 13%		8	%
Other real estate owned		27	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	22%		22	%
Mortgage servicing rights		225	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%		371	%

(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.

Interest bearing time deposits with banks – The estimated fair value is determined by discounting the contractual future cash flows, using the rates currently offered for deposits of similar remaining maturities.

Loans – As of June 30, 2018, the fair values of loans were estimated on an exit price basis due to the adoption of ASU 2016-01, incorporating discounts for credit, liquidity and marketability factors. These fair values are not comparable with the fair values disclosed as of December 31, 2017, which were based on an entrance price basis. As of that date, fair values of variable rate loans that reprice frequently and which entail no significant changes in credit risk were based on carrying values. The fair values of other loans as of that date were estimated by calculating the present value of the cash flow difference between the current rate and the market rate, for the average maturity, discounted quarterly at the market rate.

36

Fixed rate time deposits – The estimated fair value is determined by discounting the contractual future cash flows, using the rates currently offered for deposits of similar remaining maturities.

Long-term debt and other interest-bearing liabilities – The fair value is estimated using discounted cash flow analysis, based on incremental borrowing rates for similar types of arrangements.

Commitments to extend credit and letters of credit – The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, considering market interest rates, the remaining terms and present credit-worthiness of the counterparties. The fair value of guarantees and letters of credit is based on fees currently charged for similar agreements.

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

	Financial Instruments
	June 30, 2018				December 31, 2017
(Dollars in thousands)	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,956	$	15,956	$	9,839	$	9,839
Interest bearing deposits with banks		291		291		58		58
Federal funds sold		915		915		-		-
Interest bearing time deposits with banks		3,780		3,755		350		350
Equity securities		1,166		1,166		-		-
Available for sale securities		143,237		143,237		153,824		153,824
Restricted investment in FHLB stock		2,498		2,498		3,104		3,104
Loans, net of allowance for loan losses		418,653		410,158		380,965		372,906
Mortgage servicing rights		215		215		225		225
Accrued interest receivable		1,675		1,675		1,582		1,582
Financial liabilities:
Non-interest bearing deposits	$	122,101	$	122,101	$	115,911	$	115,911
Interest bearing deposits		410,338		409,610		361,757		361,468
Securities sold under agreements to repurchase		3,843		3,843		9,769		9,769
Short-term borrowings		7,500		7,500		12,000		12,000
Long-term debt		15,000		14,896		25,000		24,885
Other interest bearing liabilities		1,587		1,589		1,593		1,595
Accrued interest payable		298		298		300		300
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 June 30, 2018 and December 31, 2017. This table excludes 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
June 30, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,780	$	3,755	$	-	$	3,755	$	-
Loans, net of allowance for loan losses		418,653		410,158		-		-		410,158
Financial instruments - Liabilities
Interest bearing deposits	$	410,338	$	409,610	$	-	$	409,610	$	-
Long-term debt		15,000		14,896		-		14,896		-
Other interest bearing liabilities		1,587		1,589		-		1,589		-

37

					(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, 2017
Financial instruments - Assets
Interest bearing time deposits with banks	$	350	$	350	$	-	$	350	$	-
Loans, net of allowance for loan losses		380,965		372,906		-		-		372,906
Financial instruments - Liabilities
Interest bearing deposits	$	361,757	$	361,468	$	-	$	361,468	$	-
Long-term debt		25,000		24,885		-		24,885		-
Other interest bearing liabilities		1,593		1,595		-		1,595		-

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.

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 made no contributions during the six months ended June 30, 2018 and is not required to make a contribution in the remainder of 2018; however, it is considering doing so.

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 third 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 the second step of this strategy on July 1, 2018. Refer to Note 14 for additional information.

Pension expense included the following components for the three and six month periods ended June 30, 2018 and 2017:

	Three Months Ended						Six Months Ended
(Dollars in thousands)	June 30,						June 30,
	2018			2017			2018			2017
Components of net periodic pension (benefit) cost:
Interest cost	$	132		$	161		$	264		$	322
Expected return on plan assets		(192	)		(202	)		(384	)		(403	)
Recognized net actuarial loss		40			57			81			113
Net periodic pension (benefit) cost	$	(20	)	$	16		$	(39	)	$	32
Amortization of net actuarial loss recognized in other comprehensive income	$	(40	)	$	(57	)	$	(81	)	$	(113	)
Total recognized in net periodic pension cost and other comprehensive income	$	(60	)	$	(41	)	$	(120	)	$	(81	)

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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 June 30, 2018, the Company had $81,948,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $77,023,000 at December 31, 2017.

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 $3,147,000 and $2,541,000 of financial and performance letters of credit commitments as of June 30, 2018 and December 31, 2017, respectively. Commercial letters of credit as of June 30, 2018 and December 31, 2017 totaled $12,833,000 and $12,650,000, 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 June 30, 2018 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 ASU’s that modified ASC 606. The Company elected to apply the ASU and all related ASU’s using the modified retrospective approach applied to all contracts imitated 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 ASC 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 ASC 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 ASC 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.

39

A description of the Company’s sources of revenue accounted for under ASC 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 and six months ended June 30, 2018 totaled $98,000 and $188,000, respectively. 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 and six months ended June 30, 2018 totaled $25,000 and $37,000, 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 ASC 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.

14. Subsequent Events

On July 1, 2018, the Company made a lump sum payment offer to a small group of terminated vested participants in the Company’s defined benefit plan intended to reduce its overall pension liability. The Company expects to complete the lump sum offering in the third quarter of 2018. Currently, no material effect to the consolidated financial statements as a result of the offering is expected.

On July 17, 2018, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 15, 2018, payable on August 31, 2018.

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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. Forward-looking statements can be identified by the use of words such as “believes”, “expects”, “anticipates”, “may”, “should”, “will”, “could”, “estimates”, “projects”, “predicts”, “potential”, “continue”, “plans”, “future”, “intends”, “goal”, “strategy”, “likely”, “seek” and similar expressions. 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, particularly following a period of low market interest rates and current market 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 increasing time and expense associated with regulatory compliance and risk management;

· 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 of 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 of the Company’s financial condition and results of operations;

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

· the impact of the Company’s strategy to reduce the liability associated with 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, 2017, 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.

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, 2017. Any policies adopted after this date are included in the Note 1, Basis of Presentation and Accounting Policies. 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 investment portfolio for other-than-temporary impairment.

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General:

The following discussion relates to the consolidated financial condition of the Company as of June 30, 2018, as compared to December 31, 2017, and the consolidated results of operations for the three and six months ended June 30, 2018, compared to the same period in 2017. 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. The Company completed its acquisition of FNBPA Bancorp, Inc. (“FNBPA”) on November 30, 2015, at which time total assets increased by approximately $92 million, or 19%. On April 30, 2018, Juniata acquired the Liverpool Community Bank (“LCB”) of which it previously owned 39.16%. As of the merger date, total assets increased by approximately $49 million, or 8%. Juniata now operates a total of 16 locations in Pennsylvania.

Financial Condition:

Total assets as of June 30, 2018, were $631.5 million, an increase of $39.6 million, or 6.7%, compared to December 31, 2017. Comparing the balances at June 30, 2018 and December 31, 2017, loans increased by $37.8 million, while deposits increased by $54.8 million, predominantly in interest bearing deposits. As of April 30, 2018, after acquisition accounting adjustments, the Company acquired approximately $31.3 million in loans and $36.1 million in deposits as a result of the Liverpool acquisition. During the same period, the Company utilized a strategy to apply cash flows from the investment portfolio to reduce high cost borrowings. This strategy led to a strategic decline in the investment portfolio of $10.6 million and contributed to a decline in total borrowings of $20.4 million, as did Liverpool’s surplus funds position.

The table below shows changes in deposit volumes by type of deposit between December 31, 2017 and June 30, 2018.

(Dollars in thousands)	June 30,		December 31,		Change
	2018		2017		$		%
Deposits:
Demand, non-interest bearing	$	122,101	$	115,911	$	6,190		5.3	%
Interest bearing demand and money market		151,057		122,407		28,650		23.4
Savings		105,224		98,966		6,258		6.3
Time deposits, $250,000 and more		10,611		8,456		2,155		25.5
Other time deposits		143,446		131,928		11,518		8.7
Total deposits	$	532,439	$	477,668	$	54,771		11.5	%

Total loans increased $37.8 million, or 9.8%, between December 31, 2017 and June 30, 2018. As shown in the table below, all loan categories increased, except commercial real estate loans.

(Dollars in thousands)	June 30,		December 31,		Change
	2018		2017		$			%
Loans:
Commercial, financial and agricultural	$	58,488	$	45,802	$	12,686			27.7	%
Real estate - commercial		137,531		140,369		(2,838	)		(2.0	)
Real estate - construction		32,092		28,403		3,689			13.0
Real estate - mortgage		169,615		146,888		22,727			15.5
Obligations of states and political subdivisions		13,264		13,044		220			1.7
Personal		10,721		9,398		1,323			14.1
Total loans	$	421,711	$	383,904	$	37,807			9.8	%

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A summary of the activity in the allowance for loan losses for each of the six month periods ended June 30, 2018 and 2017 is presented below.

(Dollars in thousands)	Periods Ended June 30,
	2018			2017
Balance of allowance - January 1	$	2,939		$	2,723
Loans charged off		(102	)		(137	)
Recoveries of loans previously charged off		22			50
Net charge-offs		(80	)		(87	)
Provision for loan losses		199			240
Balance of allowance - end of period	$	3,058		$	2,876
Ratio of net charge-offs during period to average loans outstanding		0.02	%		0.02	%

As of June 30, 2018, 35 loans (exclusive of loans acquired from FNBPA and LCB with existing credit deterioration) with aggregate outstanding balances of $2,899,000 were individually evaluated for impairment. A collateral analysis was performed on each of these 35 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 June 30, 2018, there were $1,533,000 in special mention loans compared to $34,456,000 at December 31, 2017 and $15,127,000 in substandard loans compared to $14,970,000 at December 31, 2017. As of June 30, 2018, Management expanded the Company’s internal credit quality risk ratings to include a pass/watch rating for loans whose performance may exhibit characteristics or conditions that could result in a downgrade to special mention in the future. The pass/watch rated loans are now reported within the pass rating classification. Prior to June 30, 2018, all watch and special mention rated loans were classified as special mention. As of June 30, 2018, the amount reclassified from the special mention rating to the pass/watch rating was $32,603,000.

Management believes that the specific 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.

The following is a summary of the Bank’s non-performing loans on June 30, 2018 as compared to December 31, 2017.

(Dollar amounts in thousands)	As of and for the			As of and for the
	six months ended			year ended
	June 30, 2018			December 31, 2017
Non-performing loans
Non-accrual loans	$	2,498		$	2,787
Accruing loans past due 90 days or more,  exclusive of loans acquired with credit deterioration		-			64
Restructured loans in default and non-accruing		-			87
Total	$	2,498		$	2,938
Average loans outstanding		400,431			385,411
Ratio of non-performing loans to average loans outstanding		0.62	%		0.76	%

Stockholders’ equity increased from December 31, 2017 to June 30, 2018 by $5,273,000, or 8.9%. The Company’s net income exceeded dividends paid by $726,000. The adjustment to accumulated other comprehensive loss to record the change in net unrealized gains from the unconsolidated subsidiary, the reclassification adjustment for losses on sales of debt securities, and the amortization of the net actuarial cost of the Company’s defined benefit retirement plan increased the Company’s equity by $81,000. The change in net unrealized losses from the change in market value of securities available for sale decreased shareholders’ equity by $2,129,000 when comparing June 30, 2018 to December 31, 2017. Stock based compensation expense recorded pursuant to the Company’s Stock Option Plan added $39,000 to stockholders’ equity during the six month period, while payments for exercised stock options increased shareholders’ equity by $91,000 and employee stock plans added $42,000. In addition, the common stock issued to LCB shareholders increased total stockholders’ equity by $6,463,000. Treasury stock purchases during the six months ended June 30, 2018 decreased stockholders’ equity by $40,000.

Subsequent to June 30, 2018, the following events took place:

On July 1, 2018, the Company made a lump sum payment offer to a small group of terminated vested participants in the Company’s defined benefit plan intended to reduce its overall pension liability. The Company expects to complete the lump sum offering in the third quarter of 2018. Currently, no material effect to the consolidated financial statements as a result of the offering is expected.

On July 17, 2018, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 15, 2018, payable on August 31, 2018.

43

Comparison of the Three Months Ended June 30, 2018 and 2017

Operations Overview:

Net income for the second quarter of 2018 was $1,569,000, an increase of $275,000, or 21.3%, when compared to the second quarter of 2017. Basic and diluted earnings per share also increased in the second quarter of 2018 to $0.31 compared to $0.27 in the second quarter of 2017. Annualized return on average equity for the three months ended June 30, 2018 was 10.14%, compared to 8.62% for the same period in 2017, representing an increase of 17.6%. For the three months ended June 30, annualized return on average assets was 1.01% in 2018, versus 0.87% in 2017. The comparability of the results of operations for the three months ended June 30, 2018 and financial condition at June 30, 2018 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
	June 30,
	2018			2017
Return on average assets (annualized)		1.01	%		0.87	%
Return on average equity (annualized)		10.14	%		8.62	%
Average equity to average assets		10.01	%		10.10	%
Non-interest income, excluding securities gains (losses), as a percentage of average assets (annualized)		0.97	%		0.84	%
Non-interest expense as a percentage of average assets (annualized)		3.17	%		2.84	%

The discussion that follows further explains changes in the components of net income when comparing the second quarter of 2018 with the second quarter of 2017.

Net Interest Income:

Net interest income, after the provision for loan losses, increased during the three months ended June 30, 2018 by $502,000, or 11.1%, when compared to the three months ended June 30, 2017. Overall, average earning assets increased 4.0%, while average interest bearing liabilities increased 2.1%. Net interest margin, on a fully tax equivalent basis, increased from 3.52% during the three months ended June 30, 2017 to 3.61% during the three months ended June 30, 2018.

Average loan balances and interest on loans increased by $23,862,000 and $527,000, respectively, for the second quarter of 2018 compared to the same period in 2017. The increase in the average volume of loans outstanding and the 24 basis point increase in the weighted average yield on loans increased interest income by approximately $294,000 and $233,000, respectively.

Interest earned on investment securities increased $34,000 in the second quarter of 2018 compared to the second quarter of 2017, while the average balance of investment securities declined by $6,350,000, or 4.0%, during the period. The decline in the average balance decreased interest income by $29,000, while the increase in the overall pre-tax yield of 17 basis points on the investment securities portfolio added $63,000 to interest income.

Average earning assets increased $21,711,000, to $569,038,000, primarily due to the 6.2% increase in average loans. The yield on earning assets increased to 4.18% during the three months ended June 30, 2018 from 3.91% in the same period in 2017. The average balance of interest bearing liabilities and non-interest bearing liabilities increased over the period by $8,700,000 and $13,579,000, respectively, compared to the same 2017 period. In addition, the cost to fund interest bearing assets with interest bearing liabilities increased 16 basis points to 0.83% during the second quarter of 2018 compared to the same period in 2017.

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The table below shows the net interest margin on a fully tax-equivalent basis for the three months ended June 30, 2018 and 2017.

Average Balance Sheets and Net Interest Income Analysis
	Three Months Ended							Three Months Ended
(Dollars in thousands)	June 30, 2018							June 30, 2017
	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)	$	382,346	$	4,819		5.04	%	$	356,845	$	4,287		4,287		4.81	%	$	306		$	226	$	532
Tax-exempt loans		28,380		222		3.13			30,019		227		227		3.03			(12	)		7		(5	)
Total loans		410,726		5,041		4.91			386,864		4,514		4,514		4.67			294			233		527
Taxable investment securities		133,775		765		2.29			134,592		716		716		2.13			(4	)		53		49
Tax-exempt investment securities		19,833		99		2.00			25,366		114		114		1.80			(25	)		10		(15	)
Total investment securities		153,608		864		2.25			159,958		830		830		2.08			(29	)		63		34
Interest bearing deposits		3,064		32		4.18			505		4		4		3.18			20			8		28
Federal funds sold		1,640		7		1.71			-		-		-		0.00			-			7		7
Total interest earning assets		569,038		5,944		4.18			547,327		5,348		5,348		3.91			285			311		596
Other assets (7)		49,861							47,447
Total assets	$	618,899						$	594,774
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	143,762		237		0.66		$	126,104				99		0.31		$	14		$	124	$	138
Savings deposits		103,459		26		0.10			100,262				25		0.10			1			-		1
Time deposits		149,620		482		1.29			139,438				401		1.15			29			52		81
Short-term and long-term borrowings and other interest bearing liabilities		32,831		145		1.77			55,168				177		1.29			(72	)		40		(32	)
Total interest bearing liabilities		429,672		890		0.83			420,972				702		0.67			(28	)		216		188
Non-interest bearing liabilities:
Demand deposits		120,739							107,494
Other		6,564							6,230
Stockholders' equity		61,924							60,078
Total liabilities and stockholders' equity	$	618,899						$	594,774
Net interest income and net interest rate spread			$	5,054		3.35	%					$	4,646		3.24	%	$	313		$	95	$	408
Net interest margin on interest earning assets (3)						3.55	%								3.39	%
Net interest income and net interest margin-Tax equivalent basis (4)			$	5,139		3.61	%					$	4,822		3.52	%

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% in 2018 and 34% in 2017.

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 second quarter of 2018, the provision for loan losses was $41,000, compared to a provision of $135,000 in the second quarter of 2017. Management regularly reviews the adequacy of the allowance for loan loss and makes assessments as to specific loan impairment, historical charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. As compared to the second quarter of 2017, the level of loan loss provision in the second quarter of 2018 was most affected by a reduction of credit concentrations as related to increased available capital levels from the Liverpool acquisition. 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 second quarter of 2018 was $1,496,000 compared to $1,256,000 in the second quarter of 2017, representing an increase of $240,000, or 19.1%.

Most significantly impacting the comparative three month periods was the $169,000 increase in income/gain from the unconsolidated subsidiary due primarily to a $215,000 adjustment to the carrying value of Juniata’s previous 39.16% ownership in Liverpool (derived from Juniata’s share of $239,000 in LCB’s second quarter earnings net loss, $39,000 in dividend income received from LCB’s special merger-related dividend, as well as a $415,000 equity gain recorded from the acquisition). Increases in the change in value of equity securities of $52,000 and debit card income of $44,000 from improved debit card usage in the second quarter of 2018 also contributed to the overall increase in non-interest income compared to the second quarter of 2017. Offsetting these increases was a decline in trust fees of $20,000 and a $37,000 decline in in mortgage banking income due to the strategic plan to shift the focus from selling qualifying mortgage loans to the secondary market to collecting fee income from a loan referral program in the second quarter of 2018 compared to the same period in 2017.

