10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended June 30, 2021
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)
(855) 582-5101
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
NONE	N/A	N/A

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.

☒ Yes        ☐ No

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

☒ Yes        ☐ No

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

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

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

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

☐ Yes        ☒ 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 13, 2021
Common Stock ($1.00 par value)	5,000,026 shares

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of June 30, 2021 (Unaudited) and December 31, 2020	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Not applicable.
Item 4.	Controls and Procedures	56
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Defaults upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
	Signatures	59

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, 2021		December 31, 2020
ASSETS
Cash and due from banks	$	17,165	$	11,868
Interest bearing deposits with banks		1,020		19,753
Federal funds sold		—		10,000
Cash and cash equivalents		18,185		41,621
Interest bearing time deposits with banks		735		735
Equity securities		1,178		1,091
Debt securities available for sale		342,030		286,415
Restricted investment in bank stock		2,885		3,423
Total loans		431,189		422,661
Less: Allowance for loan losses		(3,906)		(4,094)
Total loans, net of allowance for loan losses		427,283		418,567
Premises and equipment, net		8,540		8,808
Other real estate owned		110		—
Bank owned life insurance and annuities		16,708		16,568
Investment in low income housing partnerships		2,705		3,105
Core deposit and other intangible assets		208		241
Goodwill		9,047		9,047
Mortgage servicing rights		137		158
Accrued interest receivable and other assets		6,034		3,939
Total assets	$	835,785	$	793,718
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	179,363	$	168,115
Interest bearing		529,176		454,751
Total deposits		708,539		622,866
Short-term borrowings and repurchase agreements		12,153		24,750
Federal Reserve Bank ("FRB") advances		—		27,955
Long-term debt		35,000		35,000
Other interest bearing liabilities		1,572		1,584
Accrued interest payable and other liabilities		4,772		4,966
Total liabilities		762,036		717,121
Commitments and contingent liabilities
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 - 5,151,279 shares at June 30, 2021; 5,151,279 shares at December 31, 2020 Outstanding - 5,000,026 shares at June 30, 2021; 5,025,441 shares at December 31, 2020		5,151		5,151
Surplus		24,922		25,011
Retained earnings		46,266		45,096
Accumulated other comprehensive income		26		3,518
Cost of common stock in Treasury: 151,253 shares at June 30, 2021; 125,838 shares at December 31, 2020		(2,616)		(2,179)
Total stockholders’ equity		73,749		76,597
Total liabilities and stockholders’ equity	$	835,785	$	793,718

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,
	2021		2020		2021		2020
Interest and dividend income:
Loans, including fees	$	4,794	$	4,781	$	9,571	$	9,659
Taxable securities		1,187		1,257		2,193		2,430
Tax-exempt securities		38		40		76		63
Other interest income		6		10		11		65
Total interest income		6,025		6,088		11,851		12,217
Interest expense:
Deposits		597		730		1,216		1,560
Short-term borrowings and repurchase agreements		21		—		53		8
FRB advances		—		7		18		7
Long-term debt		213		230		425		513
Other interest bearing liabilities		1		3		3		10
Total interest expense		832		970		1,715		2,098
Net interest income		5,193		5,118		10,136		10,119
Provision for loan losses		(200)		196		(279)		552
Net interest income after provision for loan losses		5,393		4,922		10,415		9,567
Non-interest income:
Customer service fees		320		276		645		691
Debit card fee income		451		372		864		696
Earnings on bank-owned life insurance and annuities		68		63		122		127
Trust fees		115		91		227		204
Commissions from sales of non-deposit products		105		73		185		147
Fees derived from loan activity		92		23		196		90
Mortgage banking income		10		14		18		30
Gain on sales and calls of securities		54		551		58		562
Change in value of equity securities		8		18		101		(154)
Other non-interest income		79		76		158		158
Total non-interest income		1,302		1,557		2,574		2,551
Non-interest expense:
Employee compensation expense		2,062		1,803		4,031		3,806
Employee benefits		614		394		1,159		1,122
Occupancy		312		271		642		585
Equipment		192		231		381		465
Data processing expense		673		563		1,256		1,064
Professional fees		195		191		383		364
Taxes, other than income		119		124		243		262
FDIC Insurance premiums		70		39		151		79
Gain on other real estate owned		—		—		(49)		—
Amortization of intangible assets		17		19		33		38
Amortization of investment in low-income housing partnerships		200		200		400		400
Long-term debt prepayment penalty		—		524		—		524
Other non-interest expense		413		458		825		868
Total non-interest expense		4,867		4,817		9,455		9,577
Income before income taxes		1,828		1,662		3,534		2,541
Income tax provision (benefit)		89		57		160		(102)
Net income	$	1,739	$	1,605	$	3,374	$	2,643
Earnings per share
Basic	$	0.35	$	0.32	$	0.67	$	0.52
Diluted	$	0.35	$	0.31	$	0.67	$	0.52

See Notes to Consolidated Financial Statements

4

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(Dollars in thousands)	Three Months Ended June 30,
	2021						2020
	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
	Amount		Effect		Amount		Amount		Effect		Amount
Net income	$	1,828	$	(89)	$	1,739	$	1,662	$	(57)	$	1,605
Other comprehensive income (loss):
Available for sale securities:
Unrealized holding gains (losses) arising during the period		1,112		(233)		879		(331)		69		(262)
Less reclassification adjustment for gains included in net income (1) (3)		(54)		11		(43)		(551)		116		(435)
Unrealized losses on cash flow hedge		(301)		64		(237)		(184)		39		(145)
Less reclassification adjustment for losses (gains) included in net income (2) (3)		22		(5)		17		(22)		4		(18)
Other comprehensive income (loss)		779		(163)		616		(1,088)		228		(860)
Total comprehensive income	$	2,607	$	(252)	$	2,355	$	574	$	171	$	745

(Dollars in thousands)	Six Months Ended June 30,
	2021						2020
	Pre-Tax		Tax		Net-of-Tax		Pre-Tax		Tax		Net-of-Tax
	Amount		Effect		Amount		Amount		Effect		Amount
Net income	$	3,534	$	(160)	$	3,374	$	2,541	$	102	$	2,643
Other comprehensive (loss) income:
Available for sale securities:
Unrealized holding (losses) gains arising during the period		(4,799)		1,008		(3,791)		4,617		(970)		3,647
Less reclassification adjustment for gains included in net income (1) (3)		(58)		12		(46)		(562)		118		(444)
Unrealized gains (losses) on cash flow hedge		411		(86)		325		(184)		39		(145)
Less reclassification adjustment for losses (gains) included in net income (2) (3)		26		(6)		20		(22)		4		(18)
Other comprehensive (loss) income		(4,420)		928		(3,492)		3,849		(809)		3,040
Total comprehensive (loss) income	$	(886)	$	768	$	(118)	$	6,390	$	(707)	$	5,683

(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 interest expense on short-term borrowings and repurchase agreements on the Consolidated Statements of Income.

(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)

	Three months ended June 30, 2021
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income (Loss)		Stock		Equity
Balance, April 1, 2021	5,006,695	$	5,151	$	24,893	$	45,629	$	(590)	$	(2,509)	$	72,574
Net income							1,739						1,739
Other comprehensive income									616				616
Cash dividends at $0.22 per share							(1,102)						(1,102)
Stock-based compensation					37								37
Purchase of treasury stock	(11,613)										(192)		(192)
Treasury stock issued for stock plans	4,944				(8)						85		77
Balance, June 30, 2021	5,000,026	$	5,151	$	24,922	$	46,266	$	26	$	(2,616)	$	73,749

	Six months ended June 30, 2021
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income (Loss)		Stock		Equity
Balance, January 1, 2021	5,025,441	$	5,151	$	25,011	$	45,096	$	3,518	$	(2,179)	$	76,597
Net income							3,374						3,374
Other comprehensive loss									(3,492)				(3,492)
Cash dividends at $0.44 per share							(2,204)						(2,204)
Stock-based compensation					72								72
Purchase of treasury stock	(39,198)										(675)		(675)
Treasury stock issued for stock plans	13,783				(161)						238		77
Balance, June 30, 2021	5,000,026	$	5,151	$	24,922	$	46,266	$	26	$	(2,616)	$	73,749

6

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders’ Equity (Unaudited)

	Three months ended June 30, 2020
								Accumulated
(Dollars in thousands, except share data)	Number					Retained		Other				Total
	of Shares	Common				Earnings		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		(adjusted)		Income (Loss)		Stock		Equity
Balance at April 1, 2020	5,093,859	$	5,151	$	24,918	$	43,870	$	4,416	$	(989)	$	77,366
Net income							1,605						1,605
Other comprehensive loss									(860)				(860)
Cash dividends at $0.22 per share							(1,120)						(1,120)
Stock-based compensation					34								34
Purchase of treasury stock	(11,600)										(193)		(193)
Treasury stock issued for stock plans	4,459				(6)						76		70
Balance, June 30, 2020	5,086,718	$	5,151	$	24,946	$	44,355	$	3,556	$	(1,106)	$	76,902

	Six months ended June 30, 2020
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income		Stock		Equity
Balance, January 1, 2020	5,099,729	$	5,142	$	24,898	$	43,954	$	516	$	(803)	$	73,707
Net income							2,643						2,643
Other comprehensive income									3,040				3,040
Cash dividends at $0.44 per share							(2,242)						(2,242)
Stock-based compensation					63								63
Purchase of treasury stock	(27,000)										(379)		(379)
Treasury stock issued for stock plans	4,459				(6)						76		70
Common stock issued for stock plans	9,530		9		(9)								—
Balance, June 30, 2020	5,086,718	$	5,151	$	24,946	$	44,355	$	3,556	$	(1,106)	$	76,902

See Notes to Consolidated Financial Statements

7

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)	Six Months Ended June 30,
	2021		2020
Operating activities:
Net income	$	3,374	$	2,643
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		(279)		552
Depreciation		372		406
Net amortization of securities premiums		733		527
Net amortization of loan origination fees		346		28
Deferred net loan origination costs		(296)		(319)
Amortization of intangibles		33		38
Amortization of investment in low income housing partnerships		400		400
Net amortization of purchase fair value adjustments		(92)		(53)
Net realized gain on sales and calls of available for sale securities		(58)		(562)
Change in value of equity securities		(101)		154
Net gain on other real estate owned		(49)		—
Earnings on bank owned life insurance and annuities		(122)		(127)
Deferred income tax (benefit) expense		(151)		132
Stock-based compensation expense		72		63
Proceeds from mortgage loans sold to others		38		38
Mortgage banking income		(18)		(30)
Increase in accrued interest receivable and other assets		(576)		(2,309)
Decrease in accrued interest payable and other liabilities		(206)		(506)
Net cash provided by operating activities		3,420		1,075
Investing activities:
Purchases of:
Securities available for sale		(136,852)		(152,324)
FHLB stock		—		(45)
Premises and equipment		(104)		(202)
Bank owned life insurance and annuities		(18)		(18)
Proceeds from:
Sales of securities available for sale		32,869		36,136
Maturities of and principal repayments on securities available for sale		42,849		45,086
Redemption of FHLB stock		538		—
Net decrease in interest bearing time deposits with banks		—		740
Net increase in loans		(8,453)		(19,615)
Net cash used in investing activities		(69,171)		(90,242)
Financing activities:
Net increase in deposits		85,669		62,896
Net (decrease) increase in short-term borrowings and securities sold under agreements to repurchase		(12,597)		10,978
Issuance of FRB advances		—		31,298
Repayment of FRB advances		(27,955)		—
Repayment of long-term debt		—		(10,000)
Cash dividends		(2,204)		(2,242)
Purchase of treasury stock		(675)		(379)
Treasury stock issued for employee stock plans		77		70
Net cash provided by financing activities		42,315		92,621
Net (decrease) increase in cash and cash equivalents		(23,436)		3,454
Cash and cash equivalents at beginning of year		41,621		12,740
Cash and cash equivalents at end of period	$	18,185	$	16,194
Supplemental information:
Income tax paid	$	1,830	$	2,182
Interest paid		75		200
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned	$	61	$	—
Transfer of loans to repossessed vehicles		1		—

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.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the financial statements. Additionally, the ongoing effects of the COVID-19 pandemic may negatively impact significant estimates and the assumptions underlying those estimates. Estimates that are particularly susceptible to material change include the determination of the allowance for loan losses, and possible impairment of goodwill and other intangible assets. 

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, 2021 are not necessarily indicative of the results that can be expected for the year ending December 31, 2021. 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, 2020.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2021 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

2. RECENT ACCOUNTING STANDARDS UPDATES

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

Issued: June 2016

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

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

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

9

Effective Date: On October 16, 2019, the FASB voted and approved a delay of the effective date of this ASU for smaller reporting companies until fiscal years beginning after December 15, 2022. Since the Company is a smaller reporting company, the delay of the effective date of ASU 2016-13 approved by the FASB applies to the Company. The Company’s CECL transition team is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures and expects the allowance for loan and lease losses (“ALLL”) to increase upon adoption because it 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 being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming a CECL transition team, gathering pertinent data, assessing the sufficiency of data currently available through its core database, participating in training courses, and partnering with a software provider that specializes in ALLL analysis.

3. ACCUMULATED OTHER COMPREHENSIVE INCOME

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

(Dollars in thousands)
June 30, 2021	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2020	$	(45)	$	3,563	$	3,518
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		325		(3,791)		(3,466)
Amounts reclassified from accumulated other comprehensive income (loss)		20		(46)		(26)
Net current period other comprehensive income (loss)		345		(3,837)		(3,492)
Ending balance, June 30, 2021	$	300	$	(274)	$	26

(Dollars in thousands)
December 31, 2020	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2019	$	—	$	516	$	516
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		(38)		3,727		3,689
Amounts reclassified from accumulated other comprehensive loss		(7)		(675)		(682)
Net current period other comprehensive income (loss)		(45)		3,052		3,007
Reclassification for ASU 2018-02		—		(5)		(5)
Ending balance, December 31, 2020	$	(45)	$	3,563	$	3,518

4. 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.

10

The following tables set forth the computation of basic and diluted earnings per share:

(Amounts in thousands, except earnings per share data)	Three Months Ended June 30,
	2021		2020
Net income	$	1,739	$	1,605
Weighted-average common shares outstanding		5,008		5,091
Basic earnings per share	$	0.35	$	0.32
Weighted-average common shares outstanding	$	5,008	$	5,091
Common stock equivalents due to effect of stock options		8		5
Total weighted-average common shares and equivalents		5,016		5,096
Diluted earnings per share	$	0.35	$	0.31

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2021		2020
Net income	$	3,374	$	2,643
Weighted-average common shares outstanding		5,013		5,097
Basic earnings per share	$	0.67	$	0.52
Weighted-average common shares outstanding	$	5,013	$	5,097
Common stock equivalents due to effect of stock options		8		6
Total weighted-average common shares and equivalents		5,021		5,103
Diluted earnings per share	$	0.67	$	0.52
Anti-dilutive stock options outstanding		2		3

5. SECURITIES

Equity Securities

Equity securities owned by the Company consist of common stock of various financial services providers. ASC Topic 321, Investments – Equity Securities requires all equity securities within its scope to be measured at fair value with changes in fair value recognized in net income. As of June 30, 2021, the Company had $1,178,000 in equity securities recorded at fair value, and $1,091,000 in equity securities were recorded at fair value at December 31, 2020. The Company recorded net gains of $8,000 and $101,000 during the three and six months ended June 30, 2021, respectively, and a net gain of $18,000 and net loss of $154,000 during the three and six months ended June 30, 2020, respectively, due to changes in the fair value of the Company’s equity securities during the applicable periods.

Debt Securities Available for Sale

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

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The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored enterprises (approximately 12% of the investment portfolio), mortgage-backed securities issued by Government-sponsored entities and backed by residential mortgages (approximately 77%), corporate debt securities (approximately 8%) and municipal bonds (approximately 3%) as of June 30, 2021. 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, 2021 and December 31, 2020, by contractual maturity, are shown in the tables below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

(Dollars in thousands)	June 30, 2021
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	41,850	$	40,999	$	1	$	(852)
		41,850		40,999		1		(852)
Obligations of state and political subdivisions
Within one year		30		30		—		—
After one year but within five years		6,766		6,939		173		—
After five years but within ten years		1,235		1,223		—		(12)
		8,031		8,192		173		(12)
Corporate debt securities
After one year but within five years		2,000		2,003		3		—
After five years but within ten years		25,461		26,206		832		(87)
		27,461		28,209		835		(87)
Mortgage-backed securities		265,036		264,630		1,823		(2,229)
Total	$	342,378	$	342,030	$	2,832	$	(3,180)

(Dollars in thousands)	December 31, 2020
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	22,994	$	22,949	$	7	$	(52)
		22,994		22,949		7		(52)
Obligations of state and political subdivisions
Within one year		31		31		—		—
After one year but within five years		4,708		4,767		59		—
After five years but within ten years		3,289		3,484		195		—
		8,028		8,282		254		—
Corporate debt securities
Within one year		1,033		1,039		6		—
After five years but within ten years		10,058		10,484		485		(59)
		11,091		11,523		491		(59)
Mortgage-backed securities		239,793		243,661		3,999		(131)
Total	$	281,906	$	286,415	$	4,751	$	(242)

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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 $88,177,000 and $74,614,000 on June 30, 2021 and December 31, 2020, respectively.

In addition to cash received from the scheduled maturities of investment securities, some securities available for sale are sold or called at current market values during 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 during the six months ended June 30, 2021 and 2020.

(Dollars in thousands)	Six Months Ended
	June 30,
	2021		2020
Gross proceeds from sales and calls of securities	$	32,869	$	36,136
Securities available for sale:
Gross realized gains from sold and called securities	$	130	$	592
Gross realized losses from sold and called securities		(72)		(30)
Net gains from sales and calls of securities	$	58	$	562

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

The following tables show gross unrealized losses and fair values of debt 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, 2021 and December 31, 2020:

	Unrealized Losses at June 30, 2021
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	7	$	38,214	$	(852)	—	$	—	$	—	7	$	38,214	$	(852)
Obligations of state and political subdivisions	4		1,223		(12)	—		—		—	4		1,223		(12)
Corporate debt securities	5		8,321		(87)	—		—		—	5		8,321		(87)
Mortgage-backed securities	32		170,793		(2,229)	—		—		—	32		170,793		(2,229)
Total temporarily impaired securities	48	$	218,551	$	(3,180)	—	$	—	$	—	48	$	218,551	$	(3,180)

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	Unrealized Losses at December 31, 2020
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	3	$	18,948	$	(52)	—	$	—	$	—	3	$	18,948	$	(52)
Corporate debt securities	1		2,972		(59)	—		—		—	1		2,972		(59)
Mortgage-backed securities	7		43,583		(131)	—		—		—	7		43,583		(131)
Total temporarily impaired securities	11	$	65,503	$	(242)	—	$	—	$	—	11	$	65,503	$	(242)

At June 30, 2021, seven obligations of U.S. Government sponsored enterprises, four obligations of state and political subdivisions, five corporate debt securities, and thirty-two mortgage-backed securities had unrealized losses. None of these securities have been in a continuous loss position for twelve 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 in the tables above are considered 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, no debt securities were deemed to be other-than-temporarily impaired for the periods ended June 30, 2021 and December 31, 2020, respectively.

6. LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

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

The loan portfolio includes the following classes: (1) commercial, financial and agricultural, (2) real estate - commercial, (3) real estate - construction, (4) real estate – mortgage, (5) obligations of states and political subdivisions, and (6) personal loans.

Interest income on consumer, mortgage and commercial loans is discontinued and loans are placed on non-accrual status at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Loans are charged off to the extent principal or interest is deemed uncollectible. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans and loans past due 90 days still on accrual include both homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan principal balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms for a reasonable period of time and future payments are reasonably assured.

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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 were normally sold to the buyer immediately. The Company maintains servicing rights on these loans.

When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date and reports changes in fair value of servicing assets in earnings in the period in which the changes occur, which are included with mortgage banking income on the income statement. The fair values of servicing rights are subject to fluctuations because of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Late fees and ancillary fees related to loan servicing are not material.

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. Evaluation 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.

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Real Estate - Commercial Lending

The Company engages in real estate - commercial lending in its primary market area and surrounding areas. The Company’s real estate - commercial portfolio is secured primarily by residential housing, commercial buildings, raw land and hotels. Generally, real estate - commercial 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.

Real estate - commercial 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 and the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, and other resources. Appraisals on properties securing real estate - commercial 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.

Real Estate - Mortgage Lending

The Company’s real estate - mortgage portfolio is comprised of one-to-four family 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 real estate - mortgage loans with a term 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 real estate - 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 80% 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.

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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 because 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 Loan 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 probable incurred losses 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 probable incurred losses 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 and loan loss provision credits. 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.

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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 consists of specific and general components. The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020 permits financial institutions to exclude loan modifications to borrowers affected by the COVID-19 pandemic from TDR treatment if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration following the passing of the 2021 Consolidated Appropriations Act (“CAA”) on December 27, 2020. A loan modification accounted for in accordance with the CARES Act is not treated as a TDR for accounting or disclosure purposes.  

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 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. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

Impairment for substantially all the Company’s impaired loans is measured based on the estimated fair value of the loan’s collateral. For real estate - commercial loans, 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, financial and agricultural, and obligations of states and political subdivision loans, 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 analysis unless such loans are subject to a restructuring agreement.