As a percentage of average assets, annualized non-interest income, exclusive of net gains on the sale of securities, was 0.97% in the second quarter of 2018 as compared to 0.84% in the second quarter of 2017.

Non-interest Expense:

Non-interest expense was $4,906,000 for the three months ended June 30, 2018 versus $4,229,000 for the same period in 2017, an increase of $677,000.

The increase was primarily due to the recording of $376,000 in merger-related expenses in the second quarter of 2018, with no comparable expense recorded in the 2017 period. Increases in employee compensation expense of $175,000 mainly due to the addition of the LCB staff and $81,000 in amortization expense from the additional investment in low-income housing partnerships due to the completion of phase II of Juniata’s low-income elderly housing tax credit investment, also contributed to the overall increase in the second quarter of 2018, as did the collection of $48,000 less in gains on sales of other real estate owned. Partially offsetting these variances were reductions in employee benefits by $58,000 relating to lower medical insurance and defined benefit expenses, as well as declines in other non-interest expense, predominantly due to favorable variances in delinquent loan expenses and electronic banking losses.

As a percentage of average assets, annualized non-interest expense was 3.17% in the second quarter of 2018 compared to 2.84% in the second quarter of 2017. Excluding merger and acquisition expenses, annualized non-interest expense as a percentage of average assets was 2.93% in the second quarter of 2018.

Provision for income taxes:

Income tax expenses of $34,000 and $244,000 were recorded in the second quarters of 2018 and 2017, respectively. The decline in the provision for income taxes resulted from the reduction in the federal income tax rate from 34% in 2017 to 21% in 2018. In addition, 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 quarter of 2018, the tax credit of $225,000 lowered the effective tax rate from 16.2% to 2.1%. In the first quarter of 2017, the tax credit of $143,000 decreased the effective tax rate from 25.2% to 15.9%.

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Comparison of the Six Months Ended June 30, 2018 and 2017

Operations Overview:

Net income for the first six months of 2018 was $2,896,000, an increase of $143,000, or 5.2%, compared to the first six months of 2017. Basic and diluted earnings per share were $0.59 in the first six months of 2018, representing an increase of 1.7% from the $0.58 earned in the first six months of 2017. Annualized return on average equity for the first six months in 2018 was 9.65%, compared to 9.22% for the same period in the prior year, an increase of 4.7%. For the six months ended June 30, annualized return on average assets was 0.95% in 2018, versus 0.93% in 2017. The comparability of the results of operations for the six months ended June 30, 2018 and financial condition at June 30, 2018 were impacted by the aforementioned 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:

	Six Months Ended
	June 30,
	2018			2017
Return on average assets (annualized)		0.95	%		0.93	%
Return on average equity (annualized)		9.65	%		9.22	%
Average equity to average assets		9.88	%		10.11	%
Non-interest income, excluding securities gains (losses), as a percentage of average assets (annualized)		0.88	%		0.80	%
Non-interest expense as a percentage of average assets (annualized)		3.07	%		2.88	%

The discussion that follows explains changes in the components of net income when comparing the first six months of 2018 with the first six months of 2017.

Net Interest Income:

Net interest income, after the provision for loan losses, was $9,500,000 for the first six months of 2018, compared to $8,953,000 in the same period in 2017, an increase of $547,000, or 6.1%. Average earning assets increased by $15,418,000, or 2.8%, while average interest bearing liabilities increased by $4,448,000, or 1.1%.

On average, loans outstanding increased by $16,125,000, or 4.2%, and interest on loans increased $708,000, or 8.0%, in the first six months of 2018 compared to the same period in 2017. The greater volume of loans and a 16 basis point rise in the weighted average yield on the loan portfolio increased interest income by $410,000 and $298,000, respectively. 

Increases of $115,000 and 19 basis points, respectively, in interest earned and the overall pre-tax yield on investment securities were recorded in the first six months of 2018 compared to same period in 2017, even though average balances declined $2,765,000 during the period.

Average interest bearing liabilities increased to $422,196,000 from $417,748,000, while average non-interest bearing deposits increased 11.2% to $118,750,000 during the six months ended June 30, 2018 compared to the same 2017 period. The cost of interest bearing liabilities rose by 16 basis points as a result of two additional increases in the federal funds borrowing rate in the current period.

Total average earning assets during the first six months of 2018 were $558,687,000, compared to $543,269,000 during the first six months of 2017, yielding 4.07% and 3.88%, respectively. Interest bearing funding costs for earning assets were 0.80% and 0.64% for the first six months of 2018 and 2017, respectively. Net interest margin on a fully tax-equivalent basis for the first six months of 2018 was 3.53%. For the same period in 2017, the fully-tax equivalent net interest margin was 3.51%.

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The table below shows the net interest margin on a fully tax-equivalent basis for the six months ended June 30, 2018 and 2017.

Average Balance Sheets and Net Interest Income Analysis
	Six Months Ended							Six Months Ended
(Dollars in thousands)	June 30, 2018							June 30, 2017
	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)	$	371,866	$	9,144		4.92	%	$	352,859	$	8,417		4.77	%	$	453		$	274	$	727
Tax-exempt loans		28,565		448		3.14			31,447		467		2.99			(43	)		24		(19	)
Total loans		400,431		9,592		4.79			384,306		8,884		4.63			410			298		708
Taxable investment securities		134,964		1,540		2.28			132,977		1,399		2.10			21			120		141
Tax-exempt investment securities		20,665		202		1.95			25,417		228		1.79			(43	)		17		(26	)
Total investment securities		155,629		1,742		2.24			158,394		1,627		2.05			(22	)		137		115
Interest bearing deposits		1,802		42		4.66			569		11		3.90			24			7		31
Federal funds sold		825		7		1.70			-		-					-			7		7
Total interest earning assets		558,687		11,383		4.07			543,269		10,522		3.88			412			449		861
Other assets (7)		48,752							47,269
Total assets	$	607,439						$	590,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	133,413		378		0.57		$	122,274		166		0.27		$	15		$	197	$	212
Savings deposits		101,753		50		0.10			99,085		49		0.10			1			-		1
Time deposits		144,770		911		1.26			138,573		779		1.13			35			97		132
Short-term and long-term borrowings and other interest bearing liabilities		42,260		345		1.63			57,816		335		1.17			(91	)		101		10
Total interest bearing liabilities		422,196		1,684		0.80			417,748		1,329		0.64			(40	)		395		355
Non-interest bearing liabilities:
Demand deposits		118,750							106,776
Other		6,480							6,291
Stockholders' equity		60,013							59,723
Total liabilities and stockholders' equity	$	607,439						$	590,538
Net interest income and net interest rate spread			$	9,699		3.28	%			$	9,193		3.24	%	$	452		$	54	$	506
Net interest margin on interest earning assets (3)						3.47	%						3.38	%
Net interest income and net interest margin-Tax equivalent basis (4)			$	9,872		3.53	%			$	9,551		3.51	%

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% in 2018 and 34% in 2017.

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 six months of 2018, the provision for loan losses was $199,000 compared to a provision of $240,000 in the first six months of 2017. Management regularly reviews the adequacy of the loan loss reserve and makes assessments as to specific loan impairment, historical 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 six months of 2018 was $2,670,000, a decrease of $202,000, or 7.0%, compared to $2,872,000 in the first six months of 2017.

Most significantly impacting non-interest income comparisons between the two periods were gains from the sales of securities. In the first six months of 2017, a tax strategy was executed, resulting in securities gains of $508,000, while securities sold in the first six months of 2018 resulted in a net loss of $15,000. Also significantly impacting non-interest income in the six months ended June 30, 2018 was the $191,000 increase in the income/gain from unconsolidated subsidiary compared to the same 2017 period due to an adjustment to the carrying value of Juniata’s previous 39.16% ownership of Liverpool at April 30, 2018, resulting in a recorded net gain of $215,000 (derived from Juniata’s share of $239,000 in LCB’s second quarter earnings net loss, $39,000 in dividend income received from LCB’s special merger-related dividend, as well as a $415,000 equity gain recorded from the acquisition).

Debit card income and fees derived from loan activity increased by 12.0% and 65.4%, respectively, in the first half of 2018 versus the first half of 2017. In addition, the change in value of equity securities increased $46,000 in the first half of 2018 compared to the same period in 2017 as changes in the fair value of equity securities were not recorded on the consolidated statements of income in 2017. Offsetting these increases was a decline of $51,000, or 58.6% in mortgage banking income in the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

As a percentage of average assets, annualized non-interest income, exclusive of net gains/losses on the sale of securities, was 0.88% in the first six months of 2018 and 0.80% in the first six months of 2017.

Non-interest Expense:

Total non-interest expense was $9,311,000 for the first six months of 2018, $813,000, or 9.6%, greater than in the first six months of 2017.

Merger-related expenses of $440,000, related to the aforementioned Liverpool acquisition were recorded in the first half of 2018 while no such expensed occurred in the 2017 period. Occupancy and equipment expense increased $100,000 due to the completion and occupation of a relocated banking office at the end of 2017, and employee compensation expense increased by 6.5%. In addition, the amortization expense for the investment in low-income housing partnerships increased $161,000 due to the additional investment in phase II of a low-income elderly tax credit investment, with no similar expense recorded in the first half of 2017. Partially offsetting these increases were cost reductions in employee benefits relating to lower medical insurance and defined benefit expenses of $148,000, or 12.0%, and a decline of $72,000, or 7.8% in other non-interest expenses primarily due to a reduction in electronic banking losses and delinquent loan expenses.

As a percentage of average assets, annualized non-interest expense was 3.07% in the first half of 2018 compared to 2.88% in the first half of 2017.

Provision for income taxes:

An income tax benefit of $37,000 was recorded in the first six months of 2018 compared to an expense of $574,000 in the first six months of 2017. As mentioned previously, the federal income tax rate declined from 34% in 2017 to 21% in 2018, resulting in a decline in the provision for income taxes in the 2018 period compared to the same period in 2017. Also contributing to the resulting income tax benefit was lower taxable income in the 2018 period compared to the 2017 period.

In addition, the Company qualifies for a federal tax credit for its low-income housing project investment, and the tax provisions for each period reflect the application of the tax credit. The tax credit recorded in the first six months periods of 2018 and 2017 was $451,000 and $286,000, respectively, offsetting $414,000 in regular tax expense in the 2018 period and $860,000 of regular tax expense in the 2017 period. For the first six months of 2018, the tax credit lowered the effective tax rate from 14.5% to (1.3%) as compared to the same period in 2017, when the tax credit lowered the effective tax rate from 25.8% to 17.3%.

49

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 six months ended June 30, 2018, overnight borrowings from the Federal Home Loan Bank averaged $16,051,000. As of June 30, 2018, the Company had short-term borrowings and long-term debt with the Federal Home Loan Bank of $7,500,000 and $15,000,000, respectively, and had remaining unused borrowing capacity with the Federal Home Loan Bank of $142,949,000.

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 $3,147,000 and $2,541,000 of financial and performance letters of credit commitments outstanding as of June 30, 2018 and December 31, 2017, respectively. Commercial letters of credit as of June 30, 2018 and December 31, 2017 totaled $12,833,000 and $12,650,000, 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 June 30, 2018 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. See Item 3 for a description of the complete simulation process and results.

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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 new 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.

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.

According to the rules, CET1 is comprised of common stock plus related surplus, net of treasury stock and other contra-equity components, retained earnings and accumulated other comprehensive income. However, certain banking institutions, including the Bank, were permitted to make a one-time election to opt out of the requirement to include most components of AOCI in CET1. This opt-out option was available only until March 31, 2015. The Bank elected to opt-out.

At June 30, 2018, the Bank exceeded the regulatory requirements to be considered a "well capitalized" financial institution under the new rules. The Bank’s CET1 and Tier 1 Capital ratio was 13.87%, its Total Capital ratio was 14.60% and its Tier 1 leverage was 9.56%. On a consolidated basis, the Company’s CET1 and Tier 1 Capital ratio was 14.36%, and Total Capital ratio and Tier 1 leverage ratio was 15.09% and 9.87%, respectively. Thus, the Company and the Bank also maintain capital sufficient to cover the additional 2.5% capital conservation buffer.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. The types of market risk exposures generally faced by financial institutions include equity market price risk, interest rate risk, foreign currency risk and commodity price risk. Due to the nature of its operations, only equity market price risk and interest rate risk are significant to the Company.

Equity market price risk is the risk that changes in the values of equity investments could have a material impact on the financial position or results of operations of the Company. The Company’s equity investments consist of common stocks of publicly traded financial institutions.

There can be volatility in the values of financial institution stocks, but the primary objective of the portfolio is to achieve value appreciation in the long term while earning consistently attractive after-tax yields from dividends. The carrying value of the financial institutions stocks accounted for 0.2% of the Company’s total assets as of June 30, 2018.

The equity investments in the Company’s portfolio had a fair value of $1,166,000 at June 30, 2018. Net unrealized gains in this portfolio for the three and six months ended June 30, 2018 included in the consolidated statements of income were $52,000 and $46,000, respectively.

In addition to its equity portfolio, the Company’s investment management and trust services revenue could be impacted by fluctuations in the securities markets. A portion of the Company’s trust revenue is based on the value of the underlying investment portfolios. If securities values decline, the Company’s trust revenue could be negatively impacted.

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Interest rate risk creates exposure in two primary areas. First, changes in rates have an impact on the Company’s liquidity position and could affect its ability to meet obligations and continue to grow. Second, movements in interest rates can create fluctuations in the Company’s net interest income and changes in the economic value of equity.

The primary objective of the Company’s asset-liability management process is to maximize current and future net interest income within acceptable levels of interest rate risk while satisfying liquidity and capital requirements. Management recognizes that a certain amount of interest rate risk is inherent, appropriate and necessary to ensure profitability. A simulation analysis is used to assess earnings and capital at risk from movements in interest rates. The model considers three major factors: (1) volume differences; (2) repricing differences; and (3) timing in its income simulation. As of the most recent model run, data was disseminated into appropriate repricing buckets, based upon the static position at that time. The interest-earning assets and interest-bearing liabilities were assigned a multiplier to simulate how much that particular balance sheet item would re-price when interest rates change. Finally, the estimated timing effect of rate changes was applied, and the net interest income effect was determined on a static basis (as if no other factors were present). As the table below indicates, based upon rate shock simulations on a static basis over a one-year period, the net effect of an immediate 100, 200, 300 and 400 basis point rate increase would change net interest income by ($335,000), ($708,000), ($1,276,000) and ($2,158,000), respectively. The net effect of an immediate 100, 200, 300, and 400 basis point rate decline would change net interest income by ($392,000), ($1,068,000), ($1,076,000), and ($1,197,000), respectively.

Effect of Interest Rate Risk on Net Interest Income
(Dollars in thousands)
Change in Interest Rates (Basis Points)		Total Change in Net Interest Income
	400	$	(2,158	)
	300		(1,276	)
	200		(708	)
	100		(335	)
	0		-
	(100)		(392	)
	(200)		(1,068	)
	(300)		(1,076	)
	(400)		(1,197	)

The Company’s rate risk policies provide for maximum limits on net interest income that can be at risk for 100 through 400 basis point changes in interest rates. The net interest income at risk position remained within the guidelines established by the Company’s asset/liability policy.

No material change has been noted in the Bank’s equity value at risk. Please refer to the Annual Report on Form 10-K as of December 31, 2017 for further discussion of this topic.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2018, 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 effective as of the end of the period covered by this quarterly report.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions, regardless of how remote.

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 June 30, 2018, that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting.

53

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, 2017.

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 August 9, 2018, the number of shares that may yet be purchased under the program was 172,062. Transactions pursuant to the repurchase program in the three month period ended June 30, 2018 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)
April 1-30, 2018		-	$	-		-		172,062
May 1-31, 2018		-		-		-		172,062
June 1-30, 2018		-		-		-		172,062
Totals		-				-		172,062

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 June 30, 2018, $33,790,000 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

54

Item 6. EXHIBITS

3.1 -	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3 (I) to the Company’s Form 8-K Current Report filed with the SEC on November 12, 2015)
3.2 -	Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s report on Form 8-K filed with the SEC on December 21, 2007)
3.3 -	Bylaw Amendment – (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 28, 2012)
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

55

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:	August 9, 2018	By:	/s/ Marcie A. Barber
			Marcie A. Barber, President
			Chief Executive Officer
			(Principal Executive Officer)
Date:	August 9, 2018	By:	/s/ JoAnn N. McMinn
			JoAnn N. McMinn
			Chief Financial Officer
			(Principal Accounting Officer and
			Principal Financial Officer)

56

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:	August 9, 2018	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:	August 9, 2018	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:	August 9, 2018

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:	August 9, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 09, 2018
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018
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 Common Stock, Shares Outstanding		5,093,536

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets:
Cash and due from banks	$ 15,956	$ 9,839
Interest bearing deposits with banks	291	58
Federal funds sold	915
Cash and cash equivalents	17,162	9,897
Interest bearing time deposits with banks	3,780	350
Equity securities	1,166
Securities available for sale	143,237	153,824
Restricted investment in bank stock	2,498	3,104
Investment in unconsolidated subsidiary		4,812
Total loans	421,711	383,904
Less: Allowance for loan losses	(3,058)	(2,939)
Total loans, net of allowance for loan losses	418,653	380,965
Premises and equipment, net	8,675	8,887
Other real estate owned	355	355
Bank owned life insurance	15,761	14,972
Investment in low income housing partnership	4,945	5,245
Core deposit and other intangible assets	453	195
Goodwill	9,139	5,448
Mortgage servicing rights	215	225
Accrued interest receivable and other assets	5,473	3,666
Total assets	631,512	591,945
Liabilities:
Non-interest bearing deposits	122,101	115,911
Interest bearing deposits	410,338	361,757
Total deposits	532,439	477,668
Securities sold under agreements to repurchase	3,843	9,769
Short-term borrowings	7,500	12,000
Long-term debt	15,000	25,000
Other interest bearing liabilities	1,587	1,593
Accrued interest payable and other liabilities	6,483	6,528
Total liabilities	566,852	532,558
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 - 5,134,249 shares at June 30, 2018; 4,811,611 shares at December 31, 2017 Outstanding - 5,093,536 shares at June 30, 2018; 4,767,656 shares at December 31, 2017	5,134	4,811
Surplus	24,779	18,565
Retained earnings	41,758	40,876
Accumulated other comprehensive loss	(6,238)	(4,034)
Cost of common stock in Treasury: 40,713 shares at June 30, 2018; 43,955 shares at December 31, 2017	(773)	(831)
Total stockholders' equity	64,660	59,387
Total liabilities and stockholders' equity	$ 631,512	$ 591,945

XML

Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
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	5,134,249	4,811,611
Common Stock, Shares, Outstanding	5,093,536	4,767,656
Treasury Stock, Shares	40,713	43,955

XML

Consolidated Statements of Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Interest income:
Loans, including fees	$ 5,041,000	$ 4,514,000	$ 9,592,000	$ 8,884,000
Taxable securities	765,000	716,000	1,540,000	1,399,000
Tax-exempt securities	99,000	114,000	202,000	228,000
Other interest income	39,000	4,000	49,000	11,000
Total interest income	5,944,000	5,348,000	11,383,000	10,522,000
Interest expense:
Deposits	745,000	525,000	1,339,000	994,000
Securities sold under agreements to repurchase	17,000	6,000	32,000	9,000
Short-term borrowings	59,000	70,000	143,000	132,000
Long-term debt	60,000	94,000	153,000	179,000
Other interest bearing liabilities	9,000	7,000	17,000	15,000
Total interest expense	890,000	702,000	1,684,000	1,329,000
Net interest income	5,054,000	4,646,000	9,699,000	9,193,000
Provision for loan losses	41,000	135,000	199,000	240,000
Net interest income after provision for loan losses	5,013,000	4,511,000	9,500,000	8,953,000
Non-interest income:
Customer service fees	437,000	441,000	849,000	874,000
Debit card fee income	324,000	280,000	616,000	550,000
Earnings on bank-owned life insurance and annuities	86,000	92,000	167,000	176,000
Trust fees	123,000	143,000	225,000	227,000
Commissions from sales of non-deposit products	70,000	50,000	120,000	97,000
Income/gain from unconsolidated subsidiary	227,000	58,000	296,000	105,000
Fees derived from loan activity	77,000	59,000	172,000	104,000
Mortgage banking income	17,000	54,000	36,000	87,000
(Loss) gain on sales and calls of securities		4,000	(15,000)	508,000
Change in value of equity securities	52,000		46,000
Other non-interest income	83,000	75,000	158,000	144,000
Total non-interest income	1,496,000	1,256,000	2,670,000	2,872,000
Non-interest expense:
Employee compensation expense	1,933,000	1,758,000	3,725,000	3,497,000
Employee benefits	523,000	581,000	1,087,000	1,235,000
Occupancy	294,000	292,000	612,000	587,000
Equipment	197,000	174,000	404,000	329,000
Data processing expense	488,000	461,000	904,000	878,000
Director compensation	53,000	63,000	107,000	123,000
Professional fees	177,000	141,000	354,000	283,000
Taxes, other than income	139,000	108,000	252,000	242,000
FDIC Insurance premiums	79,000	76,000	149,000	167,000
Gain on sales of other real estate owned	(10,000)	(58,000)	(10,000)	(45,000)
Amortization of intangible assets	20,000	18,000	31,000	35,000
Amortization of investment in low-income housing partnership	200,000	119,000	400,000	239,000
Merger and acquisition expense	376,000		440,000
Other non-interest expense	437,000	496,000	856,000	928,000
Total non-interest expense	4,906,000	4,229,000	9,311,000	8,498,000
Income before income taxes	1,603,000	1,538,000	2,859,000	3,327,000
Income tax provision	34,000	244,000	(37,000)	574,000
Net income	$ 1,569,000	$ 1,294,000	$ 2,896,000	$ 2,753,000
Earnings per share
Basic	$ 0.31	$ 0.27	$ 0.59	$ 0.58
Diluted	0.31	0.27	0.59	0.58
Cash dividends declared per share	$ 0.22	$ 0.22	$ 0.44	$ 0.44
Weighted average basic shares outstanding	4,987,137	4,768,681	4,879,361	4,762,632
Weighted average diluted shares outstanding	5,008,218	4,779,401	4,898,248	4,770,399

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income: Before Tax Amount		$ 1,603	$ 1,538	$ 2,859	$ 3,327
Net Income: Tax Effect		(34)	(244)	37	(574)
Net income: Net-of-Tax Amount		1,569	1,294	2,896	2,753
Other comprehensive (loss) income:
Unrealized holding (losses) gains arising during the period: Before Tax Amount		(528)	644	(2,695)	902
Unrealized holding (losses) gains arising during the period: Tax Effect		111	(219)	566	(307)
Unrealized holding (losses) gains arising during the period: Net-of-Tax Amount		(417)	425	(2,129)	595
Unrealized holding gains from unconsolidated subsidiary: Before Tax Amount		16	6	5	15
Unrealized holding gains from unconsolidated subsidiary: Net-of-Tax Amount		16	6	5	15
Less reclassification adjustment for losses (gains) included in net income: Before Tax Amount	[1],[2]		(4)	15	(508)
Less reclassification adjustment for losses (gains) included in net income: Tax Effect	[1],[2]		2	(3)	173
Less reclassification adjustment for losses (gains) included in net income: Net-of-Tax Amount	[1],[2]		(2)	12	(335)
Amortization of pension net actuarial cost: Before Tax Amount	[2],[3]	40	57	81	113
Amortization of net pension actuarial cost: Tax Effect	[2],[3]	(8)	(19)	(17)	(38)
Amortization of net pension actuarial cost: Net-of-Tax Amount	[2],[3]	32	38	64	75
Other comprehensive (loss) income: Before Tax Amount		(472)	703	(2,594)	522
Other comprehensive (loss) income: Tax Effect		103	(236)	546	(172)
Other comprehensive (loss) income: Net-of-Tax Amount		(369)	467	(2,048)	350
Total comprehensive income: Before Tax Amount		1,131	2,241	265	3,849
Total comprehensive income: Tax Effect		69	(480)	583	(746)
Total comprehensive income: Net-of-Tax Amount		$ 1,200	$ 1,761	$ 848	$ 3,103

[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, 2016	$ 4,805	$ 18,476	$ 39,945	$ (3,209)	$ (927)	$ 59,090
Beginning balance, shares at Dec. 31, 2016	4,755,630
Net income			2,753			2,753
Other comprehensive loss				350		350
Cash dividends at $0.44 per share			(2,097)			(2,097)
Stock-based compensation		38				38
Purchase of treasury stock					(86)	(86)
Purchase of treasury stock, shares	(4,289)
Treasury stock issued for stock plans		(10)			182	172
Treasury stock issued for stock plans, shares	9,704
Common stock issued for stock plans	$ 6	28				34
Common stock issued for stock plans, shares	6,611
Ending balance at Jun. 30, 2017	$ 4,811	18,532	40,601	(2,859)	(831)	60,254
Ending balance, shares at Jun. 30, 2017	4,767,656
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					4,767,656
Net income			2,896			$ 2,896
Other comprehensive loss				(2,048)		(2,048)
Reclassification for ASU 2016-01			156	(156)
Cash dividends at $0.44 per share			(2,170)			(2,170)
Stock-based compensation		39				39
Purchase of treasury stock					(40)	(40)
Purchase of treasury stock, shares	(1,928)
Treasury stock issued for stock plans		(7)			98	91
Treasury stock issued for stock plans, shares	5,170
Common stock issued for stock plans	$ 8	34				42
Common stock issued for stock plans, shares	7,354
Common stock issued for acquisition	$ 315	6,148				6,463
Common stock issued acquisition, shares	315,284
Ending balance at Jun. 30, 2018	$ 5,134	$ 24,779	$ 41,758	$ (6,238)	$ (773)	$ 64,660
Ending balance, shares at Jun. 30, 2018	5,093,536					5,093,536

XML

Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Consolidated Statements of in Stockholders' Equity [Abstract]
Cash Dividends at per share	$ 0.44	$ 0.44

XML

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Operating activities:
Net income	$ 1,569,000	$ 1,294,000	$ 2,896,000	$ 2,753,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	41,000	135,000	199,000	240,000	$ 439,000
Depreciation			403,000	321,000
Net amortization of securities premiums			283,000	318,000
Net amortization of loan origination fees			35,000	39,000
Deferred net loan origination costs			(197,000)	(225,000)
Amortization of core deposit intangible	20,000	18,000	31,000	35,000
Amortization of investment in low income housing partnership	200,000	119,000	400,000	239,000
Net amortization of purchase fair value adjustments			(28,000)	(1,000)
Net realized loss (gain) on sales and calls of available for sale securities			15,000	(508,000)
Change in value of equity securities	(52,000)		(46,000)
Net gain on sales and valuation of other real estate owned			(10,000)	(45,000)
Earnings on bank owned life insurance and annuities	(86,000)	(92,000)	(167,000)	(176,000)
Deferred income tax benefit			(108,000)	(75,000)
Equity loss (gain) in unconsolidated subsidiary, net of dividends of $75 and $36, respectively			194,000	(69,000)
Equity gain from acquisition of unconsolidated subsidiary	(415,000)		(415,000)
Stock-based compensation expense			39,000	38,000
Mortgage loans originated for sale				(1,579,000)
Proceeds from mortgage loans sold to others			46,000	1,544,000
Mortgage banking income			(36,000)	(87,000)
(Increase) decrease in accrued interest receivable and other assets			(764,000)	210,000
Decrease in accrued interest payable and other liabilities			(208,000)	(672,000)
Net cash provided by operating activities			2,562,000	2,300,000
Investing activities:
Purchases of: Securities available for sale			(4,119,000)	(21,620,000)
Purchases of: Premises and equipment			(66,000)	(271,000)
Purchases of: Bank owned life insurance and annuities			(18,000)	(13,000)
Proceeds from: Sales of securities available for sale		5,056,000	4,285,000	11,634,000
Proceeds from: Maturities of and principal repayments on securities available for sale			6,324,000	7,495,000
Proceeds from: Redemption of FHLB stock			730,000	260,000
Proceeds from: Sale of other real estate owned			77,000	554,000
Proceeds from: Sale of other assets			13,000	26,000
Net cash received from acquisition			7,561,000
Investment in low income housing partnerships			(100,000)	(1,591,000)
Net decrease in interest bearing time deposits with banks			245,000
Net increase in loans			(6,447,000)	(14,355,000)
Net cash provided by (used in) investing activities			8,485,000	(17,881,000)
Financing activities:
Net increase in deposits			18,721,000	20,045,000
Net (decrease) increase in short-term borrowings and securities sold under agreements to repurchase			(10,426,000)	1,543,000
Repayment of long-term debt			(10,000,000)
Cash dividends			(2,170,000)	(2,097,000)
Purchase of treasury stock			(40,000)	(86,000)
Treasury stock issued for employee stock plans			91,000
Common stock issued for employee stock plans			42,000	206,000
Net cash (used in) provided by financing activities			(3,782,000)	19,611,000
Net increase in cash and cash equivalents			7,265,000	4,030,000
Cash and cash equivalents at beginning of year			9,897,000	9,559,000	9,559,000
Cash and cash equivalents at end of period	$ 17,162,000	$ 13,589,000	17,162,000	13,589,000	$ 9,897,000
Supplemental information:
Interest paid			1,686,000	1,365,000
Income taxes paid			14,000	360,000
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned			86,000	$ 529,000
Transfer of loans to repossessed vehicles			12,000
Assets acquired:
Investment in time deposits with banks			3,675,000
Loans			31,331,000
Premises and equipment			125,000
Accrued interest receivable			123,000
Core deposit and other intangible assets			289,000
Bank owned life insurance			632,000
FHLB stock			124,000
Other assets			267,000
Assets acquired, total			36,566,000
Liabilities assumed:
Deposits			36,052,000
Accrued interest payable and other liabilities			266,000
Liabilities assumed, total			$ 36,318,000

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Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Consolidated Statements of Cash Flows(Parenthetical) [Abstract]
Equity method investment, dividends	$ 75	$ 36

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Basis of Presentation and Accounting Policies

6 Months Ended

Jun. 30, 2018

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 completed the acquisition of Liverpool Community Bank (“Liverpool” or “LCB”). 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 for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete consolidated financial statements. Certain items in prior financial statements have been reclassified to conform to the current presentation. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results for the year ending December 31, 2018. 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, 2017.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2018 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.

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Recent Accounting Standards Update

6 Months Ended

Jun. 30, 2018

Recent Accounting Standards Update [Abstract]

Recent Accounting Standards Update

2. RECENT ACCOUNTING STANDARDS UPDATES

Adoption of New Accounting Standards

ASU 2014-09, Revenue from Contracts with Customers (606)

Issued: May 2014

Summary: The amendments in this Update establish a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance. The revenue standard’s core principle requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU 2015-14 deferred the effective date of the new revenue recognition standard by one year. As such, it was effective for public entities in fiscal years beginning after December 15, 2017.

The Company adopted the ASU 2014-09 on January 1, 2018 and elected the modified retrospective transition method. Because the amended guidance does not apply to revenue associated with financial instruments accounted for under other U.S. GAAP, the Company assessed the effect the guidance had on the recognition processes of certain recurring revenue streams related to non-interest income, in addition to when it is appropriate to recognize a gain/loss on the transfer of nonfinancial assets, such as other real estate owned. The Company did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance. Additional disclosures related to revenue recognition appear in Note 13.

ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  

Issued: February 2018

Summary:The Update allows entities to reclassify from accumulated other comprehensive income (“AOCI”) to retained earnings the 'stranded' tax effects ofaccounting for income tax rate changes on items accounted for in AOCI that were impacted by tax reform enacted in December 2017. Because the impact of tax rate changes is recorded in income, items accounted for in AOCI could be left with a stranded tax effect appearing as though those items do not reflect the appropriate tax rate. The FASB's changes were intended to improve the usefulness of information reported to financial statement users.

Effective Date:  The changes are effective for years beginning after December 31, 2018, with early adoption permitted. The Company elected to adopt the changes in the first quarter of 2018, as of December 31, 2017. The amount transferred from AOCI to retained earnings totaled $588,000 and represented the impact of the Company’s corporate tax rate change from 34% to 21% at the date of enactment of the tax reform for the unrealized gains and losses on securities and the defined benefit plan accounted for in AOCI.

ASU 2016-01, Measurement of Financial Instruments

Issued: January 2016

Summary: The amendments in this Update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this Update also require an entity to present separately in AOCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the Update emphasizes the existing requirement to use exit prices to measure fair value for disclosure purposes and clarifies that entities should not make use of a practicability exception in determining the fair value of loans.  Accordingly, we refined the calculations used to determine the disclosed fair value of our loans as part of adopting this standard. The redefined calculation did not have a significant impact on our fair value disclosures.

Effective Date: For public entities, the amendments in the Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company currently holds a small portfolio of equity investments for which the fair value fluctuates with market activity. The Company adopted ASU 2016-01 on January 1, 2018. As of this date, the Company had $197,000 in unrealized gains on equity securities (see Note 6). The adoption of this Update resulted in a reclassification of $156,000 from other comprehensive loss to retained earnings. The Company recorded $52,000 for the three months ended June 30, 2018 and $46,000 for the six months ended June 30, 2018 on the consolidated statements of income for the change in fair value of equity securities.

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

Issued: February 2018

Summary: The FASB issued this Update to clarify certain aspects of the guidance on recognizing and measuring financial assets and liabilities in ASU 2016-01:

· Clarification regarding the ability to discontinue application of the measurement alternative for equity securities without a readily determinable fair value;

· Clarification of the measurement date for fair value adjustments to the carrying amount of equity securities without a readily determinable fair value for which the measurement alternative is elected;

· Clarification of the unit of account for fair value adjustments to forward contracts and purchased options on equity securities without a readily determinable fair value for which the measurement alternative is expected to be elected;

· Presentation requirements for certain hybrid financial liabilities for which the fair value option is elected;

· Measurement of financial liabilities denominated in a foreign currency for which the fair value option is elected; and

· Transition guidance for equity securities without a readily determinable fair value.

The amendments in ASU 2018-03 are effective for public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years beginning after June 15, 2018. For all other entities, the effective date is the same as the effective date for ASU 2016-01. All entities may early adopt the amendments, including adoption in an interim period, provided they have already adopted ASU 2016-01. The Company adopted this Update in conjunction with the adoption of ASU 2016-01 on January 1, 2018. The adoption had no material impact to the Company’s consolidated financial position or results of operations.

ASU 2017-09, Scope of Modification Accounting

Issued: May 2017

Summary: ASU 2017-09 clarifies Topic 718 such that an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award unless all of the following criteria are met:

1. The fair value of the modified award is the same as the fair value of the original award immediately before the modification.  The standard indicates that if the modification does not affect any of the inputs to the valuation technique used to value the award, the entity is not required to estimate the value immediately before and after the modification.

2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the modification.

3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the modification.

Effective Date: The amendments were effective for all entities for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted ASU 2017-09 on January 1, 2018 and it had no material impact on the Company’s consolidated financial position or results of operations.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities

Issued: March 2017

Summary: ASU 2017-08 shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, rather than amortizing over the full contractual term. The ASU does not change the accounting for securities held at a discount.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company chose to early adopt this standard, and the financial statements as of, and for the year ended, December 31, 2017 reflected the impact of premium amortization on callable debt securities to the earliest call date. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Issued: March 2017

Summary: ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost.The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization.

Effective Date: The amendments were effective for public business entities for fiscal years beginning after December 15, 2017. The Company adopted this Update on January 1, 2018, and it had no impact on the Company’s consolidated financial position and results of operations because the Company’s defined benefit plan is frozen; therefore, there is no service cost component to consider. The cost for other components related to the defined benefit plan are recorded in employee benefits expense on the consolidated statements of income.

ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments

Issued: August 2016

Summary: ASU 2016-15 clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are intended to reduce diversity in practice.

Effective Date: The amendments were effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this Update on January 1, 2018 and it did not have a material impact on the Company’s consolidated financial position or results of operations.

Newly Issued, Not Yet Effective Standards

ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities

Issued: August 2017

Summary: ASU 2017-12 improves Topic 815by simplifying and expanding the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies its application through targeted improvements in key practice areas. This includes expanding the list of items eligible to be hedged and amending the methods used to measure the effectiveness of hedging relationships. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. These changes are intended to allow preparers more flexibility and to enhance the transparency of how hedging results are presented and disclosed. Further, the new standard provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period.

Effective Date: The amendments are effective for public business entities, for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the amendments for existing hedging relationships on the date of adoption.This Update will have no impact on the Company’s consolidated financial position and 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 (AFS) debt securities. For an AFS 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 currently 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 partnered with a software provider specializing in ALLL analysis and is assessing the sufficiency of data currently available through its core database.