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Troubled debt restructurings are individually evaluated for impairment and included in the separately identified impairment disclosures. 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, an extension of a loan’s stated maturity date or a significant delay in payment. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a sustained period after modification. For TDRs that subsequently default, the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for loan losses on loans individually identified as impaired. The Company incorporates recent historical experience related to TDRs, including the performance of TDRs that subsequently default, into the calculation of the allowance by loan portfolio class.

Juniata experienced favorable asset quality trends and net recoveries of previously charged-off loans during the six months ended June 30, 2021. Of the original 207 loans placed on deferral due to the pandemic, only two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service with none of the $67,158,000 aggregate balances delinquent as of June 30, 2021.

Acquired Loans

Loans that Juniata acquires through business combinations are recorded at fair value with no carryover of the related allowance for loan losses. Some of these loans have shown evidence of credit deterioration since origination. These purchased credit impaired (“PCI”) loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses.

Such purchased credit impaired loans are accounted for individually or aggregated into pools of loans based on common risk characteristics, such as credit score, loan type, and date of origination. Juniata estimates the amount and timing of expected cash flows for each loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

PCI loans that met the criteria for impairment or non-accrual 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 non-accrual 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.

Paycheck Protection Program Loans

The CARES Act established the Paycheck Protection Program (“PPP”) which is administered by the Small Business Administration (“SBA”). The PPP was intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. The PPP, which began on April 3, 2020, provided small businesses with funds to cover up to eight weeks of payroll costs, including benefits. It also provided for forgiveness of up to the full principal amount of qualifying loans.

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On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”) extended the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks. The 24 week period applied to all borrowers, but borrowers that received an SBA loan number before June 5, 2020, had the option to use an eight week period. The PPP Flexibility Act also amended the requirements regarding forgiveness of PPP loans, reducing the portion of PPP loan proceeds that must be used for payroll costs for the full amount of the PPP loan to be eligible for forgiveness from 75% to 60%. Additionally, the PPP Flexibility Act extended the maturity date for PPP loans made on, or after June 5, 2020, from two years to five years; however, lenders and borrowers could mutually agree to modify PPP loans made before such date to reflect the longer maturity.

The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020. On October 8, 2020, the SBA, in consultation with the U.S. Treasury Department, released a simpler loan forgiveness application for PPP loans of $50,000 or less to streamline the PPP forgiveness process to provide financial and administrative relief to American’s smallest businesses and eased the burden on PPP lenders, allowing them to process forgiveness applications more swiftly.

The CAA provided several amendments to the PPP, including additional funding for first and second draws of PPP loans up to March 31, 2021. On March 30, 2021, the PPP Extension Act of 2021 was signed into law, extending the program to May 31, 2021.  

The Company participated in the PPP and funded 508 first round PPP loans totaling $32,064,000 in 2020 and, as of June 30, 2021, funded 362 second round PPP loans totaling $18,931,000. As of June 30, 2021, 107 of the first round PPP loans, totaling $6,695,000, remained outstanding, while all other first round PPP loans have been forgiven. Forgiveness determinations on the second round PPP loans have not yet commenced. As of June 30, 2021, 469 PPP loans remained outstanding with a total balance of $24,563,000, net of remaining deferred fees of $1,063,000. PPP loans are included in the commercial, financial and agricultural loan class.

Loan Portfolio Classification

The following table presents the loan portfolio by class at June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Commercial, financial and agricultural	$	70,562	$	73,057
Real estate - commercial		153,343		122,698
Real estate - construction		41,243		61,051
Real estate - mortgage		138,972		141,438
Obligations of states and political subdivisions		22,016		18,550
Personal		5,053		5,867
Total	$	431,189	$	422,661

20

The following table summarizes the activity in the allowance for loan losses by loan class, for the three and six months ended June 30, 2021 and 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
Three Months Ended
June 30, 2021
Balance, beginning of period	$	296	$	1,520	$	946	$	30	$	1,183	$	81	$	4,056
Provision for loan losses		(14)		(85)		(50)		3		(32)		(22)		(200)
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		7		—		28		—		13		5		53
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	433	$	758	$	904	$	23	$	1,147	$	68	$	3,333
Provision for loan losses		(122)		120		203		(1)		4		(8)		196
Charge-offs		—		—		—		—		(4)		(3)		(7)
Recoveries		—		—		30		—		2		4		36
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558
Six Months Ended
June 30, 2021
Balance, beginning of period	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094
Provision for loan losses		(20)		527		(718)		5		(65)		(8)		(279)
Charge-offs		—		—		—		—		—		(8)		(8)
Recoveries		7		—		56		—		29		7		99
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	321	$	754	$	718	$	17	$	1,081	$	70	$	2,961
Provision for loan losses		(10)		124		357		5		69		7		552
Charge-offs		—		—		—		—		(4)		(24)		(28)
Recoveries		—		—		62		—		3		8		73
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558

21

The following table summarizes loans by loan class, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
June 30, 2021
Loans allocated by:
individually evaluated for impairment	$	—	$	5,276	$	—	$	—	$	524	$	—	$	5,800
acquired with credit deterioration		—		369		—		—		604		—		973
collectively evaluated for impairment		70,562		147,698		41,243		22,016		137,844		5,053		424,416
	$	70,562	$	153,343	$	41,243	$	22,016	$	138,972	$	5,053	$	431,189
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		289		1,435		924		33		1,164		61		3,906
	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
December 31, 2020
Loans allocated by:
individually evaluated for impairment	$	—	$	3,483	$	—	$	—	$	744	$	—	$	4,227
acquired with credit deterioration		—		339		—		—		623		—		962
collectively evaluated for impairment		73,057		118,876		61,051		18,550		140,071		5,867		417,472
	$	73,057	$	122,698	$	61,051	$	18,550	$	141,438	$	5,867	$	422,661
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		302		908		1,586		28		1,198		70		4,092
	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094

The Company has certain loans in its portfolio that it considers 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 anticipated principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at June 30, 2021 and December 31, 2020 totaled $204,000 and $152,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors, are used to determine the charge-off amount.

22

The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	As of June 30, 2021						As of December 31, 2020
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate – construction		—		871		—		—		894		—
Real estate - mortgage		524		1,255		—		666		1,396		—
Acquired with credit deterioration		604		786		—		623		801		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	78	$	77	$	2
Total:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate - construction		—		871		—		—		894		—
Real estate – mortgage		524		1,255		—		744		1,473		2
Acquired with credit deterioration		604		786		—		623		801		—
	$	6,773	$	9,112	$	—	$	5,189	$	7,134	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2021 and 2020 are summarized in the tables below.

(Dollars in thousands)	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		877		4		11
Acquired with credit deterioration		600		—		—		668		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		998		4		11
Acquired with credit deterioration		600		—		—		668		—		—
	$	5,597	$	102	$	10	$	6,013	$	9	$	19

23

(Dollars in thousands)	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired Loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,010		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,131		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
	$	4,527	$	118	$	20	$	5,301	$	18	$	42

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for partial charge-offs.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is generally discontinued when the contractual payment of principal or interest has become 90 days past due or reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Company’s policy to continue to accrue interest on loans over 90 days past due if (1) they are guaranteed or well secured and (2) there is an effective means of timely collection in process. When a loan is placed on non-accrual status, all unpaid interest credited to income 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 and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The Company’s nonaccrual and charge-off policies are the same, regardless of the loan type.

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Non-accrual loans:
Real estate - commercial	$	37	$	41
Real estate - mortgage		213		381
Total	$	250	$	422

24

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. Past due status is determined by the contractual terms of the loan. The following tables present the classes of the loan portfolio summarized by the past due status as of June 30, 2021 and December 31, 2020.

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of June 30, 2021
Commercial, financial and agricultural	$	70,532	$	30	$	—	$	—	$	30	$	70,562	$	—
Real estate - commercial		152,880		57		—		37		94		152,974		—
Real estate - construction		37,609		3,634		—		—		3,634		41,243		—
Real estate - mortgage		138,188		39		—		141		180		138,368		88
Obligations of states and political subdivisions		22,016		—		—		—		—		22,016		—
Personal		5,042		11		—		—		11		5,053		—
Subtotal		426,267		3,771		—		178		3,949		430,216		88
Loans acquired with credit deterioration
Real estate - commercial		369		—		—		—		—		369		—
Real estate - mortgage		512		—		—		92		92		604		92
Subtotal		881		—		—		92		92		973		92
	$	427,148	$	3,771	$	—	$	270	$	4,041	$	431,189	$	180

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of December 31, 2020
Commercial, financial and agricultural	$	73,028	$	7	$	—	$	22	$	29	$	73,057	$	22
Real estate - commercial		122,318		—		—		41		41		122,359		—
Real estate - construction		61,051		—		—		—		—		61,051		—
Real estate - mortgage		139,842		351		453		169		973		140,815		—
Obligations of states and political subdivisions		18,550		—		—		—		—		18,550		—
Personal		5,853		—		14		—		14		5,867		—
Subtotal		420,642		358		467		232		1,057		421,699		22
Loans acquired with credit deterioration
Real estate - commercial		293		—		46		—		46		339		—
Real estate - mortgage		481		50		—		92		142		623		92
Subtotal		774		50		46		92		188		962		92
	$	421,416	$	408	$	513	$	324	$	1,245	$	422,661	$	114

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

(2) Loans are considered past due when the borrower is in arrears on two or more monthly payments.

25

Troubled Debt Restructurings

The Company’s troubled debt restructurings are impaired loans, which may result in a specific allocation and subsequent charge-off if appropriate. 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.

As of June 30, 2021, the Company had a recorded investment in troubled debt restructurings of $5,546,000 with no specific reserves, nor any charge-offs related to the troubled debt restructured loans. There were no troubled debt restructured loans in default within 12 months of restructure during the three and six months ended June 30, 2021 or 2020. On December 31, 2020, the Company had a recorded investment in troubled debt restructurings of $3,802,000 with no specific reserves, nor any charge-offs related to the troubled debt restructured loans. The increase in troubled debt restructurings between December 31, 2020 and June 30, 2021 was due to the addition of one hospitality-industry loan, which was granted concessions due to financial difficulty related only in part to the pandemic. The borrower is experiencing cash-flow difficulties and is in the process of liquidating the properties collateralizing the loan. Full payment according to the restructured terms is expected.

The following table presents the loan whose terms were modified resulting in troubled debt restructuring during the three and six months ended June 30, 2021. There were no loan terms modified resulting in troubled debt restructuring during the three and six months ended June 30, 2020.  

(Dollars in thousands)		Pre-Modification		Post-Modification
	Number of	Outstanding		Outstanding
	Contracts	Recorded Investment		Recorded Investment		Recorded Investment
Three and six months ended June 30, 2021
Accruing troubled debt restructurings:
Real estate - commercial	1	$	2,254	$	2,254	$	1,803
	1	$	2,254	$	2,254	$	1,803

The CARES Act permits financial institutions to exclude loan modifications to borrowers affected by the COVID-19 pandemic from TDR treatment if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration following the passing of the CAA on December 27, 2020. A loan modification accounted for in accordance with the CARES Act is not treated as a TDR for accounting or disclosure purposes.  

In response to the COVID-19 pandemic, the Company established a COVID-19 Modification Program on March 20, 2020 to offer payment relief to certain borrowers. Through this program, the Company has approved interest and/or principal payment deferrals on loans for individuals and businesses affected by the economic impacts of the COVID-19 pandemic. Of the original 207 loans placed on deferral due to the pandemic, only two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service with none of the $67,158,000 aggregate balances delinquent as of June 30, 2021.

26

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans to commercial customers with an aggregate loan exposure greater than $500,000 and for lines of credit in excess of $50,000. This analysis is performed on a continuing basis with all such loans reviewed annually. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Loans in this category are reviewed no less than quarterly.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans in this category are reviewed no less than monthly.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in this category are reviewed no less than monthly.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

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, 2021 and December 31, 2020.

(Dollars in thousands)			Special
As of June 30, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	68,672	$	794	$	1,096	$	—	$	70,562
Real estate - commercial		104,197		42,114		6,995		37		153,343
Real estate - construction		37,048		3,635		560		—		41,243
Real estate - mortgage		137,574		270		1,128		—		138,972
Obligations of states and political subdivisions		22,016		—		—		—		22,016
Personal		5,053		—		—		—		5,053
Total	$	374,560	$	46,813	$	9,779	$	37	$	431,189

(Dollars in thousands)			Special
As of December 31, 2020	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	71,983	$	495	$	579	$	—	$	73,057
Real estate - commercial		99,828		15,198		7,631		41		122,698
Real estate - construction		36,332		24,644		75		—		61,051
Real estate - mortgage		139,787		289		1,317		45		141,438
Obligations of states and political subdivisions		18,550		—		—		—		18,550
Personal		5,867		—		—		—		5,867
Total	$	372,347	$	40,626	$	9,602	$	86	$	422,661

27

The decline in special mention real estate – construction loans and the increase in special mention real estate – commercial loans as of June 30, 2021 compared to December 31, 2020 was largely due to two relationships transitioning from a construction phase to permanent loan status.

7. 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. On April 30, 2018, the Company acquired the remainder of the outstanding common stock of Liverpool Community Bank and, as a result, carries goodwill of $3,599,000 relating to the acquisition.

Total goodwill at June 30, 2021 and December 31, 2020 was $9,047,000. Goodwill is not amortized but is tested annually for impairment, or more frequently if certain events occur which might indicate goodwill has been impaired. There was no goodwill impairment during the three and six months ended June 30, 2021 or June 30, 2020.

Intangible Assets

On November 30, 2015, a core deposit intangible in the amount of $303,000 associated with the FNBPA Bancorp, Inc. acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digits basis. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three and six months ended June 30, 2021 was $7,000 and $13,000, 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 the three and six months ended June 30, 2021 was $10,000 and $19,000, respectively.

28

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

(Dollars in thousands)	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2020		190		84
Amortization expense recorded in the twelve months
ended December 31, 2020		33		44
Unamortized balance as of December 31, 2020		80		161
Amortization expense recorded in the
six months ended June 30, 2021		13		19
Unamortized balance as of June 30, 2021	$	67	$	142
Scheduled remaining amortization expense for years ended:
December 31, 2021	$	14	$	20
December 31, 2022		22		33
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
After December 31, 2026		—		9

8. BORROWINGS

Borrowings consisted of the following as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30,		December 31,
	2021		2020
Securities sold under agreements to repurchase	$	4,027	$	4,750
Overnight advances with FHLB		8,126		—
Short-term debt with FHLB		—		20,000
Federal Reserve Bank advances		—		27,955
Long-term debt with FHLB		35,000		35,000
	$	47,153	$	87,705

29

Long-term debt is comprised only of FHLB advances with an original maturity of one year or more. The following table summarizes the scheduled maturities of long-term debt as of June 30, 2021.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		20,000	2.42
2025		15,000	2.41
2026		—	—
Thereafter		—	—
	$	35,000	2.42	%

9. STOCK COMPENSATION PLAN

Long-Term Incentive Plan

The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”), that amended and restated the former 2011 Stock Option Plan (the “2011 Plan”). The Plan continues in effect for any outstanding awards under the 2011 Plan in accordance with the terms and conditions governing such awards immediately prior to the effective date of the Plan but expanded the types of awards authorized to include, among others, restricted stock. Under the provisions of the Plan, while active, awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and performance shares to officers and key employees of the Company, as well as directors. The Plan is administered by a committee of the Board of Directors.

The maximum number of shares of common stock that may be issued under the Plan is 300,000 shares, and 152,451 shares were available for grant as of June 30, 2021. Shares of common stock issued under the Plan may be treasury shares or authorized but unissued shares. Forfeited awards are returned to the pool of shares available for grant for future awards.

In the first quarter of 2021, 8,839 restricted shares were awarded to certain officers and all directors. Each of the awards vest after three-years, with no interim vesting. As of June 30, 2021, there was $248,000 of unrecognized compensation cost related to all non-vested restricted stock awards. This cost is expected to be recognized through February 2024.

Compensation expense for stock options granted and restricted stock awarded is measured using the fair value of the award on the grant date and is recognized over the vesting period. The Company recognized stock-based compensation expense of $37,000 and $72,000 for the three and six months ended June 30, 2021, respectively, and $34,000 and $63,000 for the three and six months ended June 30, 2020, respectively.

The following table presents a summary of the status of the Company’s non-vested restricted stock awards as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2021	20,175	$	19.62
Vested	(4,460)		19.80
Forfeited	(200)		17.90
Granted	8,839		16.55
Non-vested at June 30, 2021	24,354	$	18.49

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No stock options were awarded during the first six months of 2021. Previously granted stock options vest over three to five years and are exercisable at the grant price, which is at least the fair market value of the stock on the grant date. The Plan provides that the option price per share is not to be less than the fair market value of the stock on the day the option was granted, but in no event less than the par value of such stock. Options granted under the Plan are exercisable no earlier than one year after the date of grant and expire ten years after the date of the grant. All options previously granted under the Plans are scheduled to expire by February 17, 2025.

Total options outstanding as of June 30, 2021 have exercise prices between $17.65 and $18.00, with a weighted average exercise price of $17.78 and a weighted average remaining contractual life of 2.28 years.

As of June 30, 2021, there was no unrecognized compensation cost related to options granted under the Plan and no options were exercised under the Plans during the period.

A summary of the status of the outstanding stock options as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	81,547	$	17.78
Granted	—		—
Exercised	—		—
Forfeited	—		—
Outstanding at end of year	81,547	$	17.78

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan under which employees, through payroll deductions, may purchase shares of Company stock annually. The option price of the stock purchases is between 95% and 100% of the fair market value of the stock on the offering termination date as determined annually by the Board of Directors. The maximum number of shares which employees may purchase under the Plan is 250,000; however, the annual issuance of shares may not exceed 5,000 shares plus any unissued shares from prior offerings. There were 4,944 and 4,459 shares issued from treasury under this plan during the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, there were 161,676 shares reserved for issuance under the Employee Stock Purchase Plan.

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. 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. 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.

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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.

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 can access at the measurement date.

Level 2 Inputs – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 Inputs – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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.

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

Debt Securities Available for Sale – For debt securities available for sale where quoted prices are not available, fair values are calculated based on market prices of similar securities and 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 debt securities’ terms and conditions, among other things. For debt securities available for sale where quoted prices or market prices of similar securities are not available, fair values are calculated using other market indicators and are reported at fair value utilizing Level 3 inputs.

Derivatives – The fair values of derivatives are based on valuation models using observable market data as of the measurement date utilizing Level 2 inputs. The Company’s derivatives are comprised of interest rate swaps traded in an over-the-counter market where quoted market prices are not always available; therefore, the fair values are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of curves, prepayment rates and volatility factors used to value the position. Most market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

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

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

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

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The following tables summarize financial assets and financial liabilities measured at fair value as of June 30, 2021 and December 31, 2020 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2021	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	40,999	$	—	$	40,999
Obligations of state and political subdivisions		—		8,192		—		8,192
Corporate debt securities		—		23,709		4,500		28,209
Mortgage-backed securities		—		264,630		—		264,630
Total debt securities available for sale	$	—	$	337,530	$	4,500	$	342,030
Equity securities	$	1,178	$	—	$	—	$	1,178
Mortgage servicing rights	$	—	$	—	$	137	$	137
Interest rate swaps	$	—	$	381	$	—	$	381
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	37	$	37

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 2020	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	22,949	$	—	$	22,949
Obligations of state and political subdivisions		—		8,282		—		8,282
Corporate debt securities		—		9,523		2,000		11,523
Mortgage-backed securities		—		243,661		—		243,661
Total debt securities available for sale	$	—	$	284,415	$	2,000	$	286,415
Equity securities	$	1,091	$	—	$	—	$	1,091
Mortgage servicing rights	$	—	$	—	$	158	$	158
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	—	$	57	$	—	$	57
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	84	$	84

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The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six month periods ended June 30, 2021 and 2020.

(Dollars in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment Securities:
Beginning balance	$	2,000	$	—	$	2,000	$	—
Total gains (loss) included in OCI		—		—		—		—
Purchases		2,500		—		2,500		—
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	4,500	$	—	$	4,500	$	—

Mortgage servicing rights and assets measured at fair value on a nonrecurring basis for which Level 3 inputs have been used to determine fair value are immaterial to the Company’s consolidated financial statements.

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.

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

	Financial Instruments
(Dollars in thousands)	June 30, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	17,165	$	17,165	$	11,868	$	11,868
Interest bearing deposits with banks		1,020		1,020		19,753		19,753
Interest bearing time deposits with banks		735		735		735		735
Securities		343,208		343,208		287,506		287,506
Restricted investment in bank stock		2,885		N/A		3,423		N/A
Loans, net of allowance for loan losses		427,283		428,351		418,567		424,791
Interest rate swaps		381		381		—		—
Accrued interest receivable		2,230		2,230		2,105		2,105
Financial liabilities:
Non-interest bearing deposits	$	179,363	$	179,363	$	168,115	$	168,115
Interest bearing deposits		529,176		532,879		454,751		459,224
Securities sold under agreements to repurchase		4,027		N/A		4,750		N/A
Short-term borrowings		—		20,002		20,000		20,002
FRB advances		—		—		27,955		27,955
Long-term debt		35,000		36,594		35,000		37,365
Interest rate swaps		—		—		57		57
Other interest bearing liabilities		1,572		1,572		1,584		1,585
Accrued interest payable		333		333		448		448
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, 2021 and December 31, 2020. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
June 30, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		427,283		428,351		—		—		428,351
Financial instruments - Liabilities
Interest bearing deposits	$	529,176	$	532,879	$	—	$	532,879	$	—
Long-term debt		35,000		36,594		—		36,594		—
Other interest bearing liabilities		1,572		1,572		—		1,572		—

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					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2020
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		418,567		424,791		—		—		424,791
Financial instruments - Liabilities
Interest bearing deposits	$	454,751	$	459,224	$	—	$	459,224	$	—
Long-term debt		35,000		37,365		—		37,365		—
Other interest bearing liabilities		1,584		1,585		—		1,585		—

11. 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, 2021, the Company had $109,410,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $95,089,000 at December 31, 2020.