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.

Effective Date:The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has determined that the provisions of ASU 2016-02 will result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities; however, the Company does not expect this new standard to have a material impact on the Company’s financial position, results of operations or cash flows because the Company owns most of its facilities and this ASU will apply primarily to its four small operating leases. The Company is currently evaluating the projected present value at the adoption date.

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Merger

6 Months Ended

Jun. 30, 2018

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, or39.16%, 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. 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.

Included in the purchase price was goodwill and a core deposit intangible of $3,691,000 and $289,000, respectively. The core deposit intangible will be amortized over a ten-year period using a sum of the year’s digits basis. The goodwill will not be amortized but will be measured annually for impairment, or more frequently if circumstances require.

Allocation of the purchase price was as follows:

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

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

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

As of April 30, 2018, the merger date, goodwill was recorded at $3,691,000. 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 that reflects circumstances at the merger date.

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.

The information about the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018 is as follows:

(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 and six months ended June 30, 2018 and 2017 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 June 30, 2018 were adjusted to exclude $227,000 from the income/gain from unconsolidated subsidiary, $376,000 in merger-related expenses, and the resulting $31,000 tax benefit. Supplemental pro forma earnings for the six months ended June 30, 2018 were adjusted to exclude $296,000 from the income/gain from unconsolidated subsidiary, $440,000 in merger-related expenses, and the resulting tax benefit of $30,000. The results for the comparable 2017 periods were adjusted to include the aforementioned merger-related expenses; however, those results exclude the income from unconsolidated subsidiary previously recorded in the three and six months ended June 30, 2017 of $58,000 and $105,000, respectively. The resulting tax benefits included in the three and six months ended June 30, 2017 was $91,000 and $114,000, respectively. A 21% tax rate was assumed in both the 2018 and 2017 periods. 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.

	(Unaudited)				(Unaudited)
(Dollars in thousands; except share data)	Three Months ended June 30,				Six Months ended June 30,
	2018		2017		2018		2017
Net interest income after loan loss provision	$	5,487	$	4,986	$	10,449	$	9,903
Noninterest income		1,312		1,240		2,460		2,852
Noninterest expense		4,649		4,725		9,111		9,179
Net income available to common shareholders		2,001		1,265		3,637		2,950
Net income per common share		0.39		0.25		0.71		0.58

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2018

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)
	June 30, 2018		December 31, 2017
Unrealized losses on available for sale securities	$	(3,952)	$	(1,683)
Unrecognized expense for defined benefit pension		(2,286)		(2,351)
Accumulated other comprehensive loss	$	(6,238)	$	(4,034)

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

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 June 30,
	2018		2017
Net income	$	1,569	$	1,294
Weighted-average common shares outstanding		4,987		4,769
Basic earnings per share	$	0.31	$	0.27
Weighted-average common shares outstanding		4,987		4,769
Common stock equivalents due to effect of stock options		21		10
Total weighted-average common shares and equivalents		5,008		4,779
Diluted earnings per share	$	0.31	$	0.27

	Six Months Ended June 30,
	2018		2017
Net income	$	2,896	$	2,753
Weighted-average common shares outstanding		4,879		4,763
Basic earnings per share	$	0.59	$	0.58
Weighted-average common shares outstanding		4,879		4,763
Common stock equivalents due to effect of stock options		19		7
Total weighted-average common shares and equivalents		4,898		4,770
Diluted earnings per share	$	0.59	$	0.58

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Securities

6 Months Ended

Jun. 30, 2018

Securities [Abstract]

Securities

6.  Securities

On January 1, 2018, the Company adopted ASU 2016-01, Measurement of Financial Assets Instruments. Upon adoption, equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in net income. For periods prior to January 1, 2018, equity securities were classified as available for sale and stated at fair value with unrealized gains and losses reported as a separate component of AOCI, net of tax. At December 31, 2017, the fair value of equity securities classified as available for sale was $1,119,000. The adoption of ASU 2016-01 resulted in a reclassification of $156,000 in net unrealized gains from AOCI to retained earnings. As of June 30, 2018, the Company had $1,166,000 in equity investments recorded at fair value.

The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored agencies (approximately 24% of the investment portfolio), mortgage-backed securities issued by Government-sponsored agencies and backed by residential mortgages (approximately 62%) and municipal bonds (approximately 14%) as of June 30, 2018. 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 June 30, 2018 and December 31, 2017, 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.

		June 30, 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
Within one year	$	6,000	$	5,984	$	-	$	(16)
After one year but within five years		20,997		20,168		-		(829)
After five years but within ten years		7,998		7,562		-		(436)
		34,995		33,714		-		(1,281)
Obligations of state and political subdivisions
Within one year		837		836		-		(1)
After one year but within five years		14,537		14,407		14		(144)
After five years but within ten years		5,243		5,043		6		(206)
		20,617		20,286		20		(351)
Mortgage-backed securities		92,633		89,237		-		(3,396)
Total securities available for sale	$	148,245	$	143,237	$	20	$	(5,028)

		December 31, 2017
(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
Within one year	$	6,000	$	5,969	$	-	$	(31)
After one year but within five years		15,000		14,689		-		(311)
After five years but within ten years		13,998		13,556		-		(442)
		34,998		34,214		-		(784)
Obligations of state and political subdivisions
Within one year		2,521		2,516		-		(5)
After one year but within five years		13,959		13,955		50		(54)
After five years but within ten years		8,611		8,510		18		(119)
		25,091		24,981		68		(178)
Mortgage-backed securities		94,945		93,510		38		(1,473)
Equity securities		922		1,119		197		-
Total	$	155,956	$	153,824	$	303	$	(2,435)

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 $56,280,000 and $47,825,000 at June 30, 2018 and December 31, 2017, respectively.

In addition to cash received from the scheduled maturities of securities, some investment 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				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2018		2017		2018		2017
Gross proceeds from sales and calls of securities	$	-	$	5,056	$	4,285	$	11,634
Securities available for sale:
Gross realized gains from sold and called securities	$	-	$	3	$	-	$	509
Gross realized losses from sold and called securities		-		(2)		(15)		(4)
Gross gains from business combinations		-		3		-		3
Net (losses) gains	$	-	$	4	$	(15)	$	508

As of January 1, 2018, upon the adoption of ASU 2016-01, all of the Company’ equity securities are within the scope of ASC Topic 321, Investments – Equity Securities. ASC 321 requires all equity investments within its scope to be measured at fair value with changes in fair value recognized in net income. The Company recorded $52,000 for the three months ended June 30, 2018 and $46,000 for the six months ended June 30, 2018 on the consolidated statements of income for the change in fair value of equity securities.

ASC Topic 320, Investments – Debt and Equity Securities, 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 June 30, 2018 and December 31, 2017:

	Unrealized Losses at June 30, 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	5	$	10,652	$	(346)	15	$	23,062	$	(935)	20	$	33,714	$	(1,281)
Obligations of state and
political subdivisions	18		10,773		(142)	6		3,759		(209)	24		14,532		(351)
Mortgage-backed
securities	25		51,933		(1,594)	21		37,304		(1,802)	46		89,237		(3,396)
Total temporarily
impaired
securities	48	$	73,358	$	(2,082)	42	$	64,125	$	(2,946)	90	$	137,483	$	(5,028)

	Unrealized Losses at December 31, 2017
	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	5	$	10,845	$	(157)	15	$	23,369	$	(627)	20	$	34,214	$	(784)
Obligations of state and
political subdivisions	23		10,491		(70)	6		3,862		(108)	29		14,353		(178)
Mortgage-backed
securities	23		51,050		(518)	20		38,740		(955)	43		89,790		(1,473)
Total debt securities	51		72,386		(745)	41		65,971		(1,690)	92		138,357		(2,435)
Equity securities	1		9		-	1		4		-	2		13		-
Total temporarily
impaired
securities	52	$	72,395	$	(745)	42	$	65,975	$	(1,690)	94	$	138,370	$	(2,435)

At June 30, 2018, 20 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. Fifteen of these securities have been in a continuous loss position for 12 months or more.

At June 30, 2018, 24 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. Six of these securities has been in a continuous loss position for 12 months or more.

At June 30, 2018, 46 mortgage-backed securities had an unrealized loss that did not exceed 3.0% of the amortized cost of the securities portfolio. Twenty-one of these securities has 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, June 30, 2018, June 30, 2017 and December 31, 2017, respectively.

Equity securities owned by the Company consist of common stock of various financial services providers. Management identified no other-than-temporary impairment as of, or for the periods ended December 31, 2017 and June 30, 2017.

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Loans and Related Allowance for Credit Losses

6 Months Ended

Jun. 30, 2018

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 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. 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 June 30, 2018 was adequate.

There are two components of the allowance: a specific component for loans that are deemed to be impaired and a general component for 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, aging accounts receivable, 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 such 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 contingencies relates to other loans that have been segmented into risk rated categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated quarterly or when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. As of June 30, 2018, Management expanded the Company’s internal credit quality risk ratings to include a pass/watch rating for loans whose performance may exhibit characteristics or conditions that could result in a downgrade to special mention in the future. The pass/watch rated loans are now reported within the pass rating classification. Prior to June 30, 2018, all watch and special mention rated loans were classified as special mention. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified as substandard have one or more well-defined weaknesses that jeopardize the liquidation of the debt. Substandard loans include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Specific reserves may be established for larger, individual classified loans as a result of this evaluation, as discussed above. Remaining loans are categorized into large groups of smaller balance homogeneous loans and are collectively evaluated for impairment. This computation is generally based on historical loss experience adjusted for qualitative factors. During 2017, the historical loss experience look-back period was changed from ten years to five years in conjunction with an increase in the number of homogeneous loan groups. Increasing the number of portfolio segments allows for a more granular approach to the analysis, and historical loss experience is more specific to the selected loan types. Management believes that evaluating a look-back period longer than five years is no longer appropriate since more recent information is generally considered to be the most relevant. As indicated above, the historical loss experience is averaged over a five-year look-back period for each of the defined portfolio segments. The qualitative risk factors are reviewed for relevancy each quarter and include:

· National, regional and local economic and business conditions, as well as the condition of various market segments, including the underlying collateral for collateral dependent loans;

· Nature and volume of the portfolio and terms of loans;

· Experience, ability and depth of lending and credit management and staff;

· Volume and severity of past due, classified and nonaccrual loans, as well as other loan modifications;

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

· Effect of external factors, including competition, legal and regulatory requirements; and

· Risk from change in the historical look-back period.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

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 June 30, 2018 and December 31, 2017. As of June 30, 2018, due to the expansion of the Company’s internal credit quality risk ratings, the amount reclassified from the special mention rating to the pass/watch rating, which is included within the pass rating classification below, was $32,603,000. Previously, both special mention and watch rated loans were reported under the special mention rating classification.

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of June 30, 2018
Commercial, financial and agricultural	$	56,005	$	123	$	2,360	$	-	$	58,488
Real estate - commercial		128,496		1,410		6,727		898		137,531
Real estate - construction		29,518		-		2,574		-		32,092
Real estate - mortgage		165,762		-		3,445		408		169,615
Obligations of states and political subdivisions		13,264		-		-		-		13,264
Personal		10,700		-		21		-		10,721
Total	$	403,745	$	1,533	$	15,127	$	1,306	$	421,711

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2017
Commercial, financial and agricultural	$	34,826	$	8,692	$	2,280	$	4	$	45,802
Real estate - commercial		114,299		17,928		7,189		953		140,369
Real estate - construction		22,470		3,297		2,636		-		28,403
Real estate - mortgage		139,861		3,551		2,859		617		146,888
Obligations of states and political subdivisions		12,088		956		-		-		13,044
Personal		9,360		32		6		-		9,398
Total	$	332,904	$	34,456	$	14,970	$	1,574	$	383,904

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. Charge off 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 June 30, 2018 and December 31, 2017.

	As of June 30, 2018							As of December 31, 2017
				Unpaid						Unpaid
(Dollars in thousands)	Recorded			Principal		Related		Recorded		Principal		Related
	Investment			Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-		$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913			1,304		-		5,031		5,957		-
Acquired with credit deterioration		532			594		-		191		247		-
Real estate - mortgage		1,969			3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130			1,188		-		337		384		-
Personal		17			17		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	-	$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913	-		1,304		-		5,031		5,957		-
Acquired with credit deterioration		532			594		-		191		247		-
Real estate - mortgage		1,969			3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130			1,188		-		337		384		-
Personal		17			17		-		-		-		-
	$	4,561		$	6,684	$	-	$	8,259	$	10,803	$	-

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2018 and 2017 are summarized in the tables below.

	Three Months Ended June 30, 2018							Three Months Ended June 30, 2017
	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	$	1		$	-	$	-	$	386	$	6	$	-
Real estate - commercial		906			-		-		4,820		82		-
Acquired with credit deterioration		351			-		-		212		-		-
Real estate - construction		-			-		-		1,228		-		-
Real estate - mortgage		2,034			5		1		2,957		6		6
Acquired with credit deterioration		730			-		-		359		-		-
Personal		9			-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-		$	-	$	-	$	18	$	-	$	-
Real estate - commercial		-			-		-		919		-		-
Real estate - mortgage		-			-		-		338		-		-
Total:
Commercial, financial and agricultural	$	1	-	$	-	$	-	$	404	$	6	$	-
Real estate - commercial		906			-		-		5,739		82		-
Acquired with credit deterioration		351			-		-		212		-		-
Real estate - construction		-			-		-		1,228		-		-
Real estate - mortgage		2,034			5		1		3,295		6		6
Acquired with credit deterioration		730			-		-		359		-		-
Personal		9			-		-		-		-		-
	$	4,031		$	5	$	1	$	11,237	$	94	$	6

	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	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	$	234	$	-	$	-	$	391	$	13	$	-
Real estate - commercial		2,972		-		-		5,165		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,207		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	8	$	-	$	-
Real estate - commercial		-		-		-		460		-		-
Real estate - mortgage		-		-		-		356		-		-
Total:
Commercial, financial and agricultural	$	234	$	-	$	-	$	399	$	13	$	-
Real estate - commercial		2,972		-		-		5,625		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,563		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
	$	6,412	$	10	$	2	$	11,623	$	215	$	13

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2018 and December 31, 2017.

(Dollars in thousands)
	June 30, 2018		December 31, 2017
Nonaccrual loans:
Commercial, financial and agricultural	$	-	$	4
Real estate - commercial		913		953
Real estate - mortgage		1,568		1,917
Personal		17		-
Total	$	2,498	$	2,874

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 June 30, 2018 and December 31, 2017.

													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
As of June 30, 2018
Commercial, financial and agricultural	$	50		-		-	$	50	$	58,438	$	58,488	$	-
Real estate - commercial:
Real estate - commercial		729		-		-		729		136,270		136,999		-
Acquired with credit deterioration		153		-		11		164		368		532		11
Real estate - construction		317		-		-		317		31,775		32,092		-
Real estate - mortgage:						-
Real estate - mortgage		1,820		225		-		2,045		166,440		168,485		-
Acquired with credit deterioration		342		-		59		401		729		1,130		59
Obligations of states and political														-
subdivisions		-		-		-		-		13,264		13,264		-
Personal		25		5		-		30		10,691		10,721		-
Total	$	3,436	$	230	$	70	$	3,736	$	417,975	$	421,711	$	70

													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
As of December 31, 2017
Commercial, financial and agricultural	$	-	$	-	$	-	$	-	$	45,802	$	45,802	$	-
Real estate - commercial:
Real estate - commercial		16		23		-		39		140,139		140,178		-
Acquired with credit deterioration		-		-		28		28		163		191		28
Real estate - construction		-		-		-		-		28,403		28,403		-
Real estate - mortgage:
Real estate - mortgage		694		80		64		838		145,713		146,551		64
Acquired with credit deterioration		-		-		123		123		214		337		123
Obligations of states and political
subdivisions		-		-		-		-		13,044		13,044		-
Personal		66		6		-		72		9,326		9,398		-
Total	$	776	$	109	$	215	$	1,100	$	382,804	$	383,904	$	215

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at June 30, 2018 and December 31, 2017.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	8	$	522	$	550	$	450
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		19
	9	$	547	$	575	$	469

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of December 31, 2017
Accruing troubled debt restructurings:
Real estate - mortgage	7	$	369	$	397	$	315
Non-accruing troubled debt restructurings:
Commercial, financial, agricultural	1		19		20		4
Real estate - mortgage	1		25		25		20
	9	$	413	$	442	$	339

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 June 30, 2018, 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 or six months ended June 30, 2018 or 2017 within 12 months of restructure. On December 31, 2017, there were no specific reserves carried for the troubled debt restructurings. There was one troubled debt restructured loan for $4,000 at December 31, 2017 for which an $8,000 charge-off was recorded in 2017. 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 was one loan whose terms were modified resulting in troubled debt restructuring during the three and six months ended June 30, 2018. There were no loan terms modified resulting in troubled debt restructuring during the three months ended June 30, 2017; however, there was one troubled debt restructuring during the six months ended June 30, 2018. The following tables list the loan whose terms were modified resulting in a troubled debt restructuring during the three and six month period ended June 30, 2018. 

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Three Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	1	$	153	$	153	$	153
	1	$	153	$	153	$	153
		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Six Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	1	$	153	$	153	$	153
	1	$	153	$	153	$	153

The following table lists the loan whose terms were modified resulting in a troubled debt restructuring during the six months ended June 30, 2017.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Six Months Ended June 30, 2017
Accruing troubled debt restructurings:
Commercial, financial, agricultural	1	$	19	$	20	$	16
	1	$	19	$	20	$	16

Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at June 30, 2018 and December 31, 2017 totaled $788,000 and $1,285,000, respectively. 

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, June 30, 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, April 1, 2018	$	319		$	1,059		$	340		$	1,259		$	-		$	58	$	3,035
Charge-offs		-			-			-			(17)			-			(12)		(29)
Recoveries		3			-			-			5			-			3		11
Provisions		26			3			(13)			14			-			11		41
Ending balance, June 30, 2018	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
													Obligations of
	Commercial,												states and
	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)			-			(28)			-			(23)		(102)
Recoveries		6			5			-			5			-			6		22
Provisions		69			86			39			(1)			-			6		199
Ending balance, June 30, 2018	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
collectively evaluated for impairment	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
Loans receivable:
Ending balance	$	58,488		$	137,531		$	32,092		$	169,615		$	13,264		$	10,721	$	421,711
individually evaluated for impairment		-		$	913		$	-		$	1,969		$	-		$	17		2,899
acquired with credit deterioration		-	-	$	532	-	$	-	-	$	1,130	-	$	-	-	$	-		1,662
collectively evaluated for impairment	$	58,488		$	136,086		$	32,092		$	166,516		$	13,264		$	10,704	$	417,150

As of, and for the periods ended, June 30, 2017

									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, April 1, 2017	$	368	$	1,068	$	126	$	1,160	$	-	$	83	$	2,805
Charge-offs		(37)		-		-		(19)		-		(11)		(67)
Recoveries		-		-		-		-		-		3		3
Provisions		71		57		46		(48)		-		9		135
Ending balance, June 30, 2017	$	402	$	1,125	$	172	$	1,093	$	-	$	84	$	2,876
									Obligations of
	Commercial,								states and
	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2017	$	318	$	948	$	231	$	1,143	$	-	$	83	$	2,723
Charge-offs		(37)		-		-		(83)		-		(17)		(137)
Recoveries		-		-		-		44		-		6		50
Provisions		121		177		(59)		(11)		-		12		240
Ending balance, June 30, 2017	$	402	$	1,125	$	172	$	1,093	$	-	$	84	$	2,876
individually evaluated for impairment		8		30		-		-		-		-		38
collectively evaluated for impairment	$	394	$	1,095	$	172	$	1,093	$	-	$	84	$	2,838
Loans receivable:
Ending balance	$	49,966	$	146,124	$	23,895	$	148,132	$	14,067	$	10,045	$	392,229
individually evaluated for impairment		362		5,749		-		3,068		-		-		9,179
acquired with credit deterioration		-		208		-		351		-		-		559
collectively evaluated for impairment	$	49,604	$	140,167	$	23,895	$	144,713	$	14,067	$	10,045	$	382,491

As of December 31, 2017

									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, 2017	$	318	$	948	$	231	$	1,143	$	-	$	83	$	2,723
Charge-offs		(46)		(70)		-		(149)		-		(27)		(292)
Recoveries		5		2		-		45		-		17		69
Provisions		(4)		142		57		246		-		(2)		439
Ending balance, December 31, 2017	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
individually evaluated for impairment		-		-		-		-		-		-		-
collectively evaluated for impairment	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Loans receivable:
Ending balance	$	45,802	$	140,369	$	28,403	$	146,888	$	13,044	$	9,398	$	383,904
individually evaluated for impairment		468		5,031		-		2,232		-		-		7,731
acquired with credit deterioration		-		191		-		337		-		-		528
collectively evaluated for impairment	$	45,334	$	135,147	$	28,403	$	144,319	$	13,044	$	9,398	$	375,645

XML

Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2018

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 Liverpool Community Bank on April 30, 2018, and as a result, carries goodwill of $3,691,000 relating to the acquisition.

Total goodwill at June 30, 2018 and December 31, 2017 was $9,139,000 and $5,448,000, respectively. Goodwill is not amortized but is measured 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 or six month periods ended June 30, 2018 or 2017.

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. Other intangible assets in the amount of $40,000 were also identified and recorded as of November 30, 2015. The other intangible assets were amortized on a straight-line basis over two years, through November 30, 2017. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three and six months ended June 30, 2018 was $11,000 and $22,000, respectively.

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 both the three and six months ended June 30, 2018 was $9,000.  

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

	FNBPA		FNBPA		LCB
	Acquisition		Acquisition		Acquisition
	Core		Other		Core
(Dollars in thousands)	Deposit		Intangible		Deposit
	Intangible		Assets		Intangible
Beginning Balance at Acquisition Date	$	303	$	40	$	289
Amortization expense recorded prior to January 1, 2017		59		22		-
Amortization expense recorded in the twelve months
ended December 31, 2017		49		18		-
Unamortized balance as of December 31, 2017		195		-		-
Amortization expense recorded in the
six months ended June 30, 2018		22		-		9
Unamortized balance as of June 30, 2018	$	173	$	-	$	280
Scheduled remaining amortization expense for years ended:
December 31, 2018	$	22			$	26
December 31, 2019		38				49
December 31, 2020		33				44
December 31, 2021		27				39
December 31, 2022		21				33
After December 31, 2022		32				89

XML

Investment in Unconsolidated Subsidiary

6 Months Ended

Jun. 30, 2018

Investment in Unconsolidated Subsidiary [Abstract]

Investment in Unconsolidated Subsidiary

9. Unconsolidated Subsidiary

The Company no longer has an investment in an unconsolidated subsidiary following its acquisition 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.

The following table illustrates the components of the income/gain from the unconsolidated subsidiary investment recorded for the three and six months ended June 30, 2018 and 2017.

	Three Months Ended				Six Months Ended
	June 30, 2018				June 30, 2018
Income from unconsolidated subsidiary (excluding merger-	2018		2017		2018		2017
related adjustments)
Dividend income	$	12	$	12	$	36	$	36
Equity income		-		46		45		69
Total income (excluding merger-related adjustments)		12		58		81		105
Merger-related adjustments for investment in unconsolidated
subsidiary
Adjustment to LCB book value at April 30, 2018		(239)		-		(239)		-
Special merger-related dividend		39		-		39		-
Fair value gain		415		-		415		-
Total merger-related adjustments		215		-		215		-
Total income/gain from unconsolidated subsidiary	$	227	$	58	$	296	$	105

XML

Fair Value Measurement

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 2017, 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 six months ended June 30, 2018 or 2017.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	June 30,		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	$	33,714	$	-	$	33,714	$	-
Obligations of state and political subdivisions		20,286		-		20,286		-
Mortgage-backed securities		89,237		-		89,237		-
Equity securities		1,166		1,166		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,306	$	-	$	-	$	1,306
Mortgage servicing rights		215		-		-		215

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2017		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	34,214	$	-	$	34,214	$	-
Obligations of state and political subdivisions		24,981		-		24,981		-
Mortgage-backed securities		93,510		-		93,510		-
Equity securities available-for-sale		1,119		1,119		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,574	$	-	$	-	$	1,574
Other real estate owned		27		-		-		27
Mortgage servicing rights		225		-		-		225

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)
June 30, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,306	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 16%	15%
Mortgage servicing rights		215	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	371%

(Dollars in thousands)
December 31, 2017	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,574	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 13%	8%
Other real estate owned		27	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	22%	22%
Mortgage servicing rights		225	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	371%

(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.

Interest bearing time deposits with banks – The estimated fair value is determined by discounting the contractual future cash flows, using the rates currently offered for deposits of similar remaining maturities. 

Loans – As of June 30, 2018, the fair values of loans were estimated on an exit price basis due to the adoption of ASU 2016-01, incorporating discounts for credit, liquidity and marketability factors. These fair values are not comparable with the fair values disclosed as of December 31, 2017, which were based on an entrance price basis. As of that date, fair values of variable rate loans that reprice frequently and which entail no significant changes in credit risk were based on carrying values. The fair values of other loans as of that date were estimated by calculating the present value of the cash flow difference between the current rate and the market rate, for the average maturity, discounted quarterly at the market rate.

Fixed rate time deposits – The estimated fair value is determined by discounting the contractual future cash flows, using the rates currently offered for deposits of similar remaining maturities. 

Long-term debt and other interest-bearing liabilities – The fair value is estimated using discounted cash flow analysis, based on incremental borrowing rates for similar types of arrangements.

Commitments to extend credit and letters of credit – The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, considering market interest rates, the remaining terms and present credit-worthiness of the counterparties. The fair value of guarantees and letters of credit is based on fees currently charged for similar agreements.

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

	Financial Instruments
		June 30, 2018				December 31, 2017
(Dollars in thousands)		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,956	$	15,956	$	9,839	$	9,839
Interest bearing deposits with banks		291		291		58		58
Federal funds sold		915		915		-		-
Interest bearing time deposits with banks		3,780		3,755		350		350
Equity securities		1,166		1,166		-		-
Available for sale securities		143,237		143,237		153,824		153,824
Restricted investment in FHLB stock		2,498		2,498		3,104		3,104
Loans, net of allowance for loan losses		418,653		410,158		380,965		372,906
Mortgage servicing rights		215		215		225		225
Accrued interest receivable		1,675		1,675		1,582		1,582
Financial liabilities:
Non-interest bearing deposits	$	122,101	$	122,101	$	115,911	$	115,911
Interest bearing deposits		410,338		409,610		361,757		361,468
Securities sold under agreements to repurchase		3,843		3,843		9,769		9,769
Short-term borrowings		7,500		7,500		12,000		12,000
Long-term debt		15,000		14,896		25,000		24,885
Other interest bearing liabilities		1,587		1,589		1,593		1,595
Accrued interest payable		298		298		300		300
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 June 30, 2018 and December 31, 2017. This table excludes 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
June 30, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,780	$	3,755	$	-	$	3,755	$	-
Loans, net of allowance for loan losses		418,653		410,158		-		-		410,158
Financial instruments - Liabilities
Interest bearing deposits	$	410,338	$	409,610	$	-	$	409,610	$	-
Long-term debt		15,000		14,896		-		14,896		-
Other interest bearing liabilities		1,587		1,589		-		1,589		-

					(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, 2017
Financial instruments - Assets
Interest bearing time deposits with banks	$	350	$	350	$	-	$	350	$	-
Loans, net of allowance for loan losses		380,965		372,906		-		-		372,906
Financial instruments - Liabilities
Interest bearing deposits	$	361,757	$	361,468	$	-	$	361,468	$	-
Long-term debt		25,000		24,885		-		24,885		-
Other interest bearing liabilities		1,593		1,595		-		1,595		-

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Defined Benefit Retirement Plan

6 Months Ended

Jun. 30, 2018

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.

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 made no contributions during the six months ended June 30, 2018 and is not required to make a contribution in the remainder of 2018; however, it is considering doing so.

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 third 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 the second step of this strategy on July 1, 2018. Refer to Note 14 for additional information.

Pension expense included the following components for the three and six month periods ended June 30, 2018 and 2017:

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2018		2017		2018		2017
Components of net periodic pension (benefit) cost:
Interest cost	$	132	$	161	$	264	$	322
Expected return on plan assets		(192)		(202)		(384)		(403)
Recognized net actuarial loss		40		57		81		113
Net periodic pension (benefit) cost	$	(20)	$	16	$	(39)	$	32
Amortization of net actuarial loss recognized
in other comprehensive income	$	(40)	$	(57)	$	(81)	$	(113)
Total recognized in net periodic pension cost and
other comprehensive income	$	(60)	$	(41)	$	(120)	$	(81)

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Commitments and Contingent Liabilities and Guarantees

6 Months Ended

Jun. 30, 2018

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 June 30, 2018, the Company had $81,948,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $77,023,000 at December 31, 2017.

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 $3,147,000 and $2,541,000 of financial and performance letters of credit commitments as of June 30, 2018 and December 31, 2017, respectively. Commercial letters of credit as of June 30, 2018 and December 31, 2017 totaled $12,833,000 and $12,650,000, 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 June 30, 2018 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

6 Months Ended

Jun. 30, 2018

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 ASU’s that modified ASC 606. The Company elected to apply the ASU and all related ASU’s using the modified retrospective approach applied to all contracts imitated 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 ASC 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 ASC 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 ASC 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 ASC 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 and six months ended June 30, 2018 totaled $98,000 and $188,000, respectively. 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 and six months ended June 30, 2018 totaled $25,000 and $37,000, 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 ASC 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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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

14.  Subsequent Events

On July 1, 2018, the Company made a lump sum payment offer to a small group of terminated vested participants in the Company’s defined benefit plan intended to reduce its overall pension liability. The Company expects to complete the lump sum offering in the third quarter of 2018. Currently, no material effect to the consolidated financial statements as a result of the offering is expected.

On July 17, 2018, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 15, 2018, payable on August 31, 2018.  

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Recent Accounting Standards Update (Policy)

6 Months Ended

Jun. 30, 2018

Recent Accounting Standards Update [Abstract]

Adoption of New Accounting Standards

Adoption of New Accounting Standards

ASU 2014-09, Revenue from Contracts with Customers (606)

Issued: May 2014

Summary: The amendments in this Update establish a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance. The revenue standard’s core principle requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To accomplish this objective, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU 2015-14 deferred the effective date of the new revenue recognition standard by one year. As such, it was effective for public entities in fiscal years beginning after December 15, 2017.

The Company adopted the ASU 2014-09 on January 1, 2018 and elected the modified retrospective transition method. Because the amended guidance does not apply to revenue associated with financial instruments accounted for under other U.S. GAAP, the Company assessed the effect the guidance had on the recognition processes of certain recurring revenue streams related to non-interest income, in addition to when it is appropriate to recognize a gain/loss on the transfer of nonfinancial assets, such as other real estate owned. The Company did not identify any significant changes in the timing of revenue recognition when considering the amended accounting guidance. Additional disclosures related to revenue recognition appear in Note 13.

ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  

Issued: February 2018

Summary:The Update allows entities to reclassify from accumulated other comprehensive income (“AOCI”) to retained earnings the 'stranded' tax effects ofaccounting for income tax rate changes on items accounted for in AOCI that were impacted by tax reform enacted in December 2017. Because the impact of tax rate changes is recorded in income, items accounted for in AOCI could be left with a stranded tax effect appearing as though those items do not reflect the appropriate tax rate. The FASB's changes were intended to improve the usefulness of information reported to financial statement users.

Effective Date:  The changes are effective for years beginning after December 31, 2018, with early adoption permitted. The Company elected to adopt the changes in the first quarter of 2018, as of December 31, 2017. The amount transferred from AOCI to retained earnings totaled $588,000 and represented the impact of the Company’s corporate tax rate change from 34% to 21% at the date of enactment of the tax reform for the unrealized gains and losses on securities and the defined benefit plan accounted for in AOCI.

ASU 2016-01, Measurement of Financial Instruments

Issued: January 2016

Summary: The amendments in this Update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments in this Update also require an entity to present separately in AOCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the Update emphasizes the existing requirement to use exit prices to measure fair value for disclosure purposes and clarifies that entities should not make use of a practicability exception in determining the fair value of loans.  Accordingly, we refined the calculations used to determine the disclosed fair value of our loans as part of adopting this standard. The redefined calculation did not have a significant impact on our fair value disclosures.

Effective Date: For public entities, the amendments in the Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company currently holds a small portfolio of equity investments for which the fair value fluctuates with market activity. The Company adopted ASU 2016-01 on January 1, 2018. As of this date, the Company had $197,000 in unrealized gains on equity securities (see Note 6). The adoption of this Update resulted in a reclassification of $156,000 from other comprehensive loss to retained earnings. The Company recorded $52,000 for the three months ended June 30, 2018 and $46,000 for the six months ended June 30, 2018 on the consolidated statements of income for the change in fair value of equity securities.

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

Issued: February 2018

Summary: The FASB issued this Update to clarify certain aspects of the guidance on recognizing and measuring financial assets and liabilities in ASU 2016-01:

· Clarification regarding the ability to discontinue application of the measurement alternative for equity securities without a readily determinable fair value;

· Clarification of the measurement date for fair value adjustments to the carrying amount of equity securities without a readily determinable fair value for which the measurement alternative is elected;

· Clarification of the unit of account for fair value adjustments to forward contracts and purchased options on equity securities without a readily determinable fair value for which the measurement alternative is expected to be elected;

· Presentation requirements for certain hybrid financial liabilities for which the fair value option is elected;

· Measurement of financial liabilities denominated in a foreign currency for which the fair value option is elected; and

· Transition guidance for equity securities without a readily determinable fair value.

The amendments in ASU 2018-03 are effective for public business entities for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years beginning after June 15, 2018. For all other entities, the effective date is the same as the effective date for ASU 2016-01. All entities may early adopt the amendments, including adoption in an interim period, provided they have already adopted ASU 2016-01. The Company adopted this Update in conjunction with the adoption of ASU 2016-01 on January 1, 2018. The adoption had no material impact to the Company’s consolidated financial position or results of operations.

ASU 2017-09, Scope of Modification Accounting

Issued: May 2017

Summary: ASU 2017-09 clarifies Topic 718 such that an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award unless all of the following criteria are met:

1. The fair value of the modified award is the same as the fair value of the original award immediately before the modification.  The standard indicates that if the modification does not affect any of the inputs to the valuation technique used to value the award, the entity is not required to estimate the value immediately before and after the modification.

2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the modification.

3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the modification.

Effective Date: The amendments were effective for all entities for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted ASU 2017-09 on January 1, 2018 and it had no material impact on the Company’s consolidated financial position or results of operations.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities

Issued: March 2017

Summary: ASU 2017-08 shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, rather than amortizing over the full contractual term. The ASU does not change the accounting for securities held at a discount.

Effective Date: The amendments are effective for public business entities for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company chose to early adopt this standard, and the financial statements as of, and for the year ended, December 31, 2017 reflected the impact of premium amortization on callable debt securities to the earliest call date. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Issued: March 2017

Summary: ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost.The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization.

Effective Date: The amendments were effective for public business entities for fiscal years beginning after December 15, 2017. The Company adopted this Update on January 1, 2018, and it had no impact on the Company’s consolidated financial position and results of operations because the Company’s defined benefit plan is frozen; therefore, there is no service cost component to consider. The cost for other components related to the defined benefit plan are recorded in employee benefits expense on the consolidated statements of income.

ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments

Issued: August 2016

Summary: ASU 2016-15 clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are intended to reduce diversity in practice.

Effective Date: The amendments were effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted this Update on January 1, 2018 and it did not have a material impact on the Company’s consolidated financial position or results of operations.

Newly Issued, Not Yet Effective Standards

ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities

Issued: August 2017

Summary: ASU 2017-12 improves Topic 815by simplifying and expanding the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies its application through targeted improvements in key practice areas. This includes expanding the list of items eligible to be hedged and amending the methods used to measure the effectiveness of hedging relationships. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. These changes are intended to allow preparers more flexibility and to enhance the transparency of how hedging results are presented and disclosed. Further, the new standard provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period.

Effective Date: The amendments are effective for public business entities, for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the amendments for existing hedging relationships on the date of adoption.This Update will have no impact on the Company’s consolidated financial position and 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 (AFS) debt securities. For an AFS 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 currently 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 partnered with a software provider specializing in ALLL analysis and is assessing the sufficiency of data currently available through its core database.

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.

Effective Date:The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company has determined that the provisions of ASU 2016-02 will result in an increase in assets to recognize the present value of the lease obligations with a corresponding increase in liabilities; however, the Company does not expect this new standard to have a material impact on the Company’s financial position, results of operations or cash flows because the Company owns most of its facilities and this ASU will apply primarily to its four small operating leases. The Company is currently evaluating the projected present value at the adoption date.