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 $3,991,000 and $2,379,000 of financial and performance letters of credit commitments, respectively, as of June 30, 2021 and $1,541,000 and $2,365,000 of financial and performance letters of credit commitments, respectively, as of December 31, 2020. Commercial letters of credit as of June 30, 2021 and December 31, 2020 totaled $7,475,000 and $6,975,000, respectively. Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The amount of the liability as of June 30, 2021 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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12. REVENUE RECOGNITION

The Company accounts for revenue from contracts with customers under Topic 606. 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 customers’ use of various interchange and ATM/debit card networks.

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

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

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

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

Trust Fees – include asset management and estate fees. Asset management fees are generally based on a fee schedule, based upon the market value of the assets under management, and recognized monthly when the service obligation is completed. Asset management fees recognized during the three and six month periods ended June 30, 2021 were $92,000 and $184,000, respectively. Asset management fees recognized during the three and six month periods ended June 30, 2020 were $86,000 and $171,000, 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 month periods ended June 30, 2021 totaled $23,000 and $43,000, respectively. Estate fees recognized during the three and six month periods ended June 30, 2020 totaled $5,000 and $33,000, respectively.

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

Other Non-Interest Income – includes certain revenue streams within the scope of Topic 606 comprised primarily of ATM surcharges, commissions on check orders, and wire transfer fees. ATM surcharges are the result of customers conducting ATM transactions that generate fee income. All of these fees, as well as wire transfer fees, are transaction based and are

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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 the customer, and therefore, does not experience significant contract balances.

Contract Acquisition Costs

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

13. DERIVATIVES

The Company uses interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

As of June 30, 2021, interest rate swaps with a notional amount totaling $40,000,000 were designated as cash flow hedges on fixed-rate brokered deposits and certain FHLB advances. As of December 31, 2020, interest rate swaps with a notional amount totaling $40,000,000, were designated as cash flow hedges on certain FHLB advances. The interest rate swaps were determined to be fully effective during the periods presented, and as such, no amount of ineffectiveness have been included in net income. The aggregate fair value of the swaps is recorded in either other assets or other liabilities on the Consolidated Statements of Condition with changes in fair value recorded in other comprehensive income. The Company expects the hedges to remain fully effective during the remaining terms of the swaps.

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The following table reflects the notional amounts and fair values of derivatives recorded on the Consolidated Statements of Condition as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30, 2021				December 31, 2020
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
	Amount		(Liability)		Amount		(Liability)
Derivatives designated as hedges:
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	20,000	$	(64)	$	—	$	—
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		—		—		20,000		(123)
Interest rate swaps - forward-starting on long-term FHLB advances		20,000		445		20,000		66

The effect of cash flow hedge accounting on accumulated other comprehensive income for the periods ended June 30, 2021 and December 31, 2020 are as follows:

(Dollars in thousands)	June 30, 2021
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	411	Interest expense on short-term borrowings and repurchase agreements	$	26

(Dollars in thousands)	December 31, 2020
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	(48)	Interest expense on short-term borrowings and repurchase agreements	$	(9)

The effect of cash flow hedge accounting on the Consolidated Statements of Income for the three and six months ended June 30, 2021 and June 30, 2020 was as follows:

Location and Amount of Gain or Loss Recognized in Income on Cash Flow Hedging Relationships

	Interest Income (Expense)				Interest Income (Expense)
	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2021		2020		2021		2020
Effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	(22)	$	22	$	(26)	$	22
Total	$	(22)	$	22		(26)		22

14. SUBSEQUENT EVENTS

On July 20, 2021, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2021, payable on September 1, 2021.

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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). These forward-looking statements may include projections of, or guidance on, the Corporation’s future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporation’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”, "predicts”, "potential”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the negative of these terms and other comparable terminology are used in this release, Juniata is making forward-looking statements. Any forward-looking statement made by us in this document is based only on Juniata’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business based on information currently available to 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. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation’s control, and actual results to differ materially from this forward-looking information. Therefore, you should not unduly rely on any of these forward-looking statements.  Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to: (i) the factors set forth in the sections of Juniata’s Annual Report on Form 10-K for the year ended December 31, 2020, titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and factors set forth in other current and periodic reports which Juniata has or will file with the Securities and Exchange Commission, and (ii) the following factors:

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

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

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

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

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

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

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

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

● the impact of increased regulatory scrutiny of the banking industry;

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

● the results of regulatory examination and supervision processes;

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

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

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

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

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

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

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● 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;

● acts of war or terrorism;

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

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

● the scope and duration of the COVID-19 pandemic, actions taken by governmental authorities in response to the pandemic and the direct and indirect impacts of the pandemic on the Company, its customers and third parties.

COVID-19 Update:

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, providing relief from certain loan modification accounting requirements under U.S. GAAP. The CARES Act permits the suspension of ASC 310-40 for loan modifications that are made by financial institutions in response to the COVID-19 pandemic if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration following the passing of the 2021 Consolidated Appropriations Act (“CAA”) on December 27, 2020. A loan modification accounted for in accordance with the CARES Act is not treated as a TDR for accounting or disclosure purposes.

In response to the COVID-19 pandemic, the Company established a COVID-19 Modification Program on March 20, 2020 to offer payment relief to certain borrowers. Through this program, the Company approved interest and/or principal payment deferrals on loans for individuals and businesses affected by the economic impacts of the COVID-19 pandemic. Juniata experienced favorable asset quality trends and net recoveries of previously charged-off loans during the six months ended June 30, 2021. Of the original 207 loans placed on deferral due to the pandemic, only two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service with none of the $67,158,000 aggregate balances delinquent as of June 30, 2021.

As part of the CARES Act and in recognition of the challenging circumstances faced by small businesses, Congress created the Paycheck Protection Program (“PPP”), in which the Company is a participant. Loans made pursuant to the PPP are fully guaranteed as to principal and accrued interest by the SBA, and therefore, require a zero percent risk weight for risk-based capital requirements. The SBA reimburses PPP lenders for any amount of a PPP covered loan that is forgiven. PPP lenders are not held liable for any representations made by PPP borrowers in connection with a borrower's request for PPP covered loan forgiveness.

The CAA also provided several amendments to the PPP, including adding additional funding for first and second draws of PPP loans up to June 30, 2021. On March 30, 2021, the PPP Extension Act of 2021 was signed into law, extending the program to May 31, 2021.  

The Company participated in the PPP and funded 508 first round PPP loans totaling $32,064,000 in 2020 and, as of June 30, 2021, funded 362 second round PPP loans totaling $18,931,000. As of June 30, 2021, 107 of the first round PPP loans, totaling $6,695,000, remained outstanding, while all other first round PPP loans have been forgiven. Forgiveness determinations on the second round PPP loans have not yet commenced. As of June 30, 2021, 469 PPP loans remained outstanding with a total balance of $24,563,000, net of remaining deferred fees of $1,063,000.  

On April 7, 2020, the Federal Reserve Banks extended credit under the Paycheck Protection Program Liquidity Facility (“PPPLF”) to provide liquidity to small business lenders and the broader credit markets, and to help stabilize the financial system. Only PPP covered loans guaranteed by the SBA under the Paycheck Protection Program with respect to both principal and interest, and that are originated by an eligible institution, may be pledged as collateral to the Federal Reserve Banks. The Company participated in the PPPLF and as of June 30, 2021, had repaid all Federal Reserve Bank advances.

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Critical Accounting Policies:

Disclosure of the Company’s significant accounting policies is included in the Company’s critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2020. 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.

General:

The following discussion relates to the consolidated financial condition of the Company as of June 30, 2021, compared to December 31, 2020, and the consolidated results of operations for the three and six months ended June 30, 2021, compared to the same periods in 2020. 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 provided to its customers.

Financial Condition:

Total assets as of June 30, 2021, were $835,785,000, an increase of $42,067,000, or 5.3%, compared to December 31, 2020. Comparing asset balances on June 30, 2021 and December 31, 2020, total cash and cash equivalents decreased by $23,436,000, as excess cash was used to repay the remaining $27,955,000 in FRB advances in 2021. Over the same period, debt securities available for sale and loans increased by $55,615,000 and $8,528,000, respectively, funded by deposit growth. As of June 30, 2021, total deposits increased by $85,673,000, or 13.8%, compared to December 31, 2020, primarily due to customers depositing government stimulus payments and PPP loan balances that were deposited.

The table below shows changes in deposit volumes by type of deposit between December 31, 2020 and June 30, 2021.

(Dollars in thousands)	June 30,		December 31,		Change
	2021		2020		$		%
Deposits:
Demand, non-interest bearing	$	179,363	$	168,115	$	11,248	6.7	%
Interest bearing demand and money market		237,046		176,469		60,577	34.3
Savings		141,726		123,572		18,154	14.7
Time deposits, $250,000 and more		14,218		13,475		743	5.5
Other time deposits		136,186		141,235		(5,049)	(3.6)
Total deposits	$	708,539	$	622,866	$	85,673	13.8	%

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As shown in the table below, total loans increased $8,528,000, or 2.0%, between December 31, 2020 and June 30, 2021. This increase was primarily in the real estate – commercial class, which increased both from organic loan growth as well as from the transition of two large relationships from the real estate – construction loan class as of December 31, 2020 to permanent loan status in the real estate – commercial loan class as of June 30, 2021. PPP loans, which are included in the commercial, financial and agricultural class, accounted for the decline in this class as of June 30, 2021 compared to December 31, 2020 due to forgiveness payments exceeding originations by $3,089,000.

(Dollars in thousands)	June 30,		December 31,		Change
	2021		2020		$		%
Loans:
Commercial, financial and agricultural	$	70,562	$	73,057	$	(2,495)	(3.4)	%
Real estate - commercial		153,343		122,698		30,645	25.0
Real estate - construction		41,243		61,051		(19,808)	(32.4)
Real estate - mortgage		138,972		141,438		(2,466)	(1.7)
Obligations of states and political subdivisions		22,016		18,550		3,466	18.7
Personal		5,053		5,867		(814)	(13.9)
Total loans	$	431,189	$	422,661	$	8,528	2.0	%

A summary of the activity in the allowance for loan losses for each of the six month periods ended June 30, 2021 and 2020 is presented below.

(Dollars in thousands)	Six months ended June 30,
	2021			2020
Balance of allowance - January 1	$	4,094		$	2,961
Loans charged off		(8)			(28)
Recoveries of loans previously charged off		99			73
Net recoveries		91			45
Provision for loan losses		(279)			552
Balance of allowance - end of period	$	3,906		$	3,558
Ratio of net recoveries during period to average loans outstanding		(0.02)	%		(0.01)	%

Juniata experienced favorable asset quality trends and net recoveries of previously charged-off loans during the six months ended June 30, 2021. Of the original 207 loans placed on deferral due to the pandemic, two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service, and none of the $67,158,000 aggregate balances of those loans was delinquent as of June 30, 2021. Juniata continued to apply elevated qualitative risk factors to all loan segments in the loan portfolio in its allowance for loan loss analysis in the first six months of 2021 due to the remaining uncertainty of the strength of the economy, as well as the lingering effects and duration of the pandemic. However, because borrowers with loans previously placed in deferment have shown the ability to continue making payments under contractual debt service, management reduced the level of risk originally established on these loans. Due to the positive asset quality trends noted above and sustained performance of the loan portfolio, the analysis resulted in a provision credit of $279,000 for the six months ended June 30, 2021 compared to a provision expense of $552,000 recorded in the six months ended June 30, 2020.

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As of June 30, 2021, 23 loans (exclusive of loans acquired with existing credit deterioration) with aggregate outstanding balances of $5,800,000 were individually evaluated for impairment. The increase in impaired loans between December 31, 2020 and June 30, 2021 was due to the addition of one hospitality-industry loan classified as a troubled debt restructuring in 2021. A collateral analysis was performed on each of the loans individually evaluated for impairment in order to establish a portion of the reserve needed to carry the impaired loans at no higher than the fair value of their collateral. Following the analysis, no loans were determined to have insufficient collateral at June 30, 2021 requiring the establishment of specific reserves.

As of June 30, 2021, there were $46,813,000 loans classified as special mention compared to $40,626,000 at December 31, 2020, $9,779,000 classified as substandard loans at June 30, 2021 compared to $9,602,000 at December 31, 2020, and $37,000 classified as doubtful loans at June 30, 2021 compared to $86,000 at December 31, 2020.

Management believes that the reserves carried are adequate to cover probable incurred losses related to these relationships as of June 30, 2021. There are uncertainties about the lasting effects of the COVID-19 impact on the economy. Such effects could have a material impact on future results of operations if businesses are not able to remain solvent and unemployment remains high. Management believes the Company has sufficient liquidity and capital and an adequate allocation for loan losses to withstand losses that may occur, but continues to closely monitor the financial strength of borrowers whose ability to comply with repayment terms may become permanently impaired.

The following is a summary of the Bank’s non-performing loans, exclusive of loans acquired with credit deterioration, on June 30, 2021 compared to December 31, 2020.

(Dollar amounts in thousands)	June 30, 2021			December 31, 2020
Non-performing loans
Non-accrual loans	$	250		$	422
Accruing loans past due 90 days or more		88			22
Total	$	338		$	444
Loans outstanding	$	431,189		$	422,661
Ratio of non-performing loans to loans outstanding		0.08	%		0.11	%

Total non-performing loans as of June 30, 2021 decreased $106,000 over total non-performing loans as of December 31, 2020. Contributing to the decline was a $61,000 non-accrual loan placed in foreclosure, as well as $62,000 non-accrual loan upgraded to accrual status in 2021.

Stockholders’ equity decreased from December 31, 2020 to June 30, 2021 by $2,848,000, or 3.7%, mainly due to unrealized losses resulting from the change in market value of debt securities available for sale.

Subsequent to June 30, 2021, the following event took place:

On July 20, 2021, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2021, payable on September 1, 2021.

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Comparison of the Three Months Ended June 30, 2021 and 2020

Operations Overview:

Net income for the second quarter of 2021 was $1,739,000, an increase of $134,000, or 8.3%, when compared to the second quarter of 2020. Basic and diluted earnings per share increased 9.4% and 12.9%, respectively, to $0.35, in the second quarter of 2021 compared to basic and diluted earnings per share of $0.32 and $0.31, respectively, in the second quarter of 2020.

Annualized return on average equity for the three months ended June 30, 2021 was 9.54%, compared to the return on average equity of 8.40% for the same period in 2020. For the three months ended June 30, annualized return on average assets was 0.85% in 2021, compared to 0.88% in 2020.

Presented below are selected key ratios for the two periods:

	Three Months Ended
	June 30,
	2021		2020
Return on average assets (annualized)	0.85	%	0.88	%
Return on average equity (annualized)	9.54	%	8.40	%
Average equity to average assets	8.89	%	10.44	%
Non-interest income, excluding gain/loss on sales and calls of securities and change in value of equity securities, as a percentage of average assets (annualized)	0.60	%	0.54	%
Non-interest expense, excluding long-term debt prepayment penalty, as a percentage of average assets (annualized)	2.37	%	2.35	%

The discussion that follows further explains changes in the components of net income when comparing the second quarter of 2021 with the second quarter of 2020.

Net Interest Income:

Net interest income was $5,193,000 during the three months ended June 30, 2021 when compared to $5,118,000 during the three months ended June 30, 2020. Total interest income decreased by $63,000 during the second quarter of 2021 compared to the same period in 2020 due to a decline in interest income on taxable securities, while total interest expense decreased by $138,000 over the same periods due to a decline in interest expense on deposits.

Overall, average earning assets increased 13.9% in the second quarter of 2021 compared to the second quarter of 2020, while average interest bearing liabilities increased 16.4% over the same periods. The net interest margin, on a fully tax equivalent basis, decreased from 3.10% during the three months ended June 30, 2020 to 2.75% during the three months ended June 30, 2021.

Average loan balances increased by $17,476,000 and interest on loans increased by $13,000 during the second quarter of 2021 compared to the same period in 2020 due to increases in both organic loan growth, as well as PPP loan origination activity. Average PPP loans were $31,154,000 during the three months ended June 30, 2021 compared to $22,483,000 during the three months ended June 30, 2020. The increase in the average volume of loans outstanding increased interest income by $196,000, while the 19 basis point decline in the weighted average yield on loans decreased interest income by $183,000.

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The average balance of investment securities increased $83,735,000, while interest earned on investment securities declined by $72,000 in the second quarter of 2021 compared to the second quarter of 2020. The increase in the average balance on investment securities during the period increased interest income by $451,000, while the decline in yield on investment securities decreased interest income by $523,000.

Average earning assets increased $93,601,000, to $766,892,000, when comparing the three months ended June 30, 2021 to the three months ended June 30, 2020 due to a 34.9% increase in average investment securities, as well as a 4.2% increase in average loans. The yield on earning assets declined 49 basis points, to 3.15%, during the three months ended June 30, 2021, from 3.64% during the same period in 2020. The average balance of interest bearing liabilities increased over the period by $79,146,000 compared to the same 2020 period, while the cost to fund interest bearing assets with interest bearing liabilities decreased 22 basis points, to 0.59%, during the second quarter of 2021 compared to the same period in 2020.

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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, 2021 and 2020.

Average Balance Sheets and Net Interest Income Analysis

	Three Months Ended						Three Months Ended
(Dollars in thousands)	June 30, 2021						June 30, 2020						Increase (Decrease) Due To (6)
	Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Volume		Rate		Total
ASSETS
Interest earning assets:
Taxable loans (5)	$	400,109	$	4,549	4.56	%	$	385,635	$	4,556	4.75	%	$	172	$	(179)	$	(7)
Tax-exempt loans		31,667		245	3.10			28,665		225	3.16			24		(4)		20
Total loans		431,776		4,794	4.45			414,300		4,781	4.64			196		(183)		13
Taxable investment securities		317,086		1,187	1.50			233,051		1,257	2.16			453		(523)		(70)
Tax-exempt investment securities		6,299		38	2.41			6,599		40	2.42			(2)		—		(2)
Total investment securities		323,385		1,225	1.52			239,650		1,297	2.16			451		(523)		(72)
Interest bearing deposits		6,126		6	0.37			12,528		9	0.29			(4)		1		(3)
Federal funds sold		5,605		—	0.01			6,813		1	0.03			(1)		—		(1)
Total interest earning assets		766,892		6,025	3.15			673,291		6,088	3.64			642		(705)		(63)
Other assets (7)		53,169						58,737
Total assets	$	820,061					$	732,028
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	225,907		86	0.15		$	165,610		79	0.19		$	29	$	(22)	$	7
Savings deposits		138,873		17	0.05			107,140		15	0.06			5		(3)		2
Time deposits		151,590		494	1.31			152,553		636	1.68			(4)		(138)		(142)
Short-term and long-term borrowings and other interest bearing liabilities		46,249		235	2.04			58,170		240	1.66			(50)		45		(5)
Total interest bearing liabilities		562,619		832	0.59			483,473		970	0.81			(20)		(118)		(138)
Non-interest bearing liabilities:
Demand deposits		179,586						158,672
Other		4,921						13,426
Stockholders’ equity		72,935						76,457
Total liabilities and stockholders’ equity	$	820,061					$	732,028
Net interest income and net interest rate spread			$	5,193	2.56	%			$	5,118	2.83	%	$	662	$	(587)	$	75
Net interest margin on interest earning assets (3)					2.72	%					3.06	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	5,268	2.76	%			$	5,188	3.10	%

Notes:

1) Average balances were calculated using a daily average.

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

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

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

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

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

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

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Provision for Loan Losses:

In the second quarter of 2021, a $200,000 loan loss provision credit was recorded, compared to a provision expense of $196,000 in the second quarter of 2020. Based on an analysis of the allowance of loan losses as of June 30, 2021, the decreased provision was primarily the result of continued improvement in asset quality trends and net recoveries. Additionally, management reduced the level of risk originally established on COVID deferred loans because borrowers have shown the ability to continue making payments under contractual debt service.

Management regularly reviews the adequacy of the allowance for loan losses and makes assessments as to specific loan impairment, charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. See the earlier discussion in the Financial Condition section explaining the information used to determine the provision.

Non-interest Income:

Non-interest income in the second quarter of 2021 was $1,302,000 compared to $1,557,000 in the second quarter of 2020, a decrease of $255,000, or 16.4%. Excluding net gains on sales and calls of securities and the change in value of equity securities, non-interest income increased $252,000, or 25.5%, in the second quarter of 2021 compared to the second quarter of 2020.

Most significantly impacting non-interest income in the comparative three month periods was a $497,000 decrease in the gain on sales and calls of securities in the second quarter of 2021 compared to the second quarter of 2020. Partially offsetting this decline in the second quarter of 2021 were increases of $44,000 in customer service fees, $79,000 in debit card fee income and $69,000 in fees derived from loan activity compared to the comparable 2020 period.