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Loans and Related Allowance for Credit Losses (Policy)

6 Months Ended

Jun. 30, 2018

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. Charge off 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)

6 Months Ended

Jun. 30, 2018

Merger [Abstract]

Schedule of Purchase Price Allocation

Allocation of the purchase price was as follows:

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

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

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

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

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

The information about the acquired Liverpool purchased credit impaired loan portfolio as of April 30, 2018 is as follows:

(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.

	(Unaudited)				(Unaudited)
(Dollars in thousands; except share data)	Three Months ended June 30,				Six Months ended June 30,
	2018		2017		2018		2017
Net interest income after loan loss provision	$	5,487	$	4,986	$	10,449	$	9,903
Noninterest income		1,312		1,240		2,460		2,852
Noninterest expense		4,649		4,725		9,111		9,179
Net income available to common shareholders		2,001		1,265		3,637		2,950
Net income per common share		0.39		0.25		0.71		0.58

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2018

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)
	June 30, 2018		December 31, 2017
Unrealized losses on available for sale securities	$	(3,952)	$	(1,683)
Unrecognized expense for defined benefit pension		(2,286)		(2,351)
Accumulated other comprehensive loss	$	(6,238)	$	(4,034)

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

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 June 30,
	2018		2017
Net income	$	1,569	$	1,294
Weighted-average common shares outstanding		4,987		4,769
Basic earnings per share	$	0.31	$	0.27
Weighted-average common shares outstanding		4,987		4,769
Common stock equivalents due to effect of stock options		21		10
Total weighted-average common shares and equivalents		5,008		4,779
Diluted earnings per share	$	0.31	$	0.27

	Six Months Ended June 30,
	2018		2017
Net income	$	2,896	$	2,753
Weighted-average common shares outstanding		4,879		4,763
Basic earnings per share	$	0.59	$	0.58
Weighted-average common shares outstanding		4,879		4,763
Common stock equivalents due to effect of stock options		19		7
Total weighted-average common shares and equivalents		4,898		4,770
Diluted earnings per share	$	0.59	$	0.58

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Securities (Tables)

6 Months Ended

Jun. 30, 2018

Securities [Abstract]

Securities Available for Sale

The amortized cost and fair value of securities available for sale as of June 30, 2018 and December 31, 2017, 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.

		June 30, 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
Within one year	$	6,000	$	5,984	$	-	$	(16)
After one year but within five years		20,997		20,168		-		(829)
After five years but within ten years		7,998		7,562		-		(436)
		34,995		33,714		-		(1,281)
Obligations of state and political subdivisions
Within one year		837		836		-		(1)
After one year but within five years		14,537		14,407		14		(144)
After five years but within ten years		5,243		5,043		6		(206)
		20,617		20,286		20		(351)
Mortgage-backed securities		92,633		89,237		-		(3,396)
Total securities available for sale	$	148,245	$	143,237	$	20	$	(5,028)

		December 31, 2017
(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
Within one year	$	6,000	$	5,969	$	-	$	(31)
After one year but within five years		15,000		14,689		-		(311)
After five years but within ten years		13,998		13,556		-		(442)
		34,998		34,214		-		(784)
Obligations of state and political subdivisions
Within one year		2,521		2,516		-		(5)
After one year but within five years		13,959		13,955		50		(54)
After five years but within ten years		8,611		8,510		18		(119)
		25,091		24,981		68		(178)
Mortgage-backed securities		94,945		93,510		38		(1,473)
Equity securities		922		1,119		197		-
Total	$	155,956	$	153,824	$	303	$	(2,435)

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				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2018		2017		2018		2017
Gross proceeds from sales and calls of securities	$	-	$	5,056	$	4,285	$	11,634
Securities available for sale:
Gross realized gains from sold and called securities	$	-	$	3	$	-	$	509
Gross realized losses from sold and called securities		-		(2)		(15)		(4)
Gross gains from business combinations		-		3		-		3
Net (losses) gains	$	-	$	4	$	(15)	$	508

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 June 30, 2018 and December 31, 2017:

	Unrealized Losses at June 30, 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	5	$	10,652	$	(346)	15	$	23,062	$	(935)	20	$	33,714	$	(1,281)
Obligations of state and
political subdivisions	18		10,773		(142)	6		3,759		(209)	24		14,532		(351)
Mortgage-backed
securities	25		51,933		(1,594)	21		37,304		(1,802)	46		89,237		(3,396)
Total temporarily
impaired
securities	48	$	73,358	$	(2,082)	42	$	64,125	$	(2,946)	90	$	137,483	$	(5,028)

	Unrealized Losses at December 31, 2017
	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	5	$	10,845	$	(157)	15	$	23,369	$	(627)	20	$	34,214	$	(784)
Obligations of state and
political subdivisions	23		10,491		(70)	6		3,862		(108)	29		14,353		(178)
Mortgage-backed
securities	23		51,050		(518)	20		38,740		(955)	43		89,790		(1,473)
Total debt securities	51		72,386		(745)	41		65,971		(1,690)	92		138,357		(2,435)
Equity securities	1		9		-	1		4		-	2		13		-
Total temporarily
impaired
securities	52	$	72,395	$	(745)	42	$	65,975	$	(1,690)	94	$	138,370	$	(2,435)

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Loans and Related Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 2017. As of June 30, 2018, due to the expansion of the Company’s internal credit quality risk ratings, the amount reclassified from the special mention rating to the pass/watch rating, which is included within the pass rating classification below, was $32,603,000. Previously, both special mention and watch rated loans were reported under the special mention rating classification.

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of June 30, 2018
Commercial, financial and agricultural	$	56,005	$	123	$	2,360	$	-	$	58,488
Real estate - commercial		128,496		1,410		6,727		898		137,531
Real estate - construction		29,518		-		2,574		-		32,092
Real estate - mortgage		165,762		-		3,445		408		169,615
Obligations of states and political subdivisions		13,264		-		-		-		13,264
Personal		10,700		-		21		-		10,721
Total	$	403,745	$	1,533	$	15,127	$	1,306	$	421,711

(Dollars in thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
As of December 31, 2017
Commercial, financial and agricultural	$	34,826	$	8,692	$	2,280	$	4	$	45,802
Real estate - commercial		114,299		17,928		7,189		953		140,369
Real estate - construction		22,470		3,297		2,636		-		28,403
Real estate - mortgage		139,861		3,551		2,859		617		146,888
Obligations of states and political subdivisions		12,088		956		-		-		13,044
Personal		9,360		32		6		-		9,398
Total	$	332,904	$	34,456	$	14,970	$	1,574	$	383,904

Impaired Loans by Loan Portfolio Class

The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2018 and December 31, 2017.

	As of June 30, 2018							As of December 31, 2017
				Unpaid						Unpaid
(Dollars in thousands)	Recorded			Principal		Related		Recorded		Principal		Related
	Investment			Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	-		$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913			1,304		-		5,031		5,957		-
Acquired with credit deterioration		532			594		-		191		247		-
Real estate - mortgage		1,969			3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130			1,188		-		337		384		-
Personal		17			17		-		-		-		-
Total:
Commercial, financial and agricultural	$	-	-	$	8	$	-	$	468	$	477	$	-
Real estate - commercial		913	-		1,304		-		5,031		5,957		-
Acquired with credit deterioration		532			594		-		191		247		-
Real estate - mortgage		1,969			3,573		-		2,232		3,738		-
Acquired with credit deterioration		1,130			1,188		-		337		384		-
Personal		17			17		-		-		-		-
	$	4,561		$	6,684	$	-	$	8,259	$	10,803	$	-

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2018 and 2017 are summarized in the tables below.

	Three Months Ended June 30, 2018							Three Months Ended June 30, 2017
	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	$	1		$	-	$	-	$	386	$	6	$	-
Real estate - commercial		906			-		-		4,820		82		-
Acquired with credit deterioration		351			-		-		212		-		-
Real estate - construction		-			-		-		1,228		-		-
Real estate - mortgage		2,034			5		1		2,957		6		6
Acquired with credit deterioration		730			-		-		359		-		-
Personal		9			-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-		$	-	$	-	$	18	$	-	$	-
Real estate - commercial		-			-		-		919		-		-
Real estate - mortgage		-			-		-		338		-		-
Total:
Commercial, financial and agricultural	$	1	-	$	-	$	-	$	404	$	6	$	-
Real estate - commercial		906			-		-		5,739		82		-
Acquired with credit deterioration		351			-		-		212		-		-
Real estate - construction		-			-		-		1,228		-		-
Real estate - mortgage		2,034			5		1		3,295		6		6
Acquired with credit deterioration		730			-		-		359		-		-
Personal		9			-		-		-		-		-
	$	4,031		$	5	$	1	$	11,237	$	94	$	6

	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	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	$	234	$	-	$	-	$	391	$	13	$	-
Real estate - commercial		2,972		-		-		5,165		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,207		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
With an allowance recorded:
Commercial, financial and agricultural	$	-	$	-	$	-	$	8	$	-	$	-
Real estate - commercial		-		-		-		460		-		-
Real estate - mortgage		-		-		-		356		-		-
Total:
Commercial, financial and agricultural	$	234	$	-	$	-	$	399	$	13	$	-
Real estate - commercial		2,972		-		-		5,625		157		-
Acquired with credit deterioration		362		-		-		425		-		-
Real estate - construction		-		-		-		1,228		34		-
Real estate - mortgage		2,101		10		2		3,563		11		13
Acquired with credit deterioration		734		-		-		383		-		-
Personal		9		-		-		-		-		-
	$	6,412	$	10	$	2	$	11,623	$	215	$	13

Nonaccrual Loans by Classes of the Loan Portfolio

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2018 and December 31, 2017.

(Dollars in thousands)
	June 30, 2018		December 31, 2017
Nonaccrual loans:
Commercial, financial and agricultural	$	-	$	4
Real estate - commercial		913		953
Real estate - mortgage		1,568		1,917
Personal		17		-
Total	$	2,498	$	2,874

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 June 30, 2018 and December 31, 2017.

													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
As of June 30, 2018
Commercial, financial and agricultural	$	50		-		-	$	50	$	58,438	$	58,488	$	-
Real estate - commercial:
Real estate - commercial		729		-		-		729		136,270		136,999		-
Acquired with credit deterioration		153		-		11		164		368		532		11
Real estate - construction		317		-		-		317		31,775		32,092		-
Real estate - mortgage:						-
Real estate - mortgage		1,820		225		-		2,045		166,440		168,485		-
Acquired with credit deterioration		342		-		59		401		729		1,130		59
Obligations of states and political														-
subdivisions		-		-		-		-		13,264		13,264		-
Personal		25		5		-		30		10,691		10,721		-
Total	$	3,436	$	230	$	70	$	3,736	$	417,975	$	421,711	$	70

													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
As of December 31, 2017
Commercial, financial and agricultural	$	-	$	-	$	-	$	-	$	45,802	$	45,802	$	-
Real estate - commercial:
Real estate - commercial		16		23		-		39		140,139		140,178		-
Acquired with credit deterioration		-		-		28		28		163		191		28
Real estate - construction		-		-		-		-		28,403		28,403		-
Real estate - mortgage:
Real estate - mortgage		694		80		64		838		145,713		146,551		64
Acquired with credit deterioration		-		-		123		123		214		337		123
Obligations of states and political
subdivisions		-		-		-		-		13,044		13,044		-
Personal		66		6		-		72		9,326		9,398		-
Total	$	776	$	109	$	215	$	1,100	$	382,804	$	383,904	$	215

Troubled Debt Restructurings on Financing Receivables

The following tables summarize information regarding troubled debt restructurings by loan portfolio class at June 30, 2018 and December 31, 2017.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	8	$	522	$	550	$	450
Non-accruing troubled debt restructurings:
Real estate - mortgage	1		25		25		19
	9	$	547	$	575	$	469

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
As of December 31, 2017
Accruing troubled debt restructurings:
Real estate - mortgage	7	$	369	$	397	$	315
Non-accruing troubled debt restructurings:
Commercial, financial, agricultural	1		19		20		4
Real estate - mortgage	1		25		25		20
	9	$	413	$	442	$	339

Summary of Loans Whose Terms Have Been Modified

The following tables list the loan whose terms were modified resulting in a troubled debt restructuring during the three and six month period ended June 30, 2018. 

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Three Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	1	$	153	$	153	$	153
	1	$	153	$	153	$	153
		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Six Months Ended June 30, 2018
Accruing troubled debt restructurings:
Real estate - mortgage	1	$	153	$	153	$	153
	1	$	153	$	153	$	153

The following table lists the loan whose terms were modified resulting in a troubled debt restructuring during the six months ended June 30, 2017.

		Pre-Modification		Post-Modification
(Dollars in thousands)	Number of	Outstanding Recorded		Outstanding Recorded
	Contracts	Investment		Investment		Recorded Investment
Six Months Ended June 30, 2017
Accruing troubled debt restructurings:
Commercial, financial, agricultural	1	$	19	$	20	$	16
	1	$	19	$	20	$	16

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, June 30, 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, April 1, 2018	$	319		$	1,059		$	340		$	1,259		$	-		$	58	$	3,035
Charge-offs		-			-			-			(17)			-			(12)		(29)
Recoveries		3			-			-			5			-			3		11
Provisions		26			3			(13)			14			-			11		41
Ending balance, June 30, 2018	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
													Obligations of
	Commercial,												states and
	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)			-			(28)			-			(23)		(102)
Recoveries		6			5			-			5			-			6		22
Provisions		69			86			39			(1)			-			6		199
Ending balance, June 30, 2018	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
collectively evaluated for impairment	$	348		$	1,062		$	327		$	1,261		$	-		$	60	$	3,058
Loans receivable:
Ending balance	$	58,488		$	137,531		$	32,092		$	169,615		$	13,264		$	10,721	$	421,711
individually evaluated for impairment		-		$	913		$	-		$	1,969		$	-		$	17		2,899
acquired with credit deterioration		-	-	$	532	-	$	-	-	$	1,130	-	$	-	-	$	-		1,662
collectively evaluated for impairment	$	58,488		$	136,086		$	32,092		$	166,516		$	13,264		$	10,704	$	417,150

As of, and for the periods ended, June 30, 2017

									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, April 1, 2017	$	368	$	1,068	$	126	$	1,160	$	-	$	83	$	2,805
Charge-offs		(37)		-		-		(19)		-		(11)		(67)
Recoveries		-		-		-		-		-		3		3
Provisions		71		57		46		(48)		-		9		135
Ending balance, June 30, 2017	$	402	$	1,125	$	172	$	1,093	$	-	$	84	$	2,876
									Obligations of
	Commercial,								states and
	financial and		Real estate -		Real estate -		Real estate -		political
	agricultural		commercial		construction		mortgage		subdivisions		Personal		Total
Allowance for loan losses:
Beginning balance, January 1, 2017	$	318	$	948	$	231	$	1,143	$	-	$	83	$	2,723
Charge-offs		(37)		-		-		(83)		-		(17)		(137)
Recoveries		-		-		-		44		-		6		50
Provisions		121		177		(59)		(11)		-		12		240
Ending balance, June 30, 2017	$	402	$	1,125	$	172	$	1,093	$	-	$	84	$	2,876
individually evaluated for impairment		8		30		-		-		-		-		38
collectively evaluated for impairment	$	394	$	1,095	$	172	$	1,093	$	-	$	84	$	2,838
Loans receivable:
Ending balance	$	49,966	$	146,124	$	23,895	$	148,132	$	14,067	$	10,045	$	392,229
individually evaluated for impairment		362		5,749		-		3,068		-		-		9,179
acquired with credit deterioration		-		208		-		351		-		-		559
collectively evaluated for impairment	$	49,604	$	140,167	$	23,895	$	144,713	$	14,067	$	10,045	$	382,491

As of December 31, 2017

									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, 2017	$	318	$	948	$	231	$	1,143	$	-	$	83	$	2,723
Charge-offs		(46)		(70)		-		(149)		-		(27)		(292)
Recoveries		5		2		-		45		-		17		69
Provisions		(4)		142		57		246		-		(2)		439
Ending balance, December 31, 2017	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
individually evaluated for impairment		-		-		-		-		-		-		-
collectively evaluated for impairment	$	273	$	1,022	$	288	$	1,285	$	-	$	71	$	2,939
Loans receivable:
Ending balance	$	45,802	$	140,369	$	28,403	$	146,888	$	13,044	$	9,398	$	383,904
individually evaluated for impairment		468		5,031		-		2,232		-		-		7,731
acquired with credit deterioration		-		191		-		337		-		-		528
collectively evaluated for impairment	$	45,334	$	135,147	$	28,403	$	144,319	$	13,044	$	9,398	$	375,645

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

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		FNBPA		LCB
	Acquisition		Acquisition		Acquisition
	Core		Other		Core
(Dollars in thousands)	Deposit		Intangible		Deposit
	Intangible		Assets		Intangible
Beginning Balance at Acquisition Date	$	303	$	40	$	289
Amortization expense recorded prior to January 1, 2017		59		22		-
Amortization expense recorded in the twelve months
ended December 31, 2017		49		18		-
Unamortized balance as of December 31, 2017		195		-		-
Amortization expense recorded in the
six months ended June 30, 2018		22		-		9
Unamortized balance as of June 30, 2018	$	173	$	-	$	280
Scheduled remaining amortization expense for years ended:
December 31, 2018	$	22			$	26
December 31, 2019		38				49
December 31, 2020		33				44
December 31, 2021		27				39
December 31, 2022		21				33
After December 31, 2022		32				89

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Investment in Unconsolidated Subsidiary (Tables)

6 Months Ended

Jun. 30, 2018

Investment in Unconsolidated Subsidiary [Abstract]

Components of the Income/Gain from the Unconsolidated Subsidiary Investment

The following table illustrates the components of the income/gain from the unconsolidated subsidiary investment recorded for the three and six months ended June 30, 2018 and 2017.

	Three Months Ended				Six Months Ended
	June 30, 2018				June 30, 2018
Income from unconsolidated subsidiary (excluding merger-	2018		2017		2018		2017
related adjustments)
Dividend income	$	12	$	12	$	36	$	36
Equity income		-		46		45		69
Total income (excluding merger-related adjustments)		12		58		81		105
Merger-related adjustments for investment in unconsolidated
subsidiary
Adjustment to LCB book value at April 30, 2018		(239)		-		(239)		-
Special merger-related dividend		39		-		39		-
Fair value gain		415		-		415		-
Total merger-related adjustments		215		-		215		-
Total income/gain from unconsolidated subsidiary	$	227	$	58	$	296	$	105

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

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 June 30, 2018 and December 31, 2017, 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 six months ended June 30, 2018 or 2017.

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	June 30,		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	$	33,714	$	-	$	33,714	$	-
Obligations of state and political subdivisions		20,286		-		20,286		-
Mortgage-backed securities		89,237		-		89,237		-
Equity securities		1,166		1,166		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,306	$	-	$	-	$	1,306
Mortgage servicing rights		215		-		-		215

			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
(Dollars in thousands)	December 31,		for Identical		Observable		Unobservable
	2017		Assets		Inputs		Inputs
Measured at fair value on a recurring basis:
Debt securities available-for-sale:
Obligations of U.S. Government agencies and corporations	$	34,214	$	-	$	34,214	$	-
Obligations of state and political subdivisions		24,981		-		24,981		-
Mortgage-backed securities		93,510		-		93,510		-
Equity securities available-for-sale		1,119		1,119		-		-
Measured at fair value on a non-recurring basis:
Impaired loans	$	1,574	$	-	$	-	$	1,574
Other real estate owned		27		-		-		27
Mortgage servicing rights		225		-		-		225

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)
June 30, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,306	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 16%	15%
Mortgage servicing rights		215	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	371%

(Dollars in thousands)
December 31, 2017	Fair Value Estimate		Valuation Technique	Unobservable Input	Range	Weighted Average
Impaired loans	$	1,574	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	0% - 13%	8%
Other real estate owned		27	Appraisal of collateral (1)	Appraisal and liquidation adjustments (2)	22%	22%
Mortgage servicing rights		225	Multiple of annual servicing fee	Estimated pre-payment speed, based on rate and term	300% - 400%	371%

(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
		June 30, 2018				December 31, 2017
(Dollars in thousands)		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	15,956	$	15,956	$	9,839	$	9,839
Interest bearing deposits with banks		291		291		58		58
Federal funds sold		915		915		-		-
Interest bearing time deposits with banks		3,780		3,755		350		350
Equity securities		1,166		1,166		-		-
Available for sale securities		143,237		143,237		153,824		153,824
Restricted investment in FHLB stock		2,498		2,498		3,104		3,104
Loans, net of allowance for loan losses		418,653		410,158		380,965		372,906
Mortgage servicing rights		215		215		225		225
Accrued interest receivable		1,675		1,675		1,582		1,582
Financial liabilities:
Non-interest bearing deposits	$	122,101	$	122,101	$	115,911	$	115,911
Interest bearing deposits		410,338		409,610		361,757		361,468
Securities sold under agreements to repurchase		3,843		3,843		9,769		9,769
Short-term borrowings		7,500		7,500		12,000		12,000
Long-term debt		15,000		14,896		25,000		24,885
Other interest bearing liabilities		1,587		1,589		1,593		1,595
Accrued interest payable		298		298		300		300
Off-balance sheet financial instruments:
Commitments to extend credit	$	-	$	-	$	-	$	-
Letters of credit		-		-		-		-

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

This table excludes 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
June 30, 2018
Financial instruments - Assets
Interest bearing time deposits with banks	$	3,780	$	3,755	$	-	$	3,755	$	-
Loans, net of allowance for loan losses		418,653		410,158		-		-		410,158
Financial instruments - Liabilities
Interest bearing deposits	$	410,338	$	409,610	$	-	$	409,610	$	-
Long-term debt		15,000		14,896		-		14,896		-
Other interest bearing liabilities		1,587		1,589		-		1,589		-

					(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, 2017
Financial instruments - Assets
Interest bearing time deposits with banks	$	350	$	350	$	-	$	350	$	-
Loans, net of allowance for loan losses		380,965		372,906		-		-		372,906
Financial instruments - Liabilities
Interest bearing deposits	$	361,757	$	361,468	$	-	$	361,468	$	-
Long-term debt		25,000		24,885		-		24,885		-
Other interest bearing liabilities		1,593		1,595		-		1,595		-

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Defined Benefit Retirement Plan (Tables)

6 Months Ended

Jun. 30, 2018

JVB Plan [Member]

Defined Benefit Plan Disclosure [Line Items]

Components of Net Periodic Pension Cost

Pension expense included the following components for the three and six month periods ended June 30, 2018 and 2017:

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2018		2017		2018		2017
Components of net periodic pension (benefit) cost:
Interest cost	$	132	$	161	$	264	$	322
Expected return on plan assets		(192)		(202)		(384)		(403)
Recognized net actuarial loss		40		57		81		113
Net periodic pension (benefit) cost	$	(20)	$	16	$	(39)	$	32
Amortization of net actuarial loss recognized
in other comprehensive income	$	(40)	$	(57)	$	(81)	$	(113)
Total recognized in net periodic pension cost and
other comprehensive income	$	(60)	$	(41)	$	(120)	$	(81)

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Basis of Presentation and Accounting Policies (Narrative) (Details) - Liverpool Community Bank [Member]		6 Months Ended
	Apr. 30, 2018	Jun. 30, 2018
Business acquisition, name of acquired entity		Liverpool Community Bank ("Liverpool" or "LCB")
Acquisition date	Apr. 30, 2018

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Recent Accounting Standards Update (Narrative) (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
New Accounting Pronouncement, Early Adoption [Line Items]
Amount transferred from AOCI to retained earnings		$ 588,000
Reclassification from AOCI to retained earnings	$ 156,000	$ 156,000
Federal statutory tax rate		21.00%	34.00%
Unrealized gain (loss) on equity securities	52,000	$ 46,000
Equity Securities [Member]
New Accounting Pronouncement, Early Adoption [Line Items]
Unrealized gain (loss) on equity securities	$ 52,000	$ 46,000	$ 197,000

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Merger (Narrative) (Details) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Apr. 29, 2018
Business Acquisition [Line Items]
Fair value gain		$ 415,000		$ 415,000
Acquiree's common shares outstanding before acquisition		5,093,536		5,093,536		4,767,656
Goodwill		$ 9,139,000		$ 9,139,000		$ 5,448,000
Income/gain from unconsolidated subsidiary		227,000	$ 58,000	$ 296,000	$ 105,000
Federal statutory tax rate				21.00%		34.00%
Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Acquisition date	Apr. 30, 2018
Business acquisition, name of acquired entity				Liverpool Community Bank ("Liverpool" or "LCB")
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 before acquisition							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
Step Two purchase price consideration	7,825,000
Goodwill	3,691,000
Core deposit intangible assets acquired	289,000
Intangible assets amortization period				10 years
Gross amortized cost basis	$ 32,091,000
Income/gain from unconsolidated subsidiary		227,000	58,000	$ 296,000	105,000
Merger related costs		376,000		440,000
Merger related tax expense (benefit)		$ (31,000)	$ (91,000)	$ (30,000)	$ (114,000)
Federal statutory tax rate		21.00%	21.00%	21.00%	21.00%

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Merger (Schedule of Purchase Price Allocation) (Details) - USD ($)		3 Months Ended	6 Months Ended
	Apr. 30, 2018	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Increase in Step One basis from equity gain in acquisition		$ 415,000	$ 415,000
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Goodwill		$ 9,139,000	$ 9,139,000	$ 5,448,000
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
Net assets acquired:
Tangible common equity	9,246,000
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Total fair value adjustments	(95,000)
Associated deferred income taxes	20,000
Fair value adjustment to net assets acquired, net of tax	(75,000)
Total net assets acquired	9,171,000
Goodwill	$ 3,691,000
Number of shares issued upon the closing of acquisition	315,284

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Merger (Summary of the Estimated Fair Value of the Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands	Apr. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Net assets acquired:
Bank owned life insurance		$ 15,761	$ 14,972
Goodwill		$ 9,139	$ 5,448
Liverpool Community Bank [Member]
Business Acquisition [Line Items]
Total purchase price	$ 12,862
Net assets acquired:
Cash and cash equivalents	8,923
Investments in time deposits with banks	3,675
Loans	31,331
Premises and equipment	125
Accrued interest receivable	123
Core deposit and other intangibles	289
Bank owned life insurance	632
FHLB Stock	124
Other assets	267
Deposits	(36,052)
Accrued interest payable	(17)
Other liabilities	(249)
Total net assets acquired	9,171
Goodwill	$ 3,691

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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) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Merger [Abstract]
Net interest income after loan loss provision	$ 5,487	$ 4,986	$ 10,449	$ 9,903
Noninterest income	1,312	1,240	2,460	2,852
Noninterest expense	4,649	4,725	9,111	9,179
Net income available to common shareholders	$ 2,001	$ 1,265	$ 3,637	$ 2,950
Consolidated net income per common share	$ 0.39	$ 0.25	$ 0.71	$ 0.58

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Accumulated Other Comprehensive Loss (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Loss [Abstract]
Unrealized losses on available for sale securities	$ (3,952)	$ (1,683)
Unrecognized expense for defined benefit pension	(2,286)	(2,351)
Accumulated other comprehensive loss	$ (6,238)	$ (4,034)

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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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Net income	$ 1,569	$ 1,294	$ 2,896	$ 2,753
Weighted-average common shares outstanding	4,987,137	4,768,681	4,879,361	4,762,632
Basic earnings per share	$ 0.31	$ 0.27	$ 0.59	$ 0.58
Common stock equivalents due to effect of stock options	21,000	10,000	19,000	7,000
Total weighted-average common shares and equivalents	5,008,218	4,779,401	4,898,248	4,770,399
Diluted earnings per share	$ 0.31	$ 0.27	$ 0.59	$ 0.58

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Securities (Narrative) (Details)	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2018 USD ($) security	Jun. 30, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Securities in unrealized loss position	90	90	94
Equity securities | $	$ 1,166,000	$ 1,166,000
Unrealized gain (loss) on equity securities | $	52,000	46,000
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in unrealized loss position			2
Equity securities | $	1,166,000	1,166,000	$ 1,119,000
Unrealized gain (loss) on equity securities | $	$ 52,000	$ 46,000	$ 197,000
Debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in unrealized loss position			92
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in unrealized loss position	20	20	20
Securities in unrealized loss positions for 12 months or more	15	15
Percentage of securities depreciated from their amortized cost basis	1.00%	1.00%
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in unrealized loss position	24	24	29
Securities in unrealized loss positions for 12 months or more	6	6
Percentage of securities depreciated from their amortized cost basis	1.00%	1.00%
U.S. Government Sponsored Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment portfolio percentage	24.00%	24.00%
Carrying value of pledged assets | $	$ 56,280,000	$ 56,280,000	$ 47,825,000
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment portfolio percentage	62.00%	62.00%
Securities in unrealized loss position	46	46
Securities in unrealized loss positions for 12 months or more	21	21
Percentage of securities depreciated from their amortized cost basis	3.00%	3.00%
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Investment portfolio percentage	14.00%	14.00%
Debt instrument term		5 years

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Securities (Securities Available for Sale) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities, Total	$ 148,245	$ 155,956
Fair Value of AFS Securities, Total	143,237	153,824
Gross Unrealized Gains on AFS Securities, Total	20	303
Gross Unrealized Losses on AFS Securities, Total	(5,028)	(2,435)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing Within One Year	6,000	6,000
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	20,997	15,000
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	7,998	13,998
Amortized Cost of AFS Securities, Total	34,995	34,998
Fair Value of AFS Securities Maturing Within One Year	5,984	5,969
Fair Value of AFS Securities Maturing After One Year But Within Five Years	20,168	14,689
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	7,562	13,556
Fair Value of AFS Securities, Total	33,714	34,214
Gross Unrealized Losses on AFS Securities Maturing Within One Year	(16)	(31)
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(829)	(311)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(436)	(442)
Gross Unrealized Losses on AFS Securities, Total	(1,281)	(784)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing Within One Year	837	2,521
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	14,537	13,959
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	5,243	8,611
Amortized Cost of AFS Securities, Total	20,617	25,091
Fair Value of AFS Securities Maturing Within One Year	836	2,516
Fair Value of AFS Securities Maturing After One Year But Within Five Years	14,407	13,955
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	5,043	8,510
Fair Value of AFS Securities, Total	20,286	24,981
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	14	50
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within Ten Years	6	18
Gross Unrealized Gains on AFS Securities, Total	20	68
Gross Unrealized Losses on AFS Securities Maturing Within One Year	(1)	(5)
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(144)	(54)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(206)	(119)
Gross Unrealized Losses on AFS Securities, Total	(351)	(178)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Without Single Maturity Date	92,633	94,945
Fair Value of AFS Securities Without Single Maturity Date	89,237	93,510
Gross Unrealized Gains on AFS Securities Without Single Maturity Date		38
Gross Unrealized Losses on AFS Securities Without Single Maturity Date	$ (3,396)	(1,473)
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Without Single Maturity Date		922
Fair Value of AFS Securities Without Single Maturity Date		1,119
Gross Unrealized Gains on AFS Securities Without Single Maturity Date		$ 197

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Securities (Summary of Proceeds and Realized Gain/(Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Securities [Abstract]
Reversal of existing deferred fees and premiums	$ 5,056	$ 4,285	$ 11,634
Gross realized gains from sold and called securities	3		509
Gross realized losses from sold and called securities	(2)	(15)	(4)
Gross gains from business combinations	3		3
Net (losses) gains	$ 4	$ (15)	$ 508

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Securities (Schedule of Unrealized Losses) (Details) $ in Thousands	Jun. 30, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	48	52
Fair Value, Less Than 12 Months	$ 73,358	$ 72,395
Unrealized Losses, Less Than 12 Months	$ (2,082)	$ (745)
Number of Securities, Twelve Months or More | security	42	42
Fair Value, 12 Months or More	$ 64,125	$ 65,975
Unrealized Losses, 12 Months or More	$ (2,946)	$ (1,690)
Number of Securities, Total | security	90	94
Fair Value, Total	$ 137,483	$ 138,370
Unrealized Losses, Total	$ (5,028)	$ (2,435)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	5	5
Fair Value, Less Than 12 Months	$ 10,652	$ 10,845
Unrealized Losses, Less Than 12 Months	$ (346)	$ (157)
Number of Securities, Twelve Months or More | security	15	15
Fair Value, 12 Months or More	$ 23,062	$ 23,369
Unrealized Losses, 12 Months or More	$ (935)	$ (627)
Number of Securities, Total | security	20	20
Fair Value, Total	$ 33,714	$ 34,214
Unrealized Losses, Total	$ (1,281)	$ (784)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	18	23
Fair Value, Less Than 12 Months	$ 10,773	$ 10,491
Unrealized Losses, Less Than 12 Months	$ (142)	$ (70)
Number of Securities, Twelve Months or More | security	6	6
Fair Value, 12 Months or More	$ 3,759	$ 3,862
Unrealized Losses, 12 Months or More	$ (209)	$ (108)
Number of Securities, Total | security	24	29
Fair Value, Total	$ 14,532	$ 14,353
Unrealized Losses, Total	$ (351)	$ (178)
Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	25	23
Fair Value, Less Than 12 Months	$ 51,933	$ 51,050
Unrealized Losses, Less Than 12 Months	$ (1,594)	$ (518)
Number of Securities, Twelve Months or More | security	21	20
Fair Value, 12 Months or More	$ 37,304	$ 38,740
Unrealized Losses, 12 Months or More	$ (1,802)	$ (955)
Number of Securities, Total | security	46	43
Fair Value, Total	$ 89,237	$ 89,790
Unrealized Losses, Total	$ (3,396)	$ (1,473)
Debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security		51
Fair Value, Less Than 12 Months		$ 72,386
Unrealized Losses, Less Than 12 Months		$ (745)
Number of Securities, Twelve Months or More | security		41
Fair Value, 12 Months or More		$ 65,971
Unrealized Losses, 12 Months or More		$ (1,690)
Number of Securities, Total | security		92
Fair Value, Total		$ 138,357
Unrealized Losses, Total		$ (2,435)
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security		1
Fair Value, Less Than 12 Months		$ 9
Number of Securities, Twelve Months or More | security		1
Fair Value, 12 Months or More		$ 4
Number of Securities, Total | security		2
Fair Value, Total		$ 13

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Loans and Related Allowance for Credit Losses (Narrative) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
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
Troubled debt restructured Number of loans	$ 469,000	$ 339,000
Trouble debt restructured loan	469,000	339,000
Amount of Loan Portfolio reclassified from spoecial mention ratings to pass rating	$ 32,603,000
Non-Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructurings, charge-off		8,000
Troubled debt restructured Number of loans		4,000
Trouble debt restructured loan		4,000
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	$ 788,000	1,285,000
Real Estate Portfolio Segment [Member] | Mortgage Loan [Member] | Non-Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructured Number of loans	19,000	20,000
Trouble debt restructured loan	19,000	20,000
Real Estate Portfolio Segment [Member] | Mortgage Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructured Number of loans	450,000	315,000
Trouble debt restructured loan	450,000	$ 315,000
Restructured Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructured Number of loans	153,000		$ 16,000
Trouble debt restructured loan	153,000		$ 16,000
Restructured Loan [Member] | Real Estate Portfolio Segment [Member] | Mortgage Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Troubled debt restructured Number of loans	153,000
Trouble debt restructured loan	$ 153,000

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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	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 421,711	$ 383,904	$ 392,229
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	403,745	332,904
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,533	34,456
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	15,127	14,970
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,306	1,574
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	58,488	45,802	49,966
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	56,005	34,826
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	123	8,692
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,360	2,280
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		4
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	137,531	140,369	146,124
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	128,496	114,299
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,410	17,928
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,727	7,189
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	898	953
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	32,092	28,403	23,895
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	29,518	22,470
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		3,297
Construction Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,574	2,636
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	169,615	146,888	148,132
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	165,762	139,861
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		3,551
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,445	2,859
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	408	617
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	13,264	13,044	14,067
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	13,264	12,088
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		956
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	10,721	9,398	$ 10,045
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	10,700	9,360
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans		32
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 21	$ 6