As a percentage of average assets, annualized non-interest income was 0.64% in the second quarter of 2021 compared to 0.85% in the second quarter of 2020. Excluding the gain on sales and calls of securities and change in value of equity securities, the percentage of average assets to annualized non-interest income was 0.60% in the second quarter of 2021 compared to 0.54% in the second quarter of 2020.

Non-interest Expense:

Non-interest expense was $4,867,000 for the three months ended June 30, 2021, compared to $4,817,000 for the same period in 2020, an increase of $50,000, or 1.0%.

Most significantly impacting non-interest expense in the comparative three month periods was a $479,000 increase in employee compensation and benefits expenses as staffing levels in the second quarter of 2021 were at pre-pandemic levels compared to a reduced staff during the second quarter of 2020 when some employees were furloughed. Additionally, data processing expense increased $110,000 in the second quarter of 2021 compared to the second quarter of 2020, predominantly due to the launch of Juniata’s new online deposit account opening platform. Partially offsetting these increases, was a $524,000 decline in long-term debt prepayment penalties for the three months ended June 30, 2021, as no prepayment penalties were recorded in the second quarter of 2021. Exclusive of the debt prepayment penalty in 2020, non-interest expense increased 13.4% in the second quarter of 2021 compared to the second quarter of 2020.

As a percentage of average assets, annualized non-interest expense was 2.37% in the second quarter of 2021 compared to 2.63% in the second quarter of 2020. Excluding the long-term debt prepayment penalty, average assets as a percentage of annualized non-interest expense was 2.35% in the second quarter of 2020.

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Provision for income taxes:

An income tax provision of $89,000 was recorded in the second quarter of 2021 compared to a tax provision of $57,000 recorded in the second quarter of 2020, primarily due to higher taxable income recorded in the 2021 period.

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 second quarters of 2021 and 2020, the tax credits were $226,000 in each period, offsetting $315,000 and $283,000 in tax expense in the 2021 and 2020 periods, respectively. For the second quarter of 2021, the tax credit lowered the effective tax rate from 17.2% to 4.9% compared to the same period in 2020, when the tax credit lowered the effective tax rate from 17.0% to 3.4%.

Comparison of the Six Months Ended June 30, 2021 and 2020

Operations Overview:

Net income for the first six months of 2021 was $3,374,000, an increase of $731,000, or 27.7%, when compared to the first six months of 2020, while basic and diluted earnings per share increased by 28.8%, to $0.67, during the first six months of 2021 compared to basic and diluted earnings per share of $0.52 during the comparable 2020 period. Annualized return on average equity for the six months ended June 30, 2021 was 9.10%, compared to 6.98% for the same period in 2020. For the six months ended June 30, annualized return on average assets was 0.84% in 2021, compared to 0.76% in 2020.

Presented below are selected key ratios for the two periods:

	Six Months Ended
	June 30,
	2021		2020
Return on average assets (annualized)	0.84	%	0.76	%
Return on average equity (annualized)	9.10	%	6.98	%
Average equity to average assets	9.18	%	10.84	%
Non-interest income, excluding gain/loss on sales and calls of securities and change in value of equity securities, as a percentage of average assets (annualized)	0.60	%	0.61	%
Non-interest expense, excluding long-term debt prepayment penalty, as a percentage of average assets (annualized)	2.34	%	2.59	%

The discussion that follows further explains changes in the components of net income when comparing the first six months of 2021 to the first six months of 2020.

Net Interest Income:

Net interest income was $10,136,000 during the six months ended June 30, 2021 compared to $10,119,000 recorded during the six months ended June 30, 2020. Total interest income decreased by $366,000 during the first half of 2021 compared to the first half of 2020 mainly due to a decline in interest income on taxable securities and loans, while total interest expense decreased by $383,000 over the same period due to a decline in interest expense on deposits and long-term debt as $10,000,000 in FHLB long-term advances were repaid in April 2020.

Overall, average earning assets increased 17.5%, while average interest bearing liabilities increased 19.0% during the six months ended June 30, 2021 compared to the same period in 2020. Over the same period, net interest margin, on a fully tax equivalent basis, decreased from 3.21% during the six months ended June 30, 2020 to 2.75% during the six months ended June 30, 2021.

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Average loan balances increased by $28,521,000, or 7.1%, during the first six months of 2021, while interest income on loans declined by $88,000 over the same period compared to the first six months of 2020. PPP loan origination activity was a significant factor in the increase in average loan balances between periods as average PPP loans were $31,001,000 during the six months ended June 30, 2021 compared to $11,258,000 during the six months ended June 30, 2020. PPP loans contributed $625,000 in fee income in the first six months of 2021 compared to $178,000 in the first six months of 2020. The increase in the average volume of loans outstanding during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 increased interest income by $680,000, while the 35 basis point decrease in the weighted average yield on loans decreased interest income by approximately $768,000.

The average balance of investment securities increased by $86,131,000 in the first six months of 2021 compared to the first six months of 2020, while interest earned on investment securities decreased $224,000. The change in the average balance increased interest income by $966,000, while the decline in the overall pre-tax yield of 77 basis points on the investment securities portfolio resulted in a decrease in interest income of $1,190,000.

Average earning assets increased $112,256,000 to $753,883,000, primarily due to the 38.8% increase in average investment securities. The yield on earning assets decreased to 3.17% during the six months ended June 30, 2021 from 3.83% in the same period in 2020. The average balance of interest bearing liabilities increased over the period by $88,518,000 to $554,330,000, compared to the same period in 2020. In addition, the cost to fund interest bearing assets with interest bearing liabilities decreased 29 basis points, to 0.62%, during the first six months of 2021 compared to the same period in 2020. The yields on earning assets and cost of funds were affected by the 225 basis point decline in the prime rate and the federal funds target range between the first half of 2020 and 2021.

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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, 2021 and 2020.

	Six Months Ended						Six Months Ended
(Dollars in thousands)	June 30, 2021						June 30, 2020						Increase (Decrease) Due To (6)
	Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Volume		Rate		Total
ASSETS
Interest earning assets:
Taxable loans (5)	$	399,391	$	9,093	4.59	%	$	373,742	$	9,207	4.95	%	$	635	$	(749)	$	(114)
Tax-exempt loans		31,536		478	3.06			28,664		452	3.17			45		(19)		26
Total loans		430,927		9,571	4.48			402,406		9,659	4.83			680		(768)		(88)
Taxable investment securities		301,935		2,193	1.45			216,687		2,430	2.24			956		(1,193)		(237)
Tax-exempt investment securities		6,301		76	2.41			5,418		63	2.33			10		3		13
Total investment securities		308,236		2,269	1.47			222,105		2,493	2.24			966		(1,190)		(224)
Interest bearing deposits		8,477		11	0.26			10,973		52	0.95			(12)		(29)		(41)
Federal funds sold		6,243		0	0.01			6,143		13	0.44			—		(13)		(13)
Total interest earning assets		753,883		11,851	3.17			641,627		12,217	3.83			1,634		(2,000)		(366)
Other assets (7)		53,656						56,588
Total assets	$	807,539					$	698,215
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	204,369		153	0.15		$	156,463		243	0.31		$	75	$	(164)	$	(89)
Savings deposits		134,167		33	0.05			103,028		40	0.08			12		(19)		(7)
Time deposits		152,371		1,030	1.36			151,766		1,277	1.69			5		(253)		(248)
Short-term and long-term borrowings and other interest bearing liabilities		63,423		499	1.59			54,555		538	1.98			88		(127)		(39)
Total interest bearing liabilities		554,330		1,715	0.62			465,812		2,098	0.91			180		(563)		(383)
Non-interest bearing liabilities:
Demand deposits		174,255						147,500
Other		4,817						9,202
Stockholders’ equity		74,137						75,701
Total liabilities and stockholders’ equity	$	807,539					$	698,215
Net interest income and net interest rate spread			$	10,136	2.55	%			$	10,119	2.92	%	$	1,454	$	(1,437)	$	17
Net interest margin on interest earning assets (3)					2.71	%					3.17	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	10,283	2.75	%			$	10,256	3.21	%

Notes:

1) Average balances were calculated using a daily average.

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

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

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

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

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

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

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Provision for Loan Losses:

In the first six months of 2021, the provision for loan losses was a credit of $279,000, compared to a provision expense of $552,000 in the first six months of 2020. The decline in the provision in 2021 compared to the 2020 period was due to favorable asset quality trends and net recoveries of previously charged-off loans. Additionally, management reduced the level of risk originally established on COVID deferred loans because borrowers have shown the ability to continue making payments under contractual debt service.

Management regularly reviews the adequacy of the allowance for loan losses and makes assessments as to specific loan impairment, charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. See the earlier discussion in the Financial Condition section explaining the information used to determine the provision.

Non-interest Income:

Non-interest income in the first six months of 2021 was $2,574,000 compared to $2,551,000 in the first six months of 2020, an increase of $23,000, or 0.9%. Excluding net gains on sales and calls of securities and the change in value of equity securities, non-interest income increased $527,000, or 26.5%, in the second quarter of 2021 compared to the second quarter of 2020.

Most significantly impacting the comparative six month periods was a $504,000 decline in the gain on sales and calls of securities in 2021 over the comparable 2020 period due to the execution of a balance sheet strategy in 2020 that produced $549,000 in security gains to offset a $524,000 prepayment penalty on the extinguishment of long-term debt. Partially offsetting this decline were increases of $255,000 in the change in value of equity securities, $168,000 in debit card fee income and $106,000 in fees derived from loan activity during the first half of 2021 compared to the comparable 2020 period.

As a percentage of average assets, annualized non-interest income was 0.64% in the first six months of 2021 compared to 0.73% in the comparable 2020 period. As a percentage of average assets, annualized non-interest income, exclusive of net gains/losses on the sales of securities and the change in value of equity securities, was 0.60% in the first six months of 2021 compared to 0.61% in the first six months of 2020.

Non-interest Expense:

Non-interest expense was $9,455,000 for the six months ended June 30, 2021 compared to $9,577,000 for the same period in 2020, a decrease of $122,000.

Most significantly impacting non-interest expense in the comparative six month periods was a $524,000 decline in long-term debt prepayment penalties as no prepayment penalty was recorded during the six months ended June 30, 2021. Partially offsetting this decline between periods was an increase of $225,000 in employee compensation expense as staffing levels in the first half of 2021 returned to pre-pandemic levels compared to the comparable 2020 period when some employees were furloughed. Data processing expense also increased by $192,000 during the six months ended June 30, 2021, compared to the same 2020 period, predominantly due to the expenses incurred from the launch of Juniata’s new online deposit account opening platform at the end of 2020.

As a percentage of average assets, annualized non-interest expense was 2.34% in the first months of 2021 compared to 2.74% in the first six months of 2020. Excluding the long-term debt prepayment penalty recorded during the six months ended June 30, 2020, annualized non-interest expense was 2.59% through the first half of 2020.

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Provision for income taxes:

An income tax provision of $160,000 was recorded in the first six months of 2021 compared to an income tax benefit of $102,000 recorded in the first six months of 2020, primarily due to higher taxable income earned in the 2021 period. Additionally, under the provisions of the CARES Act, the Company recorded a tax refund in excess of its deferred tax carrying value, resulting in a $57,000 credit to income tax expense in 2020.

The Company qualifies for a federal tax credit for a low-income housing project investment, and the tax provisions for each period reflected the application of the tax credit. For the first six months of 2021 and 2020, the tax credits were $451,000 in both periods, offsetting $611,000 in tax expense recorded during the six months ended June 30, 2021 and $349,000 in tax expense recorded in the comparable 2020 period. The tax credit lowered the effective tax rate from 17.3% to 4.5% during the first six months of 2021 compared to the same period in 2020, when the tax credit lowered the effective tax rate from 13.9% to (0.40)%.

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, 2021, overnight borrowings from the Federal Home Loan Bank averaged $1,190,000. As of June 30, 2021, the Company had no short-term borrowings, but had $35,000,000 in long-term debt with the Federal Home Loan Bank with a remaining unused borrowing capacity with the Federal Home Loan Bank of $137,329,000.

The Company also has a source for obtaining brokered deposits as an additional funding alternative. As of June 30, 2021, brokered deposits of $20,000,000 were included in total interest-bearing deposits.

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

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 $3,991,000 and $2,379,000 of financial and performance letters of credit commitments outstanding as of June 30, 2021 and December 31, 2020, respectively. Commercial letters of credit as of June 30, 2021 and December 31, 2020 totaled $7,475,000 and $6,975,000, respectively.

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Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of June 30, 2021 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

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

Interest Rate Sensitivity:

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

Capital Adequacy:

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

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

The CARES Act requires banking organizations to apply a zero percent risk weight to PPP covered loans for risk-based capital requirement purposes. In addition, because of the non-recourse nature of the Federal Reserve's extension of credit to the banking organization, the banking organization is not exposed to credit or market risk from the pledged PPP covered loans. Therefore, pledged PPP covered loans are excluded from the banking organization's regulatory capital.

At June 30, 2021, the Bank exceeded the regulatory requirements to be considered a "well capitalized" financial institution under Basel III. The Bank’s CET1 and Tier 1 Capital ratio was 12.32%, its Total Capital ratio was 13.07% and its Tier 1 leverage ratio was 7.86%. The Bank also maintain capital sufficient to cover the additional 2.5% capital conservation buffer.

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At June 30, 2021, $36,296,000 in undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.

55

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2021, 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, 2021, that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1.         LEGAL PROCEEDINGS

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

Item 1A.      RISK FACTORS

There have been no other 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, 2020.

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

The Company periodically repurchases shares of its common stock under the share repurchase program approved by the Board of Directors. In December of 2016, the Board of Directors authorized the repurchase of an additional 200,000 shares of its common stock through its share repurchase program. The program will remain authorized until all approved shares are repurchased, unless terminated by the Board of Directors. As of August 13, 2021, 20,791 shares remained available to purchase under that program. Transactions pursuant to the repurchase program in the three month period ended June 30, 2021 are shown below.

				Total Number of
	Total Number			Shares Purchased as	Maximum Number of
	of Shares	Average		Part of Publicly	Shares that May Yet Be
	Purchased or Restricted	Price Paid		Announced Plans or	Purchased Under the
Period	Shares Forfeited	per Share		Programs	Plans or Programs (1)
April 1-30, 2021	—	$	—	—	32,404
May 1-31, 2021	—		—	—	32,404
June 1-30, 2021	11,613		16.85	11,613	20,791
Totals	11,613			11,613	20,791

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.

Item 3.         DEFAULTS UPON SENIOR SECURITIES

Not applicable

Item 4.         MINE SAFETY DISCLOSURES

Not applicable

Item 5.         OTHER INFORMATION

None

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Item 6.        EXHIBITS

3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Current Report on Form 8-K filed with the SEC on November 12, 2015)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the SEC on February 27, 2019)
3.3	Amended and Restated Juniata Valley Financial Corp. Employee Stock Purchase Plan
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.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

58

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 13, 2021	By:	/s/ Marcie A. Barber
			Marcie A. Barber, President
			Chief Executive Officer
			(Principal Executive Officer)
Date:	August 13, 2021	By:	/s/ JoAnn N. McMinn
			JoAnn N. McMinn
			Chief Financial Officer
			(Principal Accounting Officer and
			Principal Financial Officer)

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EX-3.3

Exhibit 3.3

AMENDED AND RESTATED

JUNIATA VALLEY FINANCIAL CORP. EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I–PURPOSE

1.01.Purpose

The Juniata Valley Financial Corp. Employee Stock Purchase Plan provides a method for employees of The Juniata Valley Bank to acquire a proprietary interest in Juniata Valley Financial Corp. Under the Employee Stock Purchase Plan, participating employees may purchase shares of the Common Stock of Juniata Valley Financial Corp. Juniata Valley Financial Corp. The Employee Stock Purchase Plan, which was most recently amended in 2007 for the purpose of modifying the Option Price floor, is now being amended and restated primarily for the purpose of extending the Offering Termination Date and making other minor administrative changes. It is intended that this Amended and Restated Employee Stock Purchase Plan, effective as of June 15, 2021, shall qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended. The Amended and Restated Employee Stock Purchase Plan shall be construed to comply with the requirements of that section of the Internal RevenueCode.

ARTICLEII-DEFINITIONS

2.01Administrator

"Administrator" means the Committee or individual(s) appointed by the Committee to administer the Plan.

2.02BasePay

"Base Pay" means the base salary or base hourly wages paid to a Participant by The Juniata Valley Bank as compensation for services to The Juniata Valley Bank, determined prior to any pre-tax contributions made by a Participant to either a qualified cash or deferred arrangement (Code Section 401(k) plan) or cafeteria plan (Code Section 125 plan), excluding payments for overtime, shift premium, bonuses and other special payments, commissions, and other marketing incentive payments.  The Committee, in its discretion, may, on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2(f), establish a different definition of Base Pay prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering.

2.03Board ofDirectors

"Board of Directors" means the Board of Directors of Juniata Valley Financial Corp.

2.04Code

"Code" means the Internal Revenue Code of 1986, as amended.

2.05Committee

“Committee” means the committee administering the Employee Stock Purchase Plan, which is more fully described in Article XI.

2.06Employee

"Employee" means a common-law employee who is customarily employed on a full-time or part-time basis by The Juniata Valley Bank.For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by The Juniata Valley Bank that meets the requirements of Treasury Regulation Section 1.421-1(h(2).

2.07JVB

"JVB" means The Juniata Valley Bank.

2.08JUVF

"JUVF" means Juniata Valley Financial Corp.

2.09Offerings

"Offerings" means the annual offerings of JUVF's common stock. Each Offering will begin on July 1 and end on June 1 of the following year.

2.10Offering CommencementDate

"Offering Commencement Date" means July 1 of each year.

2.11Offering TerminationDate

"Offering Termination Date" means June 1 of the year following theOffering Commencement Date.

1

2.12Participant

"Participant" means any eligible Employee of JVB that has completed an authorization for payroll deduction on the form provided by JVB and filed the form with the Administrator.  

2.13Plan

"Plan" means the JUVF Employee Stock Purchase Plan.

2.14Stock

"Stock" means the common stock of JUVF.

ARTICLE III-ELIGIBILITY AND PARTICIPATION

3.01InitialEligibility

An employee is eligible to participate in the Plan if: (i) he or she has completed ninety (90) days' employment; and (ii) he or she is employed by JVB on the date the employee's participation in the Plan becomes effective. Eligible employees may participate in offerings under the Plan which commence on or after the employee meets the eligibility requirements set forth in this section.

3.02Restrictions onParticipation

Any provision of the Plan to the contrary notwithstanding, an employee's participation in the Plan will be limited or prohibited if; because of participation the employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of JUVF (for purposes of this paragraph, the rules of Section 424(d) of the Code shall apply in determining stock ownership of any employee).

3.03Commencement ofParticipation

An eligible employee may become a Participant by completing an authorization for a payroll deduction on the form provided by JVB and filing it with the Administrator. With respect to each Offering, the payroll deduction authorization must be received by the Administrator on or before a date established by the Committee. For each Offering, payroll deductions for a Participant will commence on the applicable Offering Commencement Date, and will end on the Offering Termination Date, unless sooner terminated by the Participant as provided in ArticleVIII.

ARTICLE IV-OFFERINGS

4.01.AnnualOfferings

The Plan will be implemented by annual Offerings of JUVF's Common Stock beginning on the 1st day of July in each year. Each Offering will terminate on June 1st of the following year. Notwithstanding any contrary provision of the Plan, to the extent required under Section 423(b) of the Code, an option (taken together with all other options then outstanding under this Plan and under all other similar employee stock purchase plans of the Employers)shall not give the Participant the right to purchase JUVF stock at a rate which accrues in excess of $25,000 worth of stock (determined using the fair market value of a share of the stock on the Offering Termination Date of each such option) for each calendar year in which such option is outstanding, in accordance with Treasury Regulation Section 1.423-2(a)(3)(vi).

ARTICLE V-PAYROLL DEDUCTIONS

5.01Amount ofDeduction

At the time a Participant files the authorization for payroll deduction, he or she shall elect to have deductions made from his or her Base Pay. The deductions shall be made on each payday during the time the employee is a Participant in an Offering. The rate of each deduction shall be in an amount equal to at least 1%, but not more than 10% (or such greater or lesser percentage or dollar amount that the Committee may establish from time to time, in its discretion and on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2), of the Participant's base pay. If permitted by the Committee, a Participant instead may elect to have a specific amount withheld or to contribute a specific amount, subject to such uniform and nondiscriminatory rules (or as otherwise permitted by Treasury Regulation Section 1.423-2) as the Committee in its discretion may specify.

5.02Participant'sAccount

All payroll deductions made for a Participant shall be credited to the Participant's account under the Plan. A Participant may make separate cash payments only to accumulate up to the limits described in Section 5.01.

5.03Changes in PayrollDeductions

A Participant may discontinue participation in the Plan as provided in Article VIII. No other change can be made during an Offering, except to the extent necessary to comply with Section 4.01. Specifically, a Participant may not alter the amount of his or her payroll deductions for that Offering.

2

ARTICLE VI-GRANTING OF OPTION

6.01Number of OptionShares

On the Commencement Date of each Offering, a Participant will be granted an option to purchase as many full shares of the Stock as he or she will be able to purchase with the aggregate sum of the deposits in the participant’s payroll deduction account during that Offering.

6.02OptionPrice

The option price of Stock purchased during each annual Offering for a Participant shall be a percentage between ninety-five (95%) percent and one hundred (100%) percent of the fair market value of the Stock on the Offering Termination Date or the nearest prior business day to the Offering Termination Date. The percentage used shall be in the sole and exclusive discretion of the Board of Directors.

ARTICLE VII-EXERCISE OF OPTION

7.01AutomaticExercise

Unless a Participant gives written notice to the Administrator  as providedinSection 8.01,theParticipant'soptionforthepurchaseofStock with payroll deductions made during any offering will be exercised automatically on the Offering Termination Date, for the purchase of the number of full shares of Stock which the balance in his or her account at that time will purchase at the applicable option price (but not in excess of the number of shares for which options have been granted to the employee pursuant to (S)6.0l). Any excess in the account at that time will be returned to theParticipant.

7.02FractionalShares

Fractional shares will not be issued under the Plan. Any accumulated payroll deductions which would have been used to purchase fractional shares will be returned to any Participant promptly following the termination of an Offering.

7.03Transferability ofOption

During a Participant's lifetime, options held by the Participant shall be exercisable only by that Participant.

7.04Delivery ofStock

Within forty-five (45) days after the Offering Termination Date of each Offering, or as soon as practicable thereafter, JUVF will deliver to each Participant, as appropriate, the Stock purchased upon exercise of his or her option.

ARTICLE VIII-WITHDRAWAL

8.01InGeneral

A Participant may withdraw payroll deductions credited to his or her account under the Plan by providing written notice to the Administrator at any time prior to the Offering Termination Date applicable to any Offering. All of the Participant's payroll deductions credited to his or her account will be paid to the Participant promptly after receipt of notice of withdrawal. No further payroll deductions will be made from the Participant's pay during suchOffering. Notwithstanding the foregoing, a Participant may partially withdraw any payroll deductions held on behalf of a Participant (that have not been used to purchase shares of Common Stock) to the extent necessary to satisfy the limit set forth in Section 4.01.

8.02Effect on SubsequentParticipation

A Participant's withdrawal from any Offering will not have any effect upon his or her eligibility to participate in any succeeding Offering or in any similar plan which may hereafter be adopted by JUVF.

8.03Termination ofEmployment

Upon termination of the Participant's employment for any reason, including retirement (but excluding death or continuation of a leave of absence for a period beyond 90 days), the Participant's participation in the Plan shall automatically terminate, the Participant shall not be entitled to purchase any shares at the end of the Offering, and the payroll deductions credited to the Participant's account will be returned to the Participant.

3

8.04Termination of Employment Due toDeath

Upon termination of the Participant's employment because of death, the Participant's beneficiary (as defined in Section l2.0l) shall have the right to elect, by written notice given to the Administrator prior to the earlier of the Offering Termination Date or the expiration of a period of sixty (60) days commencing with the date of death of the Participant, either:

(a) to withdraw all of the payroll deductions credited to the Participant's account under the Plan;or

(b) to exercise the Participant's option for the purchase of Stock on the Offering Termination Date following the date of the Participant's death under the terms described in Section7.01.

In the event that no written notice of election is received by the Administrator, the beneficiary shall automatically be deemed to have elected, pursuant to paragraph (b), to exercise the Participant's option.

8.05Leave ofAbsence

A Participant on leave of absence shall continue to be a Participant in the Plan so long as the Participant is on continuous leave of absence even if they elect to discontinue their contributions.  A Participant who wishes to continue their contributions must authorize deductions to be made from payments made by JVB to the Participant during the leave of absence or otherwise undertaking to make cash payments to the Plan at the end of each payroll period to the extent that amounts payable by JVB to the Participant are insufficient to meet the Participant’s authorized Plan deductions.  A Participant who has been on leave of absence for more than 90 days will not be entitled to participate in any offering commencing after the 90th day of such leave of absence. Notwithstanding any other provisions of the Plan, a Participant on a leave of absence will cease to be considered a Participant unless he or she returns to regular full time or part time employment with JVB at the earlier of:

(a) the termination of such leave of absence;or

(b) three months from the 90th day of the leave of absence.

ARTICLE IX-INTEREST

9.01 Payment of Interest

A Participant's account will be credited with simple interest computed at the regular statement savings account rate in effect at JVB during the applicable offering period.

ARTICLE X-STOCK

10.01 Maximum Shares

As of July 1, 1996, the maximum number of shares which may be issued under the Plan, subject to adjustment upon changes in capitalization of JUVF as provided in Section 12.04 shall be 5,000 shares in each annual Offering plus all unissued shares from prior Offerings, whether offered or not, not to exceed 100,000 shares for all Offerings. If the total number of shares for which options are exercised on any Offering Termination Date in accordancewith Article VI exceeds the maximum number of shares for the applicable Offering, JUVF shall make a pro rata allocation of the shares remaining available in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable. In such event, the balance of payroll deductions credited to the account of each Participant under the Plan shall be returned to the Participant as promptly as possible.

10.02Participant's Interest in OptionStock

The Participant will have no interest in Stock covered by his or her option until the option has been exercised.

10.03Registration ofStock

Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant, or, if the Participant directs by written notice to the Administrator prior to the Offering Termination Date, in the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship or as tenants by the entireties, to the extent permitted by applicablelaw.

ARTICLE XI-ADMINISTRATION

11.01Appointment ofCommittee

The Board of Directors shall appoint a committee (the "Committee") to administer the Plan. The Committee which shall consist of no fewer than three members of the Board of Directors. No member of the Committee shall be eligible to purchase stock under the Plan.

4

11.02Authority ofCommittee

The Committee shall have absolute authority in its discretion to interpret and construe any and all provisions of the Plan, to adopt rules and regulations for administering the Plan, and to make all other determinations necessary or advisable for administering the Plan. The Committee's determination shall be conclusive.

11.03Rules Governing the Administration of theCommittee

The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable. Meetings by telephone are permissible. A majority of its members shall constitute a quorum. All decisions of the Committee shall be made by a majority of its members. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan, in the manner and to the extent it shall deem desirable. Any decision or determination reduced to writing and signed by a majority of the members of the Committee will be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

ARTICLE XII-MISCELLANEOUS

12.01Designation ofBeneficiary

A Participant may file a written designation of a beneficiary who is to receive any stock and/or cash in the event the Participant dies. A Participant may change the designated beneficiary at any time by written notice to the Administrator. In the event of the Participant's death prior to the delivery of Stock purchased pursuant to an Offering, JUVF will deliver the Stock, or any cash to which the Participant is entitled, to the joint tenant, if the Participant has designated a joint tenant as provided in Section 10.03. If there is no joint tenant, JUVF shall deliver the stock and/or cash to the designated beneficiary upon receipt by JUVF of proof of the identity and existence at the Participant's death of a beneficiary validly designated under the Plan. If a Participant dies and no living beneficiary has been validly designated under the Plan, JUVF shall deliver the stock and/or cash to the executor or administrator of the estate of the Participant. If there is no executor or administrator appointed (to the knowledge of JUVF), JUVF, in its discretion, may deliver the stock and/or cash to the spouse or to any one or more dependents of the Participant as JUVF may designate. No beneficiary shall, prior to death of the Participant by whom he has been designated, acquire any interest in the stock or cash credited to the Participant under the Plan. JUVF shall not be liable to any person for the delivery of stock and/or cash pursuant to the provisions of this Section 12.01.

12.02Transferability

In no event may any rights with regard to the exercise of an option or to receive stock under the Plan be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge, or other disposition shall be without effect, except that JUVF may treat such act as an election to withdraw funds.

12.03Use ofFunds

All payroll deductions received or held by JVB under this Plan may be used by JVB in the same manner as funds held in ordinary savings accounts at JVB are used. JVB shall not be obligated to segregate payroll deductions.

12.04Adjustment Upon Changes inCapitalization

(a}If while any options are outstanding, the outstanding shares of Common Stock of JUVF have increased, decreased, changed into, or been exchanged for a different number or kind of shares or securities of JUVF through reorganization, stock split, reverse stock split or similar transaction, appropriate and proportionate adjustments may be made by the Committee. In addition, the number and/or kind of shares which may be offered in the Offerings described in Article IV hereof shall also be proportionately adjusted. No adjustments shall be made for stock dividends. For the purposes of this Paragraph, any distribution of shares to shareholders in an amount aggregating 20% or more of the outstanding shares shall be deemed a stock split and any distributions of shares aggregating less than 20% of the outstanding shares shall be deemed a stockdividend.

(b)Upon the (i) dissolution or liquidation of JUVF; (ii) reorganization, merger or consolidation of JUVF with one or more corporations as a result of which JUVF is not the surviving corporation; or (iii) upon a sale of substantially all of the property or stock of JUVF to another corporation, the holder of each option then outstanding under the Plan will thereafter be entitled to receive at the next Offering Termination Date upon the exercise of such option for each share as to which such option shall be exercised, as nearly as reasonably may be determined, the cash, securities and/or property which a holder of one share of the Common stock was entitled to receive upon and at the time of such transaction. The Board of Directors shall take such steps in connection with such transactions as the Board shall deem necessary to assure that the provisions of this Section l2.04 shall thereafter be applicable, as nearly as reasonably may be determined, in relation to the said cash, securitiesand/or property as to which such holder of such option might thereafter be entitled to receive.

5

12.05Amendment and Termination

The Board of Directors shall have complete power and authority to terminate or amend the Plan. The Board of Directors shall not, without the approval of the stockholders of the Corporation (i) increase the maximum number of shares which may be issued under any Offering (except pursuant to Section l2.04); (ii) amend the requirements as to the class of employees eligible to purchase stock under the Plan or permit the members of the Committee to purchase stock under the Plan. No termination, modification, or amendment of the Plan may, without the consent of an employee then having an option under the Plan to purchase stock, adversely affect the rights of such employee under such option.

12.06Effective Date

The Plan became effective as of July 1, 1996, as approved by the holders of the majority of the Stock present and represented at the 1996 annual meeting of the shareholders.

12.07No EmploymentRights

The Plan does not, directly or indirectly, create any right for the benefit of any employee or class of employees to purchase any shares under the Plan, or create in any employee or class of employees any right with respect to continuation of employment by JVB. The Plan shall not be deemed to interfere in any way with JVB's right to terminate, or otherwise modify, an employee's employment at any time.

12.08Effect ofPlan

The provisions of the Plan will be binding upon all successors of each employee participating in the Plan, including, without limitation, the employee's estate and the executors, administrators, or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of the employee.

12.09Governing Law

The law of the Commonwealth of Pennsylvania will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.

6

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 13, 2021	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.

Ay
Date:	August 13, 2021	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 13, 2021

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 13, 2021

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 13, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-13232
Document Period End Date	Jun. 30, 2021
Entity Registrant Name	JUNIATA VALLEY FINANCIAL CORP
Entity Central Index Key	0000714712
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2235254
Entity Address, Address Line One	Bridge and Main Streets
Entity Address, City or Town	Mifflintown
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17059
City Area Code	855
Local Phone Number	582-5101
Title of 12(b) Security	NONE
No Trading Symbol Flag	true
Security Exchange Name	NONE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Entity Common Stock, Shares Outstanding		5,000,026

XML

Consolidated Statements of Financial Condition - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Assets
Cash and due from banks	$ 17,165,000	$ 11,868,000
Interest bearing deposits with banks	1,020,000	19,753,000
Federal funds sold	0	10,000,000
Cash and cash equivalents	18,185,000	41,621,000
Interest bearing time deposits with banks	735,000	735,000
Equity securities	1,178,000	1,091,000
Debt securities available for sale	342,030,000	286,415,000
Restricted investment in bank stock	2,885,000	3,423,000
Total loans	431,189,000	422,661,000
Less: Allowance for loan losses	(3,906,000)	(4,094,000)
Total loans, net of allowance for loan losses	427,283,000	418,567,000
Premises and equipment, net	8,540,000	8,808,000
Other real estate owned	110,000	0
Bank owned life insurance and annuities	16,708,000	16,568,000
Investment in low income housing partnerships	2,705,000	3,105,000
Core deposit and other intangible assets	208,000	241,000
Goodwill	9,047,000	9,047,000
Mortgage servicing rights	137,000	158,000
Accrued interest receivable and other assets	6,034,000	3,939,000
Total assets	835,785,000	793,718,000
Liabilities:
Deposits: Non-interest bearing	179,363,000	168,115,000
Deposits: Interest bearing	529,176,000	454,751,000
Total deposits	708,539,000	622,866,000
Short-term borrowings and repurchase agreements	12,153,000	24,750,000
Federal Reserve Bank ("FRB") advances	0	27,955,000
Long-term debt	35,000,000	35,000,000
Other interest bearing liabilities	1,572,000	1,584,000
Accrued interest payable and other liabilities	4,772,000	4,966,000
Total liabilities	762,036,000	717,121,000
Commitments and contingent liabilities
Stockholders' Equity:
Preferred stock, no par value: Authorized - 500,000 shares, none issued	0	0
Common stock, par value $1.00 per share: Authorized 20,000,000 shares Issued - 5,151,279 shares at June 30, 2021; 5,151,279 shares at December 31, 2020 Outstanding - 5,000,026 shares at June 30, 2021; 5,025,441 shares at December 31, 2020	5,151,000	5,151,000
Surplus	24,922,000	25,011,000
Retained earnings	46,266,000	45,096,000
Accumulated other comprehensive income	26,000	3,518,000
Cost of common stock in Treasury: 151,253 shares at June 30, 2021; 125,838 shares at December 31, 2020	(2,616,000)	(2,179,000)
Total stockholders' equity	73,749,000	76,597,000
Total liabilities and stockholders' equity	$ 835,785,000	$ 793,718,000

XML

Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
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	5,151,279	5,151,279
Common Stock, Shares, Outstanding	5,000,026	5,025,441
Treasury Stock, Shares	151,253	125,838

XML

Consolidated Statements of Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Interest and dividend income:
Loans, including fees	$ 4,794,000	$ 4,781,000	$ 9,571,000	$ 9,659,000
Taxable securities	1,187,000	1,257,000	2,193,000	2,430,000
Tax-exempt securities	38,000	40,000	76,000	63,000
Other interest income	6,000	10,000	11,000	65,000
Total interest income	6,025,000	6,088,000	11,851,000	12,217,000
Interest expense:
Deposits	597,000	730,000	1,216,000	1,560,000
Short-term borrowings and repurchase agreements	21,000	0	53,000	8,000
FRB advances	0	7,000	18,000	7,000
Long-term debt	213,000	230,000	425,000	513,000
Other interest bearing liabilities	1,000	3,000	3,000	10,000
Total interest expense	832,000	970,000	1,715,000	2,098,000
Net interest income	5,193,000	5,118,000	10,136,000	10,119,000
Provision for loan losses	(200,000)	196,000	(279,000)	552,000
Net interest income after provision for loan losses	5,393,000	4,922,000	10,415,000	9,567,000
Non-interest income:
Earnings on bank-owned life insurance and annuities	68,000	63,000	122,000	127,000
Gain on sales and calls of securities	54,000	551,000	58,000	562,000
Change in value of equity securities	8,000	18,000	101,000	(154,000)
Other non-interest income	79,000	76,000	158,000	158,000
Total non-interest income	1,302,000	1,557,000	2,574,000	2,551,000
Non-interest expense:
Employee compensation expense	2,062,000	1,803,000	4,031,000	3,806,000
Employee benefits	614,000	394,000	1,159,000	1,122,000
Occupancy	312,000	271,000	642,000	585,000
Equipment	192,000	231,000	381,000	465,000
Data processing expense	673,000	563,000	1,256,000	1,064,000
Professional fees	195,000	191,000	383,000	364,000
Taxes, other than income	119,000	124,000	243,000	262,000
FDIC Insurance premiums	70,000	39,000	151,000	79,000
Gain on other real estate owned	0	0	(49,000)	0
Amortization of intangible assets	17,000	19,000	33,000	38,000
Amortization of investment in low income housing partnerships	200,000	200,000	400,000	400,000
Long-term debt prepayment penalty	0	524,000	0	524,000
Other non-interest expense	413,000	458,000	825,000	868,000
Total non-interest expense	4,867,000	4,817,000	9,455,000	9,577,000
Income before income taxes	1,828,000	1,662,000	3,534,000	2,541,000
Income tax provision (benefit)	89,000	57,000	160,000	(102,000)
Net income	$ 1,739,000	$ 1,605,000	$ 3,374,000	$ 2,643,000
Earnings per share
Basic	$ 0.35	$ 0.32	$ 0.67	$ 0.52
Diluted	$ 0.35	$ 0.31	$ 0.67	$ 0.52
Customer Service Fees [Member]
Non-interest income:
Non-interest income	$ 320,000	$ 276,000	$ 645,000	$ 691,000
Debit Card fee Income [Member]
Non-interest income:
Non-interest income	451,000	372,000	864,000	696,000
Trust Fees [Member]
Non-interest income:
Non-interest income	115,000	91,000	227,000	204,000
Commissions from Sales of Non-Deposit Products [Member]
Non-interest income:
Non-interest income	105,000	73,000	185,000	147,000
Fees Derived From Loan Activity [Member]
Non-interest income:
Non-interest income	92,000	23,000	196,000	90,000
Mortgage Banking Income [Member]
Non-interest income:
Non-interest income	$ 10,000	$ 14,000	$ 18,000	$ 30,000

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income: Pre-Tax Amount		$ 1,828	$ 1,662	$ 3,534	$ 2,541
Net Income: Tax Effect		(89)	(57)	(160)	102
Net income		1,739	1,605	3,374	2,643
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period, Pre-Tax Amount		1,112	(331)	(4,799)	4,617
Unrealized holding gains (losses) arising during the period, Tax Effect		(233)	69	1,008	(970)
Unrealized holding gains (losses) arising during the period, Net-of-Tax Amount		879	(262)	(3,791)	3,647
Less reclassification adjustment for gains (losses) included in net income, Pre-Tax Amount	[1],[2]	(54)	(551)	(58)	(562)
Less reclassification adjustment for gains (losses) included in net income, Tax Effect	[1],[2]	11	116	12	118
Less reclassification adjustment for gains (losses) included in net income, Net-of-Tax Amount	[1],[2]	(43)	(435)	(46)	(444)
Unrealized gains (losses) on cash flow hedge, Pre-Tax Amount		(301)	(184)	411	(184)
Unrealized gains (losses) on cash flow hedge, Tax Effect		64	39	(86)	39
Unrealized gains (losses) on cash flow hedge, Net-of-Tax Amount		(237)	(145)	325	(145)
Less reclassification adjustment for gains (losses) included in net income, Pre-Tax Amount	[2],[3]	22	(22)	26	(22)
Less reclassification adjustment for gains (losses) included in net income, Tax Effect	[2],[3]	(5)	4	(6)	4
Less reclassification adjustment for gains (losses) included in net income, Net-of-Tax	[2],[3]	17	(18)	20	(18)
Other comprehensive income (loss), Pre-Tax Amount		779	(1,088)	(4,420)	3,849
Other comprehensive income (loss), Tax Effect		(163)	228	928	(809)
Net current period other comprehensive income (loss)		616	(860)	(3,492)	3,040
Total comprehensive income, Pre-Tax Amount		2,607	574	(886)	6,390
Total comprehensive income, Tax Effect		(252)	171	768	(707)
Total comprehensive income, Net-of-Tax Amount		$ 2,355	$ 745	$ (118)	$ 5,683

[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 interest expense on short-term borrowings and repurchase agreements on the Consolidated Statements of Income.

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Beginning balance at Dec. 31, 2019	$ 5,142	$ 24,898	$ 43,954	$ 516	$ (803)	$ 73,707
Beginning balance, shares at Dec. 31, 2019	5,099,729
Net income			2,643			2,643
Other comprehensive income (loss)				3,040		3,040
Cash dividends			(2,242)			(2,242)
Stock-based compensation		63				63
Purchase of treasury stock					(379)	(379)
Purchase of treasury stock, shares	(27,000)
Treasury stock issued for stock plans		(6)			76	70
Treasury stock issued for stock plans, shares	4,459
Common stock issued for stock plans	$ 9	(9)
Common stock issued for stock plans, shares	9,530
Ending balance at Jun. 30, 2020	$ 5,151	24,946	44,355	3,556	(1,106)	76,902
Ending balance, shares at Jun. 30, 2020	5,086,718
Beginning balance at Dec. 31, 2019	$ 5,142	24,898	43,954	516	(803)	73,707
Beginning balance, shares at Dec. 31, 2019	5,099,729
Other comprehensive income (loss)				3,007
Ending balance at Dec. 31, 2020	$ 5,151	25,011	45,096	3,518	(2,179)	$ 76,597
Ending balance, shares at Dec. 31, 2020	5,025,441					5,025,441
Beginning balance at Mar. 31, 2020	$ 5,151	24,918	43,870	4,416	(989)	$ 77,366
Beginning balance, shares at Mar. 31, 2020	5,093,859
Net income			1,605			1,605
Other comprehensive income (loss)				(860)		(860)
Cash dividends			(1,120)			(1,120)
Stock-based compensation		34				34
Purchase of treasury stock					(193)	(193)
Purchase of treasury stock, shares	(11,600)
Treasury stock issued for stock plans		(6)			76	70
Treasury stock issued for stock plans, shares	4,459
Ending balance at Jun. 30, 2020	$ 5,151	24,946	44,355	3,556	(1,106)	76,902
Ending balance, shares at Jun. 30, 2020	5,086,718
Beginning balance at Dec. 31, 2020	$ 5,151	25,011	45,096	3,518	(2,179)	$ 76,597
Beginning balance, shares at Dec. 31, 2020	5,025,441					5,025,441
Net income			3,374			$ 3,374
Other comprehensive income (loss)				(3,492)		(3,492)
Cash dividends			(2,204)			(2,204)
Stock-based compensation		72				72
Purchase of treasury stock					(675)	(675)
Purchase of treasury stock, shares	(39,198)
Treasury stock issued for stock plans		(161)			238	77
Treasury stock issued for stock plans, shares	13,783
Ending balance at Jun. 30, 2021	$ 5,151	24,922	46,266	26	(2,616)	$ 73,749
Ending balance, shares at Jun. 30, 2021	5,000,026					5,000,026
Beginning balance at Mar. 31, 2021	$ 5,151	24,893	45,629	(590)	(2,509)	$ 72,574
Beginning balance, shares at Mar. 31, 2021	5,006,695
Net income			1,739			1,739
Other comprehensive income (loss)				616		616
Cash dividends			(1,102)			(1,102)
Stock-based compensation		37				37
Purchase of treasury stock					(192)	(192)
Purchase of treasury stock, shares	(11,613)
Treasury stock issued for stock plans		(8)			85	77
Treasury stock issued for stock plans, shares	4,944
Ending balance at Jun. 30, 2021	$ 5,151	$ 24,922	$ 46,266	$ 26	$ (2,616)	$ 73,749
Ending balance, shares at Jun. 30, 2021	5,000,026					5,000,026

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Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Consolidated Statements of in Stockholders' Equity [Abstract]
Cash Dividends per share	$ 0.22	$ 0.22	$ 0.44	$ 0.44

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Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating activities:
Net income	$ 1,739,000	$ 1,605,000	$ 3,374,000	$ 2,643,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	(200,000)	196,000	(279,000)	552,000
Depreciation			372,000	406,000
Net amortization of securities premiums			733,000	527,000
Net amortization of loan origination fees			346,000	28,000
Deferred net loan origination costs			(296,000)	(319,000)
Amortization of intangibles	17,000	19,000	33,000	38,000
Amortization of investment in low income housing partnerships	200,000	200,000	400,000	400,000
Net amortization of purchase fair value adjustments			(92,000)	(53,000)
Net realized gain on sales and calls of available for sale securities			(58,000)	(562,000)
Change in value of equity securities	(8,000)	(18,000)	(101,000)	154,000
Net gain on other real estate owned	0	0	(49,000)	0
Earnings on bank owned life insurance and annuities	(68,000)	(63,000)	(122,000)	(127,000)
Deferred income tax (benefit) expense			(151,000)	132,000
Stock-based compensation expense	37,000	34,000	72,000	63,000
Proceeds from mortgage loans sold to others			38,000	38,000
Mortgage banking income			(18,000)	(30,000)
Increase in accrued interest receivable and other assets			(576,000)	(2,309,000)
Decrease in accrued interest payable and other liabilities			(206,000)	(506,000)
Net cash provided by operating activities			3,420,000	1,075,000
Investing activities:
Purchases of: Securities available for sale			(136,852,000)	(152,324,000)
Purchases of: FHLB stock			0	(45,000)
Purchases of: Premises and equipment			(104,000)	(202,000)
Purchases of: Bank owned life insurance and annuities			(18,000)	(18,000)
Proceeds from: Sales of securities available for sale			32,869,000	36,136,000
Proceeds from: Maturities of and principal repayments on securities available for sale			42,849,000	45,086,000
Proceeds from: Redemption of FHLB stock			538,000	0
Net decrease in interest bearing time deposits with banks			0	740,000
Net increase in loans			(8,453,000)	(19,615,000)
Net cash used in investing activities			(69,171,000)	(90,242,000)
Financing activities:
Net increase in deposits			85,669,000	62,896,000
Net (decrease) increase in short-term borrowings and securities sold under agreements to repurchase			(12,597,000)	10,978,000
Issuance of FRB advances			0	31,298,000
Repayment of FRB advances			(27,955,000)	0
Repayment of long-term debt			0	(10,000,000)
Cash dividends			(2,204,000)	(2,242,000)
Purchase of treasury stock			(675,000)	(379,000)
Treasury stock issued for employee stock plans			77,000	70,000
Net cash provided by financing activities			42,315,000	92,621,000
Net (decrease) increase in cash and cash equivalents			(23,436,000)	3,454,000
Cash and cash equivalents at beginning of year			41,621,000	12,740,000	$ 12,740,000
Cash and cash equivalents at end of period	$ 18,185,000	$ 16,194,000	18,185,000	16,194,000	$ 41,621,000
Supplemental information:
Income tax paid			1,830,000	2,182,000
Interest paid			75,000	200,000
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned			61,000	0
Transfer of loans to repossessed vehicles			$ 1,000	$ 0

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Basis of Presentation and Accounting Policies

6 Months Ended

Jun. 30, 2021

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.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences could be material to the financial statements. Additionally, the ongoing effects of the COVID-19 pandemic may negatively impact significant estimates and the assumptions underlying those estimates. Estimates that are particularly susceptible to material change include the determination of the allowance for loan losses, and possible impairment of goodwill and other intangible assets. 

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, 2021 are not necessarily indicative of the results that can be expected for the year ending December 31, 2021. 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, 2020.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2021 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 ("ASU")

6 Months Ended

Jun. 30, 2021

Recent Accounting Standards Update ("ASU")

Recent Accounting Standards Update ("ASU")

2. RECENT ACCOUNTING STANDARDS UPDATES

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

Issued: June 2016

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

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

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

Effective Date: On October 16, 2019, the FASB voted and approved a delay of the effective date of this ASU for smaller reporting companies until fiscal years beginning after December 15, 2022. Since the Company is a smaller reporting company, the delay of the effective date of ASU 2016-13 approved by the FASB applies to the Company. The Company’s CECL transition team is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures and expects the allowance for loan and lease losses (“ALLL”) to increase upon adoption because it 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 being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming a CECL transition team, gathering pertinent data, assessing the sufficiency of data currently available through its core database, participating in training courses, and partnering with a software provider that specializes in ALLL analysis.

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2021

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

3. ACCUMULATED OTHER COMPREHENSIVE INCOME

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

(Dollars in thousands)
June 30, 2021	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2020	$	(45)	$	3,563	$	3,518
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		325		(3,791)		(3,466)
Amounts reclassified from accumulated other comprehensive income (loss)		20		(46)		(26)
Net current period other comprehensive income (loss)		345		(3,837)		(3,492)
Ending balance, June 30, 2021	$	300	$	(274)	$	26

(Dollars in thousands)
December 31, 2020	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2019	$	—	$	516	$	516
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		(38)		3,727		3,689
Amounts reclassified from accumulated other comprehensive loss		(7)		(675)		(682)
Net current period other comprehensive income (loss)		(45)		3,052		3,007
Reclassification for ASU 2018-02		—		(5)		(5)
Ending balance, December 31, 2020	$	(45)	$	3,563	$	3,518

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Earnings Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

4. 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 tables set forth the computation of basic and diluted earnings per share:

(Amounts in thousands, except earnings per share data)	Three Months Ended June 30,
	2021		2020
Net income	$	1,739	$	1,605
Weighted-average common shares outstanding		5,008		5,091
Basic earnings per share	$	0.35	$	0.32
Weighted-average common shares outstanding	$	5,008	$	5,091
Common stock equivalents due to effect of stock options		8		5
Total weighted-average common shares and equivalents		5,016		5,096
Diluted earnings per share	$	0.35	$	0.31

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2021		2020
Net income	$	3,374	$	2,643
Weighted-average common shares outstanding		5,013		5,097
Basic earnings per share	$	0.67	$	0.52
Weighted-average common shares outstanding	$	5,013	$	5,097
Common stock equivalents due to effect of stock options		8		6
Total weighted-average common shares and equivalents		5,021		5,103
Diluted earnings per share	$	0.67	$	0.52
Anti-dilutive stock options outstanding		2		3

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Securities

6 Months Ended

Jun. 30, 2021

Securities [Abstract]

Securities

5. SECURITIES

Equity Securities

Equity securities owned by the Company consist of common stock of various financial services providers. ASC Topic 321, Investments – Equity Securities requires all equity securities within its scope to be measured at fair value with changes in fair value recognized in net income. As of June 30, 2021, the Company had $1,178,000 in equity securities recorded at fair value, and $1,091,000 in equity securities were recorded at fair value at December 31, 2020. The Company recorded net gains of $8,000 and $101,000 during the three and six months ended June 30, 2021, respectively, and a net gain of $18,000 and net loss of $154,000 during the three and six months ended June 30, 2020, respectively, due to changes in the fair value of the Company’s equity securities during the applicable periods.

Debt Securities Available for Sale

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

The Company’s available for sale investment portfolio includes primarily bonds issued by U.S. Government sponsored enterprises (approximately 12% of the investment portfolio), mortgage-backed securities issued by Government-sponsored entities and backed by residential mortgages (approximately 77%), corporate debt securities (approximately 8%) and municipal bonds (approximately 3%) as of June 30, 2021. 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, 2021 and December 31, 2020, by contractual maturity, are shown in the tables below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

(Dollars in thousands)	June 30, 2021
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	41,850	$	40,999	$	1	$	(852)
		41,850		40,999		1		(852)
Obligations of state and political subdivisions
Within one year		30		30		—		—
After one year but within five years		6,766		6,939		173		—
After five years but within ten years		1,235		1,223		—		(12)
		8,031		8,192		173		(12)
Corporate debt securities
After one year but within five years		2,000		2,003		3		—
After five years but within ten years		25,461		26,206		832		(87)
		27,461		28,209		835		(87)
Mortgage-backed securities		265,036		264,630		1,823		(2,229)
Total	$	342,378	$	342,030	$	2,832	$	(3,180)

(Dollars in thousands)	December 31, 2020
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	22,994	$	22,949	$	7	$	(52)
		22,994		22,949		7		(52)
Obligations of state and political subdivisions
Within one year		31		31		—		—
After one year but within five years		4,708		4,767		59		—
After five years but within ten years		3,289		3,484		195		—
		8,028		8,282		254		—
Corporate debt securities
Within one year		1,033		1,039		6		—
After five years but within ten years		10,058		10,484		485		(59)
		11,091		11,523		491		(59)
Mortgage-backed securities		239,793		243,661		3,999		(131)
Total	$	281,906	$	286,415	$	4,751	$	(242)

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 $88,177,000 and $74,614,000 on June 30, 2021 and December 31, 2020, respectively.

In addition to cash received from the scheduled maturities of investment securities, some securities available for sale are sold or called at current market values during 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 during the six months ended June 30, 2021 and 2020.

(Dollars in thousands)	Six Months Ended
	June 30,
	2021		2020
Gross proceeds from sales and calls of securities	$	32,869	$	36,136
Securities available for sale:
Gross realized gains from sold and called securities	$	130	$	592
Gross realized losses from sold and called securities		(72)		(30)
Net gains from sales and calls of securities	$	58	$	562

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

The following tables show gross unrealized losses and fair values of debt 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, 2021 and December 31, 2020:

	Unrealized Losses at June 30, 2021
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	7	$	38,214	$	(852)	—	$	—	$	—	7	$	38,214	$	(852)
Obligations of state and political subdivisions	4		1,223		(12)	—		—		—	4		1,223		(12)
Corporate debt securities	5		8,321		(87)	—		—		—	5		8,321		(87)
Mortgage-backed securities	32		170,793		(2,229)	—		—		—	32		170,793		(2,229)
Total temporarily impaired securities	48	$	218,551	$	(3,180)	—	$	—	$	—	48	$	218,551	$	(3,180)

	Unrealized Losses at December 31, 2020
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	3	$	18,948	$	(52)	—	$	—	$	—	3	$	18,948	$	(52)
Corporate debt securities	1		2,972		(59)	—		—		—	1		2,972		(59)
Mortgage-backed securities	7		43,583		(131)	—		—		—	7		43,583		(131)
Total temporarily impaired securities	11	$	65,503	$	(242)	—	$	—	$	—	11	$	65,503	$	(242)

At June 30, 2021, seven obligations of U.S. Government sponsored enterprises, four obligations of state and political subdivisions, five corporate debt securities, and thirty-two mortgage-backed securities had unrealized losses. None of these securities have been in a continuous loss position for twelve 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 in the tables above are considered 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, no debt securities were deemed to be other-than-temporarily impaired for the periods ended June 30, 2021 and December 31, 2020, respectively.

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Loans and Related Allowance for Loan Losses

6 Months Ended

Jun. 30, 2021

Loans and Related Allowance for Credit Losses [Abstract]

Loans and Related Allowance for Loan Losses

6. LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

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

The loan portfolio includes the following classes: (1) commercial, financial and agricultural, (2) real estate - commercial, (3) real estate - construction, (4) real estate – mortgage, (5) obligations of states and political subdivisions, and (6) personal loans.

Interest income on consumer, mortgage and commercial loans is discontinued and loans are placed on non-accrual status at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Loans are charged off to the extent principal or interest is deemed uncollectible. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Non-accrual loans and loans past due 90 days still on accrual include both homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan principal balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms for a reasonable period of time and future payments are reasonably assured.

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 were normally sold to the buyer immediately. The Company maintains servicing rights on these loans.

When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date and reports changes in fair value of servicing assets in earnings in the period in which the changes occur, which are included with mortgage banking income on the income statement. The fair values of servicing rights are subject to fluctuations because of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Late fees and ancillary fees related to loan servicing are not material.

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. Evaluation 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.

Real Estate - Commercial Lending

The Company engages in real estate - commercial lending in its primary market area and surrounding areas. The Company’s real estate - commercial portfolio is secured primarily by residential housing, commercial buildings, raw land and hotels. Generally, real estate - commercial 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.

Real estate - commercial 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 and the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, and other resources. Appraisals on properties securing real estate - commercial 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.

Real Estate - Mortgage Lending

The Company’s real estate - mortgage portfolio is comprised of one-to-four family 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 real estate - mortgage loans with a term 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 real estate - 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 80% 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 because 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 Loan 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 probable incurred losses 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 probable incurred losses 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 and loan loss provision credits. 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 consists of specific and general components. The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020 permits financial institutions to exclude loan modifications to borrowers affected by the COVID-19 pandemic from TDR treatment if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration following the passing of the 2021 Consolidated Appropriations Act (“CAA”) on December 27, 2020. A loan modification accounted for in accordance with the CARES Act is not treated as a TDR for accounting or disclosure purposes.  

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 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. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

Impairment for substantially all the Company’s impaired loans is measured based on the estimated fair value of the loan’s collateral. For real estate - commercial loans, 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, financial and agricultural, and obligations of states and political subdivision loans, 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 analysis unless such loans are subject to a restructuring agreement.

Troubled debt restructurings are individually evaluated for impairment and included in the separately identified impairment disclosures. 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, an extension of a loan’s stated maturity date or a significant delay in payment. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a sustained period after modification. For TDRs that subsequently default, the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for loan losses on loans individually identified as impaired. The Company incorporates recent historical experience related to TDRs, including the performance of TDRs that subsequently default, into the calculation of the allowance by loan portfolio class.

Juniata experienced favorable asset quality trends and net recoveries of previously charged-off loans during the six months ended June 30, 2021. Of the original 207 loans placed on deferral due to the pandemic, only two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service with none of the $67,158,000 aggregate balances delinquent as of June 30, 2021.

Acquired Loans

Loans that Juniata acquires through business combinations are recorded at fair value with no carryover of the related allowance for loan losses. Some of these loans have shown evidence of credit deterioration since origination. These purchased credit impaired (“PCI”) loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses.

Such purchased credit impaired loans are accounted for individually or aggregated into pools of loans based on common risk characteristics, such as credit score, loan type, and date of origination. Juniata estimates the amount and timing of expected cash flows for each loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

PCI loans that met the criteria for impairment or non-accrual 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 non-accrual 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.

Paycheck Protection Program Loans

The CARES Act established the Paycheck Protection Program (“PPP”) which is administered by the Small Business Administration (“SBA”). The PPP was intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. The PPP, which began on April 3, 2020, provided small businesses with funds to cover up to eight weeks of payroll costs, including benefits. It also provided for forgiveness of up to the full principal amount of qualifying loans.

On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”) extended the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks. The 24 week period applied to all borrowers, but borrowers that received an SBA loan number before June 5, 2020, had the option to use an eight week period. The PPP Flexibility Act also amended the requirements regarding forgiveness of PPP loans, reducing the portion of PPP loan proceeds that must be used for payroll costs for the full amount of the PPP loan to be eligible for forgiveness from 75% to 60%. Additionally, the PPP Flexibility Act extended the maturity date for PPP loans made on, or after June 5, 2020, from two years to five years; however, lenders and borrowers could mutually agree to modify PPP loans made before such date to reflect the longer maturity.

The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020. On October 8, 2020, the SBA, in consultation with the U.S. Treasury Department, released a simpler loan forgiveness application for PPP loans of $50,000 or less to streamline the PPP forgiveness process to provide financial and administrative relief to American’s smallest businesses and eased the burden on PPP lenders, allowing them to process forgiveness applications more swiftly.

The CAA provided several amendments to the PPP, including additional funding for first and second draws of PPP loans up to March 31, 2021. On March 30, 2021, the PPP Extension Act of 2021 was signed into law, extending the program to May 31, 2021.  

The Company participated in the PPP and funded 508 first round PPP loans totaling $32,064,000 in 2020 and, as of June 30, 2021, funded 362 second round PPP loans totaling $18,931,000. As of June 30, 2021, 107 of the first round PPP loans, totaling $6,695,000, remained outstanding, while all other first round PPP loans have been forgiven. Forgiveness determinations on the second round PPP loans have not yet commenced. As of June 30, 2021, 469 PPP loans remained outstanding with a total balance of $24,563,000, net of remaining deferred fees of $1,063,000. PPP loans are included in the commercial, financial and agricultural loan class.

Loan Portfolio Classification

The following table presents the loan portfolio by class at June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Commercial, financial and agricultural	$	70,562	$	73,057
Real estate - commercial		153,343		122,698
Real estate - construction		41,243		61,051
Real estate - mortgage		138,972		141,438
Obligations of states and political subdivisions		22,016		18,550
Personal		5,053		5,867
Total	$	431,189	$	422,661

The following table summarizes the activity in the allowance for loan losses by loan class, for the three and six months ended June 30, 2021 and 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
Three Months Ended
June 30, 2021
Balance, beginning of period	$	296	$	1,520	$	946	$	30	$	1,183	$	81	$	4,056
Provision for loan losses		(14)		(85)		(50)		3		(32)		(22)		(200)
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		7		—		28		—		13		5		53
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	433	$	758	$	904	$	23	$	1,147	$	68	$	3,333
Provision for loan losses		(122)		120		203		(1)		4		(8)		196
Charge-offs		—		—		—		—		(4)		(3)		(7)
Recoveries		—		—		30		—		2		4		36
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558
Six Months Ended
June 30, 2021
Balance, beginning of period	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094
Provision for loan losses		(20)		527		(718)		5		(65)		(8)		(279)
Charge-offs		—		—		—		—		—		(8)		(8)
Recoveries		7		—		56		—		29		7		99
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	321	$	754	$	718	$	17	$	1,081	$	70	$	2,961
Provision for loan losses		(10)		124		357		5		69		7		552
Charge-offs		—		—		—		—		(4)		(24)		(28)
Recoveries		—		—		62		—		3		8		73
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558

The following table summarizes loans by loan class, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
June 30, 2021
Loans allocated by:
individually evaluated for impairment	$	—	$	5,276	$	—	$	—	$	524	$	—	$	5,800
acquired with credit deterioration		—		369		—		—		604		—		973
collectively evaluated for impairment		70,562		147,698		41,243		22,016		137,844		5,053		424,416
	$	70,562	$	153,343	$	41,243	$	22,016	$	138,972	$	5,053	$	431,189
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		289		1,435		924		33		1,164		61		3,906
	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
December 31, 2020
Loans allocated by:
individually evaluated for impairment	$	—	$	3,483	$	—	$	—	$	744	$	—	$	4,227
acquired with credit deterioration		—		339		—		—		623		—		962
collectively evaluated for impairment		73,057		118,876		61,051		18,550		140,071		5,867		417,472
	$	73,057	$	122,698	$	61,051	$	18,550	$	141,438	$	5,867	$	422,661
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		302		908		1,586		28		1,198		70		4,092
	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094

The Company has certain loans in its portfolio that it considers 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 anticipated principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at June 30, 2021 and December 31, 2020 totaled $204,000 and $152,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors, are used to determine the charge-off amount.

The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	As of June 30, 2021						As of December 31, 2020
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate – construction		—		871		—		—		894		—
Real estate - mortgage		524		1,255		—		666		1,396		—
Acquired with credit deterioration		604		786		—		623		801		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	78	$	77	$	2
Total:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate - construction		—		871		—		—		894		—
Real estate – mortgage		524		1,255		—		744		1,473		2
Acquired with credit deterioration		604		786		—		623		801		—
	$	6,773	$	9,112	$	—	$	5,189	$	7,134	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2021 and 2020 are summarized in the tables below.

(Dollars in thousands)	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		877		4		11
Acquired with credit deterioration		600		—		—		668		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		998		4		11
Acquired with credit deterioration		600		—		—		668		—		—
	$	5,597	$	102	$	10	$	6,013	$	9	$	19

(Dollars in thousands)	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired Loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,010		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,131		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
	$	4,527	$	118	$	20	$	5,301	$	18	$	42

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for partial charge-offs.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is generally discontinued when the contractual payment of principal or interest has become 90 days past due or reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Company’s policy to continue to accrue interest on loans over 90 days past due if (1) they are guaranteed or well secured and (2) there is an effective means of timely collection in process. When a loan is placed on non-accrual status, all unpaid interest credited to income 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 and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The Company’s nonaccrual and charge-off policies are the same, regardless of the loan type.

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Non-accrual loans:
Real estate - commercial	$	37	$	41
Real estate - mortgage		213		381
Total	$	250	$	422

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. Past due status is determined by the contractual terms of the loan. The following tables present the classes of the loan portfolio summarized by the past due status as of June 30, 2021 and December 31, 2020.

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of June 30, 2021
Commercial, financial and agricultural	$	70,532	$	30	$	—	$	—	$	30	$	70,562	$	—
Real estate - commercial		152,880		57		—		37		94		152,974		—
Real estate - construction		37,609		3,634		—		—		3,634		41,243		—
Real estate - mortgage		138,188		39		—		141		180		138,368		88
Obligations of states and political subdivisions		22,016		—		—		—		—		22,016		—
Personal		5,042		11		—		—		11		5,053		—
Subtotal		426,267		3,771		—		178		3,949		430,216		88
Loans acquired with credit deterioration
Real estate - commercial		369		—		—		—		—		369		—
Real estate - mortgage		512		—		—		92		92		604		92
Subtotal		881		—		—		92		92		973		92
	$	427,148	$	3,771	$	—	$	270	$	4,041	$	431,189	$	180

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of December 31, 2020
Commercial, financial and agricultural	$	73,028	$	7	$	—	$	22	$	29	$	73,057	$	22
Real estate - commercial		122,318		—		—		41		41		122,359		—
Real estate - construction		61,051		—		—		—		—		61,051		—
Real estate - mortgage		139,842		351		453		169		973		140,815		—
Obligations of states and political subdivisions		18,550		—		—		—		—		18,550		—
Personal		5,853		—		14		—		14		5,867		—
Subtotal		420,642		358		467		232		1,057		421,699		22
Loans acquired with credit deterioration
Real estate - commercial		293		—		46		—		46		339		—
Real estate - mortgage		481		50		—		92		142		623		92
Subtotal		774		50		46		92		188		962		92
	$	421,416	$	408	$	513	$	324	$	1,245	$	422,661	$	114

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

(2) Loans are considered past due when the borrower is in arrears on two or more monthly payments.

Troubled Debt Restructurings

The Company’s troubled debt restructurings are impaired loans, which may result in a specific allocation and subsequent charge-off if appropriate. 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.

As of June 30, 2021, the Company had a recorded investment in troubled debt restructurings of $5,546,000 with no specific reserves, nor any charge-offs related to the troubled debt restructured loans. There were no troubled debt restructured loans in default within 12 months of restructure during the three and six months ended June 30, 2021 or 2020. On December 31, 2020, the Company had a recorded investment in troubled debt restructurings of $3,802,000 with no specific reserves, nor any charge-offs related to the troubled debt restructured loans. The increase in troubled debt restructurings between December 31, 2020 and June 30, 2021 was due to the addition of one hospitality-industry loan, which was granted concessions due to financial difficulty related only in part to the pandemic. The borrower is experiencing cash-flow difficulties and is in the process of liquidating the properties collateralizing the loan. Full payment according to the restructured terms is expected.

The following table presents the loan whose terms were modified resulting in troubled debt restructuring during the three and six months ended June 30, 2021. There were no loan terms modified resulting in troubled debt restructuring during the three and six months ended June 30, 2020.  

(Dollars in thousands)		Pre-Modification		Post-Modification
	Number of	Outstanding		Outstanding
	Contracts	Recorded Investment		Recorded Investment		Recorded Investment
Three and six months ended June 30, 2021
Accruing troubled debt restructurings:
Real estate - commercial	1	$	2,254	$	2,254	$	1,803
	1	$	2,254	$	2,254	$	1,803

The CARES Act permits financial institutions to exclude loan modifications to borrowers affected by the COVID-19 pandemic from TDR treatment if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the loan modification is made between March 1, 2020 and the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration following the passing of the CAA on December 27, 2020. A loan modification accounted for in accordance with the CARES Act is not treated as a TDR for accounting or disclosure purposes.  

In response to the COVID-19 pandemic, the Company established a COVID-19 Modification Program on March 20, 2020 to offer payment relief to certain borrowers. Through this program, the Company has approved interest and/or principal payment deferrals on loans for individuals and businesses affected by the economic impacts of the COVID-19 pandemic. Of the original 207 loans placed on deferral due to the pandemic, only two loans, in the aggregate amount of $5,023,000 remained in deferment as of June 30, 2021. All other loans previously placed in deferment have resumed contractual debt service with none of the $67,158,000 aggregate balances delinquent as of June 30, 2021.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans to commercial customers with an aggregate loan exposure greater than $500,000 and for lines of credit in excess of $50,000. This analysis is performed on a continuing basis with all such loans reviewed annually. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Loans in this category are reviewed no less than quarterly.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans in this category are reviewed no less than monthly.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in this category are reviewed no less than monthly.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

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, 2021 and December 31, 2020.

(Dollars in thousands)			Special
As of June 30, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	68,672	$	794	$	1,096	$	—	$	70,562
Real estate - commercial		104,197		42,114		6,995		37		153,343
Real estate - construction		37,048		3,635		560		—		41,243
Real estate - mortgage		137,574		270		1,128		—		138,972
Obligations of states and political subdivisions		22,016		—		—		—		22,016
Personal		5,053		—		—		—		5,053
Total	$	374,560	$	46,813	$	9,779	$	37	$	431,189

(Dollars in thousands)			Special
As of December 31, 2020	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	71,983	$	495	$	579	$	—	$	73,057
Real estate - commercial		99,828		15,198		7,631		41		122,698
Real estate - construction		36,332		24,644		75		—		61,051
Real estate - mortgage		139,787		289		1,317		45		141,438
Obligations of states and political subdivisions		18,550		—		—		—		18,550
Personal		5,867		—		—		—		5,867
Total	$	372,347	$	40,626	$	9,602	$	86	$	422,661

The decline in special mention real estate – construction loans and the increase in special mention real estate – commercial loans as of June 30, 2021 compared to December 31, 2020 was largely due to two relationships transitioning from a construction phase to permanent loan status.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2021

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

7. 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. On April 30, 2018, the Company acquired the remainder of the outstanding common stock of Liverpool Community Bank and, as a result, carries goodwill of $3,599,000 relating to the acquisition.

Total goodwill at June 30, 2021 and December 31, 2020 was $9,047,000. Goodwill is not amortized but is tested annually for impairment, or more frequently if certain events occur which might indicate goodwill has been impaired. There was no goodwill impairment during the three and six months ended June 30, 2021 or June 30, 2020.

Intangible Assets

On November 30, 2015, a core deposit intangible in the amount of $303,000 associated with the FNBPA Bancorp, Inc. acquisition was recorded and is being amortized over a ten-year period using a sum of the year’s digits basis. Amortization expense recognized for the intangibles related to the FNBPA acquisition in the three and six months ended June 30, 2021 was $7,000 and $13,000, 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 the three and six months ended June 30, 2021 was $10,000 and $19,000, respectively.

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

(Dollars in thousands)	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2020		190		84
Amortization expense recorded in the twelve months
ended December 31, 2020		33		44
Unamortized balance as of December 31, 2020		80		161
Amortization expense recorded in the
six months ended June 30, 2021		13		19
Unamortized balance as of June 30, 2021	$	67	$	142
Scheduled remaining amortization expense for years ended:
December 31, 2021	$	14	$	20
December 31, 2022		22		33
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
After December 31, 2026		—		9

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Borrowings

6 Months Ended

Jun. 30, 2021

Borrowings [Abstract]

Borrowings

8. BORROWINGS

Borrowings consisted of the following as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30,		December 31,
	2021		2020
Securities sold under agreements to repurchase	$	4,027	$	4,750
Overnight advances with FHLB		8,126		—
Short-term debt with FHLB		—		20,000
Federal Reserve Bank advances		—		27,955
Long-term debt with FHLB		35,000		35,000
	$	47,153	$	87,705

Long-term debt is comprised only of FHLB advances with an original maturity of one year or more. The following table summarizes the scheduled maturities of long-term debt as of June 30, 2021.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		20,000	2.42
2025		15,000	2.41
2026		—	—
Thereafter		—	—
	$	35,000	2.42	%

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Stock Compensation Plan

6 Months Ended

Jun. 30, 2021

Stock Compensation Plan [Abstract]

Stock Compensation Plan

9. STOCK COMPENSATION PLAN

Long-Term Incentive Plan

The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”), that amended and restated the former 2011 Stock Option Plan (the “2011 Plan”). The Plan continues in effect for any outstanding awards under the 2011 Plan in accordance with the terms and conditions governing such awards immediately prior to the effective date of the Plan but expanded the types of awards authorized to include, among others, restricted stock. Under the provisions of the Plan, while active, awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and performance shares to officers and key employees of the Company, as well as directors. The Plan is administered by a committee of the Board of Directors.

The maximum number of shares of common stock that may be issued under the Plan is 300,000 shares, and 152,451 shares were available for grant as of June 30, 2021. Shares of common stock issued under the Plan may be treasury shares or authorized but unissued shares. Forfeited awards are returned to the pool of shares available for grant for future awards.

In the first quarter of 2021, 8,839 restricted shares were awarded to certain officers and all directors. Each of the awards vest after three-years, with no interim vesting. As of June 30, 2021, there was $248,000 of unrecognized compensation cost related to all non-vested restricted stock awards. This cost is expected to be recognized through February 2024.

Compensation expense for stock options granted and restricted stock awarded is measured using the fair value of the award on the grant date and is recognized over the vesting period. The Company recognized stock-based compensation expense of $37,000 and $72,000 for the three and six months ended June 30, 2021, respectively, and $34,000 and $63,000 for the three and six months ended June 30, 2020, respectively.

The following table presents a summary of the status of the Company’s non-vested restricted stock awards as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2021	20,175	$	19.62
Vested	(4,460)		19.80
Forfeited	(200)		17.90
Granted	8,839		16.55
Non-vested at June 30, 2021	24,354	$	18.49

No stock options were awarded during the first six months of 2021. Previously granted stock options vest over three to five years and are exercisable at the grant price, which is at least the fair market value of the stock on the grant date. The Plan provides that the option price per share is not to be less than the fair market value of the stock on the day the option was granted, but in no event less than the par value of such stock. Options granted under the Plan are exercisable no earlier than one year after the date of grant and expire ten years after the date of the grant. All options previously granted under the Plans are scheduled to expire by February 17, 2025.

Total options outstanding as of June 30, 2021 have exercise prices between $17.65 and $18.00, with a weighted average exercise price of $17.78 and a weighted average remaining contractual life of 2.28 years.

As of June 30, 2021, there was no unrecognized compensation cost related to options granted under the Plan and no options were exercised under the Plans during the period.

A summary of the status of the outstanding stock options as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	81,547	$	17.78
Granted	—		—
Exercised	—		—
Forfeited	—		—
Outstanding at end of year	81,547	$	17.78

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan under which employees, through payroll deductions, may purchase shares of Company stock annually. The option price of the stock purchases is between 95% and 100% of the fair market value of the stock on the offering termination date as determined annually by the Board of Directors. The maximum number of shares which employees may purchase under the Plan is 250,000; however, the annual issuance of shares may not exceed 5,000 shares plus any unissued shares from prior offerings. There were 4,944 and 4,459 shares issued from treasury under this plan during the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, there were 161,676 shares reserved for issuance under the Employee Stock Purchase Plan.

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Fair Value Measurement

6 Months Ended

Jun. 30, 2021

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. 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. 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.

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 can access at the measurement date.

Level 2 Inputs – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 Inputs – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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.

Debt Securities Available for Sale – For debt securities available for sale where quoted prices are not available, fair values are calculated based on market prices of similar securities and 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 debt securities’ terms and conditions, among other things. For debt securities available for sale where quoted prices or market prices of similar securities are not available, fair values are calculated using other market indicators and are reported at fair value utilizing Level 3 inputs.

Derivatives – The fair values of derivatives are based on valuation models using observable market data as of the measurement date utilizing Level 2 inputs. The Company’s derivatives are comprised of interest rate swaps traded in an over-the-counter market where quoted market prices are not always available; therefore, the fair values are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of curves, prepayment rates and volatility factors used to value the position. Most market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

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, 2021 and December 31, 2020 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2021	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	40,999	$	—	$	40,999
Obligations of state and political subdivisions		—		8,192		—		8,192
Corporate debt securities		—		23,709		4,500		28,209
Mortgage-backed securities		—		264,630		—		264,630
Total debt securities available for sale	$	—	$	337,530	$	4,500	$	342,030
Equity securities	$	1,178	$	—	$	—	$	1,178
Mortgage servicing rights	$	—	$	—	$	137	$	137
Interest rate swaps	$	—	$	381	$	—	$	381
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	37	$	37

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 2020	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	22,949	$	—	$	22,949
Obligations of state and political subdivisions		—		8,282		—		8,282
Corporate debt securities		—		9,523		2,000		11,523
Mortgage-backed securities		—		243,661		—		243,661
Total debt securities available for sale	$	—	$	284,415	$	2,000	$	286,415
Equity securities	$	1,091	$	—	$	—	$	1,091
Mortgage servicing rights	$	—	$	—	$	158	$	158
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	—	$	57	$	—	$	57
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	84	$	84

The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six month periods ended June 30, 2021 and 2020.

(Dollars in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment Securities:
Beginning balance	$	2,000	$	—	$	2,000	$	—
Total gains (loss) included in OCI		—		—		—		—
Purchases		2,500		—		2,500		—
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	4,500	$	—	$	4,500	$	—

Mortgage servicing rights and assets measured at fair value on a nonrecurring basis for which Level 3 inputs have been used to determine fair value are immaterial to the Company’s consolidated financial statements.

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 carrying amounts and estimated fair values of the Company’s financial instruments are as follows:

	Financial Instruments
(Dollars in thousands)	June 30, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	17,165	$	17,165	$	11,868	$	11,868
Interest bearing deposits with banks		1,020		1,020		19,753		19,753
Interest bearing time deposits with banks		735		735		735		735
Securities		343,208		343,208		287,506		287,506
Restricted investment in bank stock		2,885		N/A		3,423		N/A
Loans, net of allowance for loan losses		427,283		428,351		418,567		424,791
Interest rate swaps		381		381		—		—
Accrued interest receivable		2,230		2,230		2,105		2,105
Financial liabilities:
Non-interest bearing deposits	$	179,363	$	179,363	$	168,115	$	168,115
Interest bearing deposits		529,176		532,879		454,751		459,224
Securities sold under agreements to repurchase		4,027		N/A		4,750		N/A
Short-term borrowings		—		20,002		20,000		20,002
FRB advances		—		—		27,955		27,955
Long-term debt		35,000		36,594		35,000		37,365
Interest rate swaps		—		—		57		57
Other interest bearing liabilities		1,572		1,572		1,584		1,585
Accrued interest payable		333		333		448		448
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, 2021 and December 31, 2020. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
June 30, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		427,283		428,351		—		—		428,351
Financial instruments - Liabilities
Interest bearing deposits	$	529,176	$	532,879	$	—	$	532,879	$	—
Long-term debt		35,000		36,594		—		36,594		—
Other interest bearing liabilities		1,572		1,572		—		1,572		—

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2020
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		418,567		424,791		—		—		424,791
Financial instruments - Liabilities
Interest bearing deposits	$	454,751	$	459,224	$	—	$	459,224	$	—
Long-term debt		35,000		37,365		—		37,365		—
Other interest bearing liabilities		1,584		1,585		—		1,585		—

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Commitments, Contingent Liabilities And Guarantees

6 Months Ended

Jun. 30, 2021

Commitments, Contingent Liabilities And Guarantees [Abstract]

Commitments, Contingent Liabilities And Guarantees

11. 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, 2021, the Company had $109,410,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $95,089,000 at December 31, 2020.

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 $3,991,000 and $2,379,000 of financial and performance letters of credit commitments, respectively, as of June 30, 2021 and $1,541,000 and $2,365,000 of financial and performance letters of credit commitments, respectively, as of December 31, 2020. Commercial letters of credit as of June 30, 2021 and December 31, 2020 totaled $7,475,000 and $6,975,000, respectively. Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The amount of the liability as of June 30, 2021 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, 2021

Revenue Recognition [Abstract]

Revenue Recognition

12. REVENUE RECOGNITION

The Company accounts for revenue from contracts with customers under Topic 606. 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 customers’ use of various interchange and ATM/debit card networks.

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

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

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

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

Trust Fees – include asset management and estate fees. Asset management fees are generally based on a fee schedule, based upon the market value of the assets under management, and recognized monthly when the service obligation is completed. Asset management fees recognized during the three and six month periods ended June 30, 2021 were $92,000 and $184,000, respectively. Asset management fees recognized during the three and six month periods ended June 30, 2020 were $86,000 and $171,000, 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 month periods ended June 30, 2021 totaled $23,000 and $43,000, respectively. Estate fees recognized during the three and six month periods ended June 30, 2020 totaled $5,000 and $33,000, respectively.

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

Other Non-Interest Income – includes certain revenue streams within the scope of Topic 606 comprised primarily of ATM surcharges, commissions on check orders, and wire transfer fees. ATM surcharges are the result of customers conducting ATM transactions that generate fee income. All of these fees, as well as wire transfer fees, are transaction based and are

recognized at the time of the transaction. In addition, the Company acts in an agent capacity to offer checks to its customers and recognizes commissions, net of related fees, when the contract is fulfilled.

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

Contract Balances

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

6 Months Ended

Jun. 30, 2021

Derivatives

Derivatives

13. DERIVATIVES

The Company uses interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

As of June 30, 2021, interest rate swaps with a notional amount totaling $40,000,000 were designated as cash flow hedges on fixed-rate brokered deposits and certain FHLB advances. As of December 31, 2020, interest rate swaps with a notional amount totaling $40,000,000, were designated as cash flow hedges on certain FHLB advances. The interest rate swaps were determined to be fully effective during the periods presented, and as such, no amount of ineffectiveness have been included in net income. The aggregate fair value of the swaps is recorded in either other assets or other liabilities on the Consolidated Statements of Condition with changes in fair value recorded in other comprehensive income. The Company expects the hedges to remain fully effective during the remaining terms of the swaps.

The following table reflects the notional amounts and fair values of derivatives recorded on the Consolidated Statements of Condition as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30, 2021				December 31, 2020
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
	Amount		(Liability)		Amount		(Liability)
Derivatives designated as hedges:
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	20,000	$	(64)	$	—	$	—
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		—		—		20,000		(123)
Interest rate swaps - forward-starting on long-term FHLB advances		20,000		445		20,000		66

The effect of cash flow hedge accounting on accumulated other comprehensive income for the periods ended June 30, 2021 and December 31, 2020 are as follows:

(Dollars in thousands)	June 30, 2021
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	411	Interest expense on short-term borrowings and repurchase agreements	$	26

(Dollars in thousands)	December 31, 2020
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	(48)	Interest expense on short-term borrowings and repurchase agreements	$	(9)

The effect of cash flow hedge accounting on the Consolidated Statements of Income for the three and six months ended June 30, 2021 and June 30, 2020 was as follows:

Location and Amount of Gain or Loss Recognized in Income on Cash Flow Hedging Relationships

	Interest Income (Expense)				Interest Income (Expense)
	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2021		2020		2021		2020
Effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	(22)	$	22	$	(26)	$	22
Total	$	(22)	$	22		(26)		22

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

14. SUBSEQUENT EVENTS

On July 20, 2021, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2021, payable on September 1, 2021.

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Recent Accounting Standards Update (Policy)

6 Months Ended

Jun. 30, 2021

Recent Accounting Standards Update ("ASU")

Adoption of New Accounting Standards

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

Issued: June 2016

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

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

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

Effective Date: On October 16, 2019, the FASB voted and approved a delay of the effective date of this ASU for smaller reporting companies until fiscal years beginning after December 15, 2022. Since the Company is a smaller reporting company, the delay of the effective date of ASU 2016-13 approved by the FASB applies to the Company. The Company’s CECL transition team is currently in the process of evaluating the impact of the amended guidance on its consolidated financial statements and disclosures and expects the allowance for loan and lease losses (“ALLL”) to increase upon adoption because it 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 being evaluated and will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption. In preparation, the Company has taken steps to prepare for the implementation when it becomes effective by forming a CECL transition team, gathering pertinent data, assessing the sufficiency of data currently available through its core database, participating in training courses, and partnering with a software provider that specializes in ALLL analysis.

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Loans and Related Allowance for Credit Losses (Policy)

6 Months Ended

Jun. 30, 2021

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 it considers 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 anticipated principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly, and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans based upon estimated collateral value until a confirming loss event occurs or until termination of the credit is scheduled through liquidation of the collateral or foreclosure. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process at June 30, 2021 and December 31, 2020 totaled $204,000 and $152,000, respectively. Charge-offs will occur when a confirmed loss is identified. Professional appraisals of collateral, discounted for expected selling costs, appraisal age, economic conditions and other known factors, are used to determine the charge-off amount.

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2021

Accumulated Other Comprehensive Income [Abstract]

Components of Accumulated Other Comprehensive Income

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

(Dollars in thousands)
June 30, 2021	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2020	$	(45)	$	3,563	$	3,518
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		325		(3,791)		(3,466)
Amounts reclassified from accumulated other comprehensive income (loss)		20		(46)		(26)
Net current period other comprehensive income (loss)		345		(3,837)		(3,492)
Ending balance, June 30, 2021	$	300	$	(274)	$	26

(Dollars in thousands)
December 31, 2020	Gains and (Losses) on Cash Flow Hedges		Unrealized Gains and (Losses) on Available for Sale Securities		Total
Beginning balance, December 31, 2019	$	—	$	516	$	516
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		(38)		3,727		3,689
Amounts reclassified from accumulated other comprehensive loss		(7)		(675)		(682)
Net current period other comprehensive income (loss)		(45)		3,052		3,007
Reclassification for ASU 2018-02		—		(5)		(5)
Ending balance, December 31, 2020	$	(45)	$	3,563	$	3,518

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

The following tables set forth the computation of basic and diluted earnings per share:

(Amounts in thousands, except earnings per share data)	Three Months Ended June 30,
	2021		2020
Net income	$	1,739	$	1,605
Weighted-average common shares outstanding		5,008		5,091
Basic earnings per share	$	0.35	$	0.32
Weighted-average common shares outstanding	$	5,008	$	5,091
Common stock equivalents due to effect of stock options		8		5
Total weighted-average common shares and equivalents		5,016		5,096
Diluted earnings per share	$	0.35	$	0.31

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2021		2020
Net income	$	3,374	$	2,643
Weighted-average common shares outstanding		5,013		5,097
Basic earnings per share	$	0.67	$	0.52
Weighted-average common shares outstanding	$	5,013	$	5,097
Common stock equivalents due to effect of stock options		8		6
Total weighted-average common shares and equivalents		5,021		5,103
Diluted earnings per share	$	0.67	$	0.52
Anti-dilutive stock options outstanding		2		3

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Securities (Tables)

6 Months Ended

Jun. 30, 2021

Securities [Abstract]

Debt Securities Available for Sale

The amortized cost and fair value of securities available for sale as of June 30, 2021 and December 31, 2020, by contractual maturity, are shown in the tables below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

(Dollars in thousands)	June 30, 2021
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	41,850	$	40,999	$	1	$	(852)
		41,850		40,999		1		(852)
Obligations of state and political subdivisions
Within one year		30		30		—		—
After one year but within five years		6,766		6,939		173		—
After five years but within ten years		1,235		1,223		—		(12)
		8,031		8,192		173		(12)
Corporate debt securities
After one year but within five years		2,000		2,003		3		—
After five years but within ten years		25,461		26,206		832		(87)
		27,461		28,209		835		(87)
Mortgage-backed securities		265,036		264,630		1,823		(2,229)
Total	$	342,378	$	342,030	$	2,832	$	(3,180)

(Dollars in thousands)	December 31, 2020
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	22,994	$	22,949	$	7	$	(52)
		22,994		22,949		7		(52)
Obligations of state and political subdivisions
Within one year		31		31		—		—
After one year but within five years		4,708		4,767		59		—
After five years but within ten years		3,289		3,484		195		—
		8,028		8,282		254		—
Corporate debt securities
Within one year		1,033		1,039		6		—
After five years but within ten years		10,058		10,484		485		(59)
		11,091		11,523		491		(59)
Mortgage-backed securities		239,793		243,661		3,999		(131)
Total	$	281,906	$	286,415	$	4,751	$	(242)

Summary of Proceeds Received from Sales or Calls of Available for Sale Securities

The following table summarizes proceeds received from sales or calls of available for sale investment securities transactions and the resulting realized gains and losses during the six months ended June 30, 2021 and 2020.

(Dollars in thousands)	Six Months Ended
	June 30,
	2021		2020
Gross proceeds from sales and calls of securities	$	32,869	$	36,136
Securities available for sale:
Gross realized gains from sold and called securities	$	130	$	592
Gross realized losses from sold and called securities		(72)		(30)
Net gains from sales and calls of securities	$	58	$	562

Schedule of Gross Unrealized Losses and Fair Value

The following tables show gross unrealized losses and fair values of debt 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, 2021 and December 31, 2020:

	Unrealized Losses at June 30, 2021
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	7	$	38,214	$	(852)	—	$	—	$	—	7	$	38,214	$	(852)
Obligations of state and political subdivisions	4		1,223		(12)	—		—		—	4		1,223		(12)
Corporate debt securities	5		8,321		(87)	—		—		—	5		8,321		(87)
Mortgage-backed securities	32		170,793		(2,229)	—		—		—	32		170,793		(2,229)
Total temporarily impaired securities	48	$	218,551	$	(3,180)	—	$	—	$	—	48	$	218,551	$	(3,180)

	Unrealized Losses at December 31, 2020
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	3	$	18,948	$	(52)	—	$	—	$	—	3	$	18,948	$	(52)
Corporate debt securities	1		2,972		(59)	—		—		—	1		2,972		(59)
Mortgage-backed securities	7		43,583		(131)	—		—		—	7		43,583		(131)
Total temporarily impaired securities	11	$	65,503	$	(242)	—	$	—	$	—	11	$	65,503	$	(242)

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Loans and Related Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2021

Loans and Related Allowance for Credit Losses [Abstract]

Loan Portfolio by Class

The following table presents the loan portfolio by class at June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Commercial, financial and agricultural	$	70,562	$	73,057
Real estate - commercial		153,343		122,698
Real estate - construction		41,243		61,051
Real estate - mortgage		138,972		141,438
Obligations of states and political subdivisions		22,016		18,550
Personal		5,053		5,867
Total	$	431,189	$	422,661

Activity in the Allowance for Loan Losses by Loan Class

The following table summarizes the activity in the allowance for loan losses by loan class, for the three and six months ended June 30, 2021 and 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
Three Months Ended
June 30, 2021
Balance, beginning of period	$	296	$	1,520	$	946	$	30	$	1,183	$	81	$	4,056
Provision for loan losses		(14)		(85)		(50)		3		(32)		(22)		(200)
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		7		—		28		—		13		5		53
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	433	$	758	$	904	$	23	$	1,147	$	68	$	3,333
Provision for loan losses		(122)		120		203		(1)		4		(8)		196
Charge-offs		—		—		—		—		(4)		(3)		(7)
Recoveries		—		—		30		—		2		4		36
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558
Six Months Ended
June 30, 2021
Balance, beginning of period	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094
Provision for loan losses		(20)		527		(718)		5		(65)		(8)		(279)
Charge-offs		—		—		—		—		—		(8)		(8)
Recoveries		7		—		56		—		29		7		99
Balance, end of period	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
June 30, 2020
Balance, beginning of period	$	321	$	754	$	718	$	17	$	1,081	$	70	$	2,961
Provision for loan losses		(10)		124		357		5		69		7		552
Charge-offs		—		—		—		—		(4)		(24)		(28)
Recoveries		—		—		62		—		3		8		73
Balance, end of period	$	311	$	878	$	1,137	$	22	$	1,149	$	61	$	3,558

The following table summarizes loans by loan class, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)							Obligations
	Commercial,						of states
	financial and		Real estate-		Real estate-		and political		Real estate-
	agricultural		commercial		construction		subdivisions		mortgage		Personal		Total
June 30, 2021
Loans allocated by:
individually evaluated for impairment	$	—	$	5,276	$	—	$	—	$	524	$	—	$	5,800
acquired with credit deterioration		—		369		—		—		604		—		973
collectively evaluated for impairment		70,562		147,698		41,243		22,016		137,844		5,053		424,416
	$	70,562	$	153,343	$	41,243	$	22,016	$	138,972	$	5,053	$	431,189
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		289		1,435		924		33		1,164		61		3,906
	$	289	$	1,435	$	924	$	33	$	1,164	$	61	$	3,906
December 31, 2020
Loans allocated by:
individually evaluated for impairment	$	—	$	3,483	$	—	$	—	$	744	$	—	$	4,227
acquired with credit deterioration		—		339		—		—		623		—		962
collectively evaluated for impairment		73,057		118,876		61,051		18,550		140,071		5,867		417,472
	$	73,057	$	122,698	$	61,051	$	18,550	$	141,438	$	5,867	$	422,661
Allowance for loan losses allocated by:
individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
acquired with credit deterioration		—		—		—		—		—		—		—
collectively evaluated for impairment		302		908		1,586		28		1,198		70		4,092
	$	302	$	908	$	1,586	$	28	$	1,200	$	70	$	4,094

Impaired Loans by Loan Portfolio Class

The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	As of June 30, 2021						As of December 31, 2020
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate – construction		—		871		—		—		894		—
Real estate - mortgage		524		1,255		—		666		1,396		—
Acquired with credit deterioration		604		786		—		623		801		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	78	$	77	$	2
Total:
Real estate - commercial	$	5,276	$	5,824	$	—	$	3,483	$	3,580	$	—
Acquired with credit deterioration		369		376		—		339		386		—
Real estate - construction		—		871		—		—		894		—
Real estate – mortgage		524		1,255		—		744		1,473		2
Acquired with credit deterioration		604		786		—		623		801		—
	$	6,773	$	9,112	$	—	$	5,189	$	7,134	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2021 and 2020 are summarized in the tables below.

(Dollars in thousands)	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		877		4		11
Acquired with credit deterioration		600		—		—		668		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	581	$	—	$	—
Real estate - commercial		4,082		98		—		3,412		5		8
Acquired with credit deterioration		339		—		—		354		—		—
Real estate - mortgage		576		4		10		998		4		11
Acquired with credit deterioration		600		—		—		668		—		—
	$	5,597	$	102	$	10	$	6,013	$	9	$	19

(Dollars in thousands)	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Income		Investment		Recognized		Income
Impaired Loans
With no related allowance recorded:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,010		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	121	$	—	$	—
Total:
Commercial, financial and agricultural	$	—	$	—	$	—	$	384	$	—	$	—
Real estate - commercial		2,957		111		—		2,746		10		20
Acquired with credit deterioration		336		—		—		357		—		—
Real estate - mortgage		628		7		20		1,131		8		22
Acquired with credit deterioration		606		—		—		678		—		—
Personal		—		—		—		5		—		—
	$	4,527	$	118	$	20	$	5,301	$	18	$	42

Nonaccrual Loans by Classes of the Loan Portfolio

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)
	June 30, 2021		December 31, 2020
Non-accrual loans:
Real estate - commercial	$	37	$	41
Real estate - mortgage		213		381
Total	$	250	$	422

Loan Portfolio Summarized by the Past Due Status

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. Past due status is determined by the contractual terms of the loan. The following tables present the classes of the loan portfolio summarized by the past due status as of June 30, 2021 and December 31, 2020.

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of June 30, 2021
Commercial, financial and agricultural	$	70,532	$	30	$	—	$	—	$	30	$	70,562	$	—
Real estate - commercial		152,880		57		—		37		94		152,974		—
Real estate - construction		37,609		3,634		—		—		3,634		41,243		—
Real estate - mortgage		138,188		39		—		141		180		138,368		88
Obligations of states and political subdivisions		22,016		—		—		—		—		22,016		—
Personal		5,042		11		—		—		11		5,053		—
Subtotal		426,267		3,771		—		178		3,949		430,216		88
Loans acquired with credit deterioration
Real estate - commercial		369		—		—		—		—		369		—
Real estate - mortgage		512		—		—		92		92		604		92
Subtotal		881		—		—		92		92		973		92
	$	427,148	$	3,771	$	—	$	270	$	4,041	$	431,189	$	180

													Loans
													Past Due
													Greater
(Dollars in thousands)							Greater						than 89
			30‑59 Days		60‑89 Days		than 89		Total Past				Days and
	Current		Past Due(2)		Past Due		Days		Due		Total Loans		Accruing(1)
As of December 31, 2020
Commercial, financial and agricultural	$	73,028	$	7	$	—	$	22	$	29	$	73,057	$	22
Real estate - commercial		122,318		—		—		41		41		122,359		—
Real estate - construction		61,051		—		—		—		—		61,051		—
Real estate - mortgage		139,842		351		453		169		973		140,815		—
Obligations of states and political subdivisions		18,550		—		—		—		—		18,550		—
Personal		5,853		—		14		—		14		5,867		—
Subtotal		420,642		358		467		232		1,057		421,699		22
Loans acquired with credit deterioration
Real estate - commercial		293		—		46		—		46		339		—
Real estate - mortgage		481		50		—		92		142		623		92
Subtotal		774		50		46		92		188		962		92
	$	421,416	$	408	$	513	$	324	$	1,245	$	422,661	$	114

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

(2) Loans are considered past due when the borrower is in arrears on two or more monthly payments.

Troubled Debt Restructurings on Financing Receivables

The following table presents the loan whose terms were modified resulting in troubled debt restructuring during the three and six months ended June 30, 2021. There were no loan terms modified resulting in troubled debt restructuring during the three and six months ended June 30, 2020.  

(Dollars in thousands)		Pre-Modification		Post-Modification
	Number of	Outstanding		Outstanding
	Contracts	Recorded Investment		Recorded Investment		Recorded Investment
Three and six months ended June 30, 2021
Accruing troubled debt restructurings:
Real estate - commercial	1	$	2,254	$	2,254	$	1,803
	1	$	2,254	$	2,254	$	1,803

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, 2021 and December 31, 2020.

(Dollars in thousands)			Special
As of June 30, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	68,672	$	794	$	1,096	$	—	$	70,562
Real estate - commercial		104,197		42,114		6,995		37		153,343
Real estate - construction		37,048		3,635		560		—		41,243
Real estate - mortgage		137,574		270		1,128		—		138,972
Obligations of states and political subdivisions		22,016		—		—		—		22,016
Personal		5,053		—		—		—		5,053
Total	$	374,560	$	46,813	$	9,779	$	37	$	431,189

(Dollars in thousands)			Special
As of December 31, 2020	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	71,983	$	495	$	579	$	—	$	73,057
Real estate - commercial		99,828		15,198		7,631		41		122,698
Real estate - construction		36,332		24,644		75		—		61,051
Real estate - mortgage		139,787		289		1,317		45		141,438
Obligations of states and political subdivisions		18,550		—		—		—		18,550
Personal		5,867		—		—		—		5,867
Total	$	372,347	$	40,626	$	9,602	$	86	$	422,661

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2021

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.

(Dollars in thousands)	FNBPA		LCB
	Acquisition		Acquisition
	Core		Core
	Deposit		Deposit
	Intangible		Intangible
Beginning Balance at Acquisition Date	$	303	$	289
Amortization expense recorded prior to January 1, 2020		190		84
Amortization expense recorded in the twelve months
ended December 31, 2020		33		44
Unamortized balance as of December 31, 2020		80		161
Amortization expense recorded in the
six months ended June 30, 2021		13		19
Unamortized balance as of June 30, 2021	$	67	$	142
Scheduled remaining amortization expense for years ended:
December 31, 2021	$	14	$	20
December 31, 2022		22		33
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
After December 31, 2026		—		9

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Borrowings (Tables)

6 Months Ended

Jun. 30, 2021

Borrowings [Abstract]

Schedule of Borrowings

Borrowings consisted of the following as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30,		December 31,
	2021		2020
Securities sold under agreements to repurchase	$	4,027	$	4,750
Overnight advances with FHLB		8,126		—
Short-term debt with FHLB		—		20,000
Federal Reserve Bank advances		—		27,955
Long-term debt with FHLB		35,000		35,000
	$	47,153	$	87,705

Scheduled Maturities of Long-Term Debt

Long-term debt is comprised only of FHLB advances with an original maturity of one year or more. The following table summarizes the scheduled maturities of long-term debt as of June 30, 2021.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		20,000	2.42
2025		15,000	2.41
2026		—	—
Thereafter		—	—
	$	35,000	2.42	%

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Stock Compensation Plan (Tables)

6 Months Ended

Jun. 30, 2021

Stock Compensation Plan [Abstract]

Summary of Non-Vested Restricted Shares Activity

The following table presents a summary of the status of the Company’s non-vested restricted stock awards as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2021	20,175	$	19.62
Vested	(4,460)		19.80
Forfeited	(200)		17.90
Granted	8,839		16.55
Non-vested at June 30, 2021	24,354	$	18.49

Schedule of Stock Options Activity

A summary of the status of the outstanding stock options as of June 30, 2021, and changes during the period then ended is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	81,547	$	17.78
Granted	—		—
Exercised	—		—
Forfeited	—		—
Outstanding at end of year	81,547	$	17.78

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

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, 2021 and December 31, 2020 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2021	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	40,999	$	—	$	40,999
Obligations of state and political subdivisions		—		8,192		—		8,192
Corporate debt securities		—		23,709		4,500		28,209
Mortgage-backed securities		—		264,630		—		264,630
Total debt securities available for sale	$	—	$	337,530	$	4,500	$	342,030
Equity securities	$	1,178	$	—	$	—	$	1,178
Mortgage servicing rights	$	—	$	—	$	137	$	137
Interest rate swaps	$	—	$	381	$	—	$	381
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	37	$	37

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 2020	Assets		Inputs		Inputs		Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and corporations	$	—	$	22,949	$	—	$	22,949
Obligations of state and political subdivisions		—		8,282		—		8,282
Corporate debt securities		—		9,523		2,000		11,523
Mortgage-backed securities		—		243,661		—		243,661
Total debt securities available for sale	$	—	$	284,415	$	2,000	$	286,415
Equity securities	$	1,091	$	—	$	—	$	1,091
Mortgage servicing rights	$	—	$	—	$	158	$	158
Liabilities measured at fair value on a recurring basis:
Interest rate swaps	$	—	$	57	$	—	$	57
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	—	$	—	$	84	$	84

The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six month periods ended June 30, 2021 and 2020.

(Dollars in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment Securities:
Beginning balance	$	2,000	$	—	$	2,000	$	—
Total gains (loss) included in OCI		—		—		—		—
Purchases		2,500		—		2,500		—
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	4,500	$	—	$	4,500	$	—

Reconciliation of Investment Securities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six month periods ended June 30, 2021 and 2020.

(Dollars in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment Securities:
Beginning balance	$	2,000	$	—	$	2,000	$	—
Total gains (loss) included in OCI		—		—		—		—
Purchases		2,500		—		2,500		—
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	4,500	$	—	$	4,500	$	—

Carrying Amounts and Estimated Fair Values of Financial Instruments

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

	Financial Instruments
(Dollars in thousands)	June 30, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	17,165	$	17,165	$	11,868	$	11,868
Interest bearing deposits with banks		1,020		1,020		19,753		19,753
Interest bearing time deposits with banks		735		735		735		735
Securities		343,208		343,208		287,506		287,506
Restricted investment in bank stock		2,885		N/A		3,423		N/A
Loans, net of allowance for loan losses		427,283		428,351		418,567		424,791
Interest rate swaps		381		381		—		—
Accrued interest receivable		2,230		2,230		2,105		2,105
Financial liabilities:
Non-interest bearing deposits	$	179,363	$	179,363	$	168,115	$	168,115
Interest bearing deposits		529,176		532,879		454,751		459,224
Securities sold under agreements to repurchase		4,027		N/A		4,750		N/A
Short-term borrowings		—		20,002		20,000		20,002
FRB advances		—		—		27,955		27,955
Long-term debt		35,000		36,594		35,000		37,365
Interest rate swaps		—		—		57		57
Other interest bearing liabilities		1,572		1,572		1,584		1,585
Accrued interest payable		333		333		448		448
Off-balance sheet financial instruments:
Commitments to extend credit	$	—	$	—	$	—	$	—
Letters of credit		—		—		—		—

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

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, 2021 and December 31, 2020. The tables exclude financial instruments for which the carrying amount approximates fair value.

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
June 30, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		427,283		428,351		—		—		428,351
Financial instruments - Liabilities
Interest bearing deposits	$	529,176	$	532,879	$	—	$	532,879	$	—
Long-term debt		35,000		36,594		—		36,594		—
Other interest bearing liabilities		1,572		1,572		—		1,572		—

					(Level 1)		(Level 2)		(Level 3)
					Quoted Prices in		Significant		Significant
(Dollars in thousands)					Active Markets		Other		Other
	Carrying				for Identical		Observable		Unobservable
	Amount		Fair Value		Assets or Liabilities		Inputs		Inputs
December 31, 2020
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		418,567		424,791		—		—		424,791
Financial instruments - Liabilities
Interest bearing deposits	$	454,751	$	459,224	$	—	$	459,224	$	—
Long-term debt		35,000		37,365		—		37,365		—
Other interest bearing liabilities		1,584		1,585		—		1,585		—

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Derivatives (Tables)

6 Months Ended

Jun. 30, 2021

Derivatives

Schedule of Derivatives Recorded on the Consolidated Statements of Condition

The following table reflects the notional amounts and fair values of derivatives recorded on the Consolidated Statements of Condition as of June 30, 2021 and December 31, 2020.

(Dollars in thousands)	June 30, 2021				December 31, 2020
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
	Amount		(Liability)		Amount		(Liability)
Derivatives designated as hedges:
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	20,000	$	(64)	$	—	$	—
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		—		—		20,000		(123)
Interest rate swaps - forward-starting on long-term FHLB advances		20,000		445		20,000		66

Schedule of Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The effect