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Loans and Related Allowance for Credit Losses (Impaired Loans by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Impaired [Line Items]
Recorded Investment, Total	$ 4,561	$ 8,259
Unpaid Principal Balance, Total	6,684	10,803
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment		468
Impaired Loans with No Allowance: Unpaid Principal Balance	8	477
Recorded Investment, Total		468
Unpaid Principal Balance, Total	8	477
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	913	5,031
Impaired Loans with No Allowance: Unpaid Principal Balance	1,304	5,957
Recorded Investment, Total	913	5,031
Unpaid Principal Balance, Total	1,304	5,957
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	532	191
Impaired Loans with No Allowance: Unpaid Principal Balance	594	247
Recorded Investment, Total	532	191
Unpaid Principal Balance, Total	594	247
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	1,969	2,232
Impaired Loans with No Allowance: Unpaid Principal Balance	3,573	3,738
Recorded Investment, Total	1,969	2,232
Unpaid Principal Balance, Total	3,573	3,738
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	1,130	337
Impaired Loans with No Allowance: Unpaid Principal Balance	1,188	384
Recorded Investment, Total	1,130	337
Unpaid Principal Balance, Total	1,188	$ 384
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	17
Impaired Loans with No Allowance: Unpaid Principal Balance	17
Recorded Investment, Total	17
Unpaid Principal Balance, Total	$ 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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 4,031	$ 11,237	$ 6,412	$ 11,623
Interest Income Recognized, Total	5	94	10	215
Cash Basis Interest Income, Total	1	6	2	13
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	1	386	234	391
Impaired Loans with No Allowance: Interest Income Recognized		6		13
Impaired Loans with Allowance: Average Recorded Investment		18		8
Average Recorded Investment, Total	1	404	234	399
Interest Income Recognized, Total		6		13
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	906	4,820	2,972	5,165
Impaired Loans with No Allowance: Interest Income Recognized		82		157
Impaired Loans with Allowance: Average Recorded Investment		919		460
Average Recorded Investment, Total	906	5,739	2,972	5,625
Interest Income Recognized, Total		82		157
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment		1,228		1,228
Impaired Loans with No Allowance: Interest Income Recognized				34
Average Recorded Investment, Total		1,228		1,228
Interest Income Recognized, Total				34
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	2,034	2,957	2,101	3,207
Impaired Loans with No Allowance: Interest Income Recognized	5	6	10	11
Impaired Loans with No Allowance: Cash Basis Interest Income	1	6	2	13
Impaired Loans with Allowance: Average Recorded Investment		338		356
Average Recorded Investment, Total	2,034	3,295	2,101	3,563
Interest Income Recognized, Total	5	6	10	11
Cash Basis Interest Income, Total	1	6	2	13
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Average Recorded Investment	9		9
Average Recorded Investment, Total	9		9
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	351	212	362	425
Average Recorded Investment, Total	351	212	362	425
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	730	359	734	383
Average Recorded Investment, Total	$ 730	$ 359	$ 734	$ 383

XML

Loans and Related Allowance for Credit Losses (Nonaccrual Loans by Classes of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 2,498	$ 2,874
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status		4
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	913	953
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	1,568	$ 1,917
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 17

XML

Loans and Related Allowance for Credit Losses (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 3,736	$ 1,100
Current	417,975	382,804
Total loans	421,711	383,904	$ 392,229
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	70	215
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,436	776
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	230	109
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	70	215
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	50
Current	58,438	45,802
Total loans	58,488	45,802	49,966
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	50
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	137,531	140,369	146,124
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	729	39
Current	136,270	140,139
Total loans	136,999	140,178
Commercial Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	164	28
Current	368	163
Total loans	532	191
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	11	28
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	729	16
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	153
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		23
Commercial 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	11	28
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	317
Current	31,775	28,403
Total loans	32,092	28,403	23,895
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	317
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	169,615	146,888	148,132
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	2,045	838
Current	166,440	145,713
Total loans	168,485	146,551
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		64
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	401	123
Current	729	214
Total loans	1,130	337
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	59	123
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	1,820	694
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	342
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	225	80
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		64
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	59	123
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,264	13,044
Total loans	13,264	13,044	14,067
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	30	72
Current	10,691	9,326
Total loans	10,721	9,398	$ 10,045
Personal Loan [Member] | Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	25	66
Personal Loan [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 5	$ 6

XML

Loans and Related Allowance for Credit Losses (Troubled Debt Restructurings on Financing Receivables) (Details) $ in Thousands	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($) contract	Jun. 30, 2018 USD ($) contract	Jun. 30, 2017 USD ($) contract	Dec. 31, 2017 USD ($) contract
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract		9		9
Financing Receivable, Modifications, Pre-Modification Recorded Investment		$ 547		$ 413
Financing Receivable, Modifications, Post-Modification Recorded Investment		575		442
Financing Receivable, Modifications, Recorded Investment	$ 469	$ 469		339
Non-Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment				$ 4
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Non-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				$ 19
Financing Receivable, Modifications, Post-Modification Recorded Investment				20
Financing Receivable, Modifications, Recorded Investment				$ 4
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		7
Financing Receivable, Modifications, Pre-Modification Recorded Investment		$ 522		$ 369
Financing Receivable, Modifications, Post-Modification Recorded Investment		550		397
Financing Receivable, Modifications, Recorded Investment	450	$ 450		$ 315
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	$ 19	$ 19		$ 20
Restructured Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | contract	1	1	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 153	$ 153	$ 19
Financing Receivable, Modifications, Post-Modification Recorded Investment	153	153	20
Financing Receivable, Modifications, Recorded Investment	$ 153	$ 153	$ 16
Restructured Loan [Member] | Commercial, Financial and Agricultural [Member] | Commercial 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			$ 19
Financing Receivable, Modifications, Post-Modification Recorded Investment			20
Financing Receivable, Modifications, Recorded Investment			$ 16
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	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 153	$ 153
Financing Receivable, Modifications, Post-Modification Recorded Investment	153	153
Financing Receivable, Modifications, Recorded Investment	$ 153	$ 153

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		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 3,035	$ 2,805	$ 2,939	$ 2,723	$ 2,723
Charge-offs	(29)	(67)	(102)	(137)	(292)
Recoveries	11	3	22	50	69
Provision for loan losses	41	135	199	240	439
Allowance for loan losses: Ending balance	3,058	2,876	3,058	2,876	2,939
Ending balance: individually evaluated for impairment		38		38
Ending balance: collectively evaluated for impairment	3,058	2,838	3,058	2,838	2,939
Loans: Ending Balance	421,711	392,229	421,711	392,229	383,904
Ending balance: individually evaluated for impairment	2,899	9,179	2,899	9,179	7,731
Ending balance: collectively evaluated for impairment	417,150	382,491	417,150	382,491	375,645
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	319	368	273	318	318
Charge-offs		(37)		(37)	(46)
Recoveries	3		6		5
Provision for loan losses	26	71	69	121	(4)
Allowance for loan losses: Ending balance	348	402	348	402	273
Ending balance: individually evaluated for impairment		8		8
Ending balance: collectively evaluated for impairment	348	394	348	394	273
Loans: Ending Balance	58,488	49,966	58,488	49,966	45,802
Ending balance: individually evaluated for impairment		362		362	468
Ending balance: collectively evaluated for impairment	58,488	49,604	58,488	49,604	45,334
Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,059	1,068	1,022	948	948
Charge-offs			(51)		(70)
Recoveries			5		2
Provision for loan losses	3	57	86	177	142
Allowance for loan losses: Ending balance	1,062	1,125	1,062	1,125	1,022
Ending balance: individually evaluated for impairment		30		30
Ending balance: collectively evaluated for impairment	1,062	1,095	1,062	1,095	1,022
Loans: Ending Balance	137,531	146,124	137,531	146,124	140,369
Ending balance: individually evaluated for impairment	913	5,749	913	5,749	5,031
Ending balance: collectively evaluated for impairment	136,086	140,167	136,086	140,167	135,147
Construction Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	340	126	288	231	231
Provision for loan losses	(13)	46	39	(59)	57
Allowance for loan losses: Ending balance	327	172	327	172	288
Ending balance: collectively evaluated for impairment	327	172	327	172	288
Loans: Ending Balance	32,092	23,895	32,092	23,895	28,403
Ending balance: collectively evaluated for impairment	32,092	23,895	32,092	23,895	28,403
Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,259	1,160	1,285	1,143	1,143
Charge-offs	(17)	(19)	(28)	(83)	(149)
Recoveries	5		5	44	45
Provision for loan losses	14	(48)	(1)	(11)	246
Allowance for loan losses: Ending balance	1,261	1,093	1,261	1,093	1,285
Ending balance: collectively evaluated for impairment	1,261	1,093	1,261	1,093	1,285
Loans: Ending Balance	169,615	148,132	169,615	148,132	146,888
Ending balance: individually evaluated for impairment	1,969	3,068	1,969	3,068	2,232
Ending balance: collectively evaluated for impairment	166,516	144,713	166,516	144,713	144,319
Obligations of State and Political Subdivisions [Member] | Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Ending Balance	13,264	14,067	13,264	14,067	13,044
Ending balance: collectively evaluated for impairment	13,264	14,067	13,264	14,067	13,044
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	58	83	71	83	83
Charge-offs	(12)	(11)	(23)	(17)	(27)
Recoveries	3	3	6	6	17
Provision for loan losses	11	9	6	12	(2)
Allowance for loan losses: Ending balance	60	84	60	84	71
Ending balance: collectively evaluated for impairment	60	84	60	84	71
Loans: Ending Balance	10,721	10,045	10,721	10,045	9,398
Ending balance: individually evaluated for impairment	17		17
Ending balance: collectively evaluated for impairment	10,704	10,045	10,704	10,045	9,398
Acquired with Credit Deterioration [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance: individually evaluated for impairment	1,662	559	1,662	559	528
Acquired with Credit Deterioration [Member] | Commercial Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Ending Balance	532		532		191
Ending balance: individually evaluated for impairment	532	208	532	208	191
Acquired with Credit Deterioration [Member] | Mortgage Loan [Member] | Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Ending Balance	1,130		1,130		337
Ending balance: individually evaluated for impairment	$ 1,130	$ 351	$ 1,130	$ 351	$ 337

XML

Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($)				3 Months Ended		6 Months Ended
	Apr. 30, 2018	Nov. 30, 2015	Sep. 08, 2006	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Goodwill included in acquisition price				$ 9,139,000		$ 9,139,000		$ 5,448,000
Amortization of intangible assets				20,000	$ 18,000	31,000	$ 35,000
Goodwill impairment loss				0	$ 0	0	$ 0
Branch Office in Richfield, PA [Member]
Acquisition date			Sep. 08, 2006
Goodwill included in acquisition price				2,046,000		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		$ 3,402,000
Intangible assets included in purchase price		$ 303,000
Intangible assets amortization period						10 years
Amortization of intangible assets				11,000		$ 22,000
Liverpool Community Bank [Member]
Acquisition date	Apr. 30, 2018
Goodwill included in acquisition price	$ 3,691,000
Intangible assets included in purchase price	289,000
Intangible assets amortization period						10 years
Core deposit and other intangibles	$ 289,000
Core deposit intangible amortization expense				$ 9,000		$ 9,000
Other Intangible Assets [Member] | FNBPA Bancorp, Inc [Member]
Intangible assets included in purchase price		$ 40,000
Intangible assets amortization period						2 years

XML

Goodwill and Other Intangible Assets (Amortization Schedule for Intangible Assets) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Apr. 30, 2018	Nov. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 20,000	$ 18,000	$ 31,000	$ 35,000
FNBPA Bancorp, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								$ 303,000
Amortization of intangible assets	11,000		22,000
FNBPA Bancorp, Inc [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								303,000
Amortization of intangible assets			22,000		$ 49,000	$ 59,000
Unamortized balance as of June 30, 2018	173,000		173,000		195,000
Scheduled remaining amortization expense for years ended:
December 31, 2018	22,000		22,000
December 31, 2019	38,000		38,000
December 31, 2020	33,000		33,000
December 31, 2021	27,000		27,000
December 31, 2022	21,000		21,000
After December 31, 2022	32,000		32,000
FNBPA Bancorp, Inc [Member] | Other Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								$ 40,000
Amortization of intangible assets					$ 18,000	$ 22,000
Liverpool Community Bank [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date							$ 289,000
Scheduled remaining amortization expense for years ended:
December 31, 2018	9,000		9,000
Liverpool Community Bank [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date							$ 289,000
Amortization of intangible assets			9,000
Unamortized balance as of June 30, 2018	280,000		280,000
Scheduled remaining amortization expense for years ended:
December 31, 2018	26,000		26,000
December 31, 2019	49,000		49,000
December 31, 2020	44,000		44,000
December 31, 2021	39,000		39,000
December 31, 2022	33,000		33,000
After December 31, 2022	$ 89,000		$ 89,000

XML

Investment in Unconsolidated Subsidiary (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Schedule of Equity Method Investments [Line Items]
Goodwill impairment loss	$ 0	$ 0	$ 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		$ 0

XML

Investment in Unconsolidated Subsidiary (Components of the Income/Gain from the Unconsolidated Subsidiary Investment) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income from unconsolidated subsidiary (excluding merger-related adjustments)
Dividend income	$ 12	$ 12	$ 36	$ 36
Equity income		46	45	69
Total income (excluding merger-related adjustments)	12	58	81	105
Merger-Related Adjustments for Investment in Unconsolidated Subsidiary
Adjustment to LCB book value at April 30, 2018	(239)		(239)
Special merger-related dividend	39		39
Fair value gain	415		415
Total merger-related adjustments	215		215
Total income/gain from unconsolidated subsidiary	$ 227	$ 58	$ 296	$ 105

XML

Fair Value Measurements (Fair Value Measurements by Level of Valuation Inputs) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	$ 143,237	$ 153,824
Impaired loans	4,561	8,259
Other real estate owned	355	355
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	33,714	34,214
Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	20,286	24,981
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	33,714	34,214
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	20,286	24,981
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	89,237	93,510
Fair Value, Measurements, Recurring [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	1,166	1,119
Fair Value, Measurements, Recurring [Member] | (Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	1,166	1,119
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	33,714	34,214
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	20,286	24,981
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	89,237	93,510
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	1,306	1,574
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	1,306	1,574
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		27
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		27
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	215	225
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	$ 215	$ 225

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Fair Value Measurements (Quantitative Information for Assets Measured at Fair Value) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	$ 4,561	$ 8,259
Other real estate owned	355	355
Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	$ 1,306	$ 1,574
Weighted average volatility rate	15.00%	8.00%
Other Real Estate Owned [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other real estate owned		$ 27
Range		22.00%
Weighted average volatility rate		22.00%
Mortgage Servicing Rights [Member] | Multiple of Annual Servicing Fee [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	$ 215	$ 225
Weighted average volatility rate	371.00%	371.00%
Minimum [Member] | Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Range	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]
Range	300.00%	300.00%
Maximum [Member] | Impaired Loans [Member] | Appraisal of Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Range	16.00%	13.00%
Maximum [Member] | Mortgage Servicing Rights [Member] | Multiple of Annual Servicing Fee [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Range	400.00%	400.00%

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Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing deposits with banks	$ 291	$ 58
Federal funds sold	915
Interest bearing time deposits with banks	3,780	350
Equity securities	1,166
Available for sale securities	143,237	153,824
Restricted investment in bank stock	2,498	3,104
Non-interest bearing deposits	122,101	115,911
Interest bearing deposits	410,338	361,757
Long-term debt	15,000	25,000
Other interest bearing liabilities	1,587	1,593
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	15,956	9,839
Interest bearing deposits with banks	291	58
Federal funds sold	915
Interest bearing time deposits with banks	3,780	350
Equity securities	1,166
Available for sale securities	143,237	153,824
Restricted investment in bank stock	2,498	3,104
Loans, net of allowance for loan losses	418,653	380,965
Mortgage servicing rights	215	225
Accrued interest receivable	1,675	1,582
Non-interest bearing deposits	122,101	115,911
Interest bearing deposits	410,338	361,757
Securities sold under agreements to repurchase	3,843	9,769
Short-term borrowings	7,500	12,000
Long-term debt	15,000	25,000
Other interest bearing liabilities	1,587	1,593
Accrued interest payable	298	300
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	15,956	9,839
Interest bearing deposits with banks	291	58
Federal funds sold	915
Interest bearing time deposits with banks	3,755	350
Equity securities	1,166
Available for sale securities	143,237	153,824
Restricted investment in bank stock	2,498	3,104
Loans, net of allowance for loan losses	410,158	372,906
Mortgage servicing rights	215	225
Accrued interest receivable	1,675	1,582
Non-interest bearing deposits	122,101	115,911
Interest bearing deposits	409,610	361,468
Securities sold under agreements to repurchase	3,843	9,769
Short-term borrowings	7,500	12,000
Long-term debt	14,896	24,885
Other interest bearing liabilities	1,589	1,595
Accrued interest payable	298	300
Commitments to extend credit
Letters of credit

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Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	$ 3,780	$ 350
Interest bearing deposits	410,338	361,757
Long-term debt	15,000	25,000
Other interest bearing liabilities	1,587	1,593
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	3,780	350
Loans, net of allowance for loan losses	418,653	380,965
Interest bearing deposits	410,338	361,757
Long-term debt	15,000	25,000
Other interest bearing liabilities	1,587	1,593
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	3,755	350
Loans, net of allowance for loan losses	410,158	372,906
Interest bearing deposits	409,610	361,468
Long-term debt	14,896	24,885
Other interest bearing liabilities	1,589	1,595
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	3,755	350
Interest bearing deposits	409,610	361,468
Long-term debt	14,896	24,885
Other interest bearing liabilities	1,589	1,595
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	$ 410,158	$ 372,906

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Defined Benefit Retirement Plan (Narrative) (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 30, 2017	Jun. 30, 2018	Dec. 31, 2007
Defined Benefit Plan Disclosure [Line Items]
Percentage of increase (decrease) in pension liability	12.00%
Decrease in pension plan liability	$ 377,000
JVB Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of vested benefit			100.00%
Benefits paid		$ 0

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Defined Benefit Retirement Plan (Components of Net Periodic Pension Cost) (Details) - JVB Plan [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 132	$ 161	$ 264	$ 322
Expected return on plan assets	(192)	(202)	(384)	(403)
Recognized net actuarial loss	40	57	81	113
Net periodic benefit cost	(20)	16	(39)	32
Amortization of net actuarial loss recognized in other comprehensive income	(40)	(57)	(81)	(113)
Total recognized in net periodic benefit cost and other comprehensive loss (income)	$ (60)	$ (41)	$ (120)	$ (81)

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Commitments and Contingent Liabilities and Guarantees (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
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	$ 81,948,000	$ 77,023,000
Outstanding Letters of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	3,147,000	2,541,000
Commercial Letter Of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	$ 12,833,000	$ 12,650,000

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Revenue Recognition (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Trust fees	$ 123,000	$ 143,000	$ 225,000	$ 227,000
Asset Management Services [Member]
Trust fees	98,000		188,000
Estate Management Services [Member]
Trust fees	$ 25,000		$ 37,000
Estate management services, revenue recognition description			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.

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Subsequent Events (Narrative) (Details) - Subsequent Event [Member]	Jul. 17, 2018 $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Jul. 17, 2018
Dividends payable per share	$ 0.22
Dividends payable, date of record	Aug. 15, 2018
Dividends payable, date to be paid	Aug. 31, 2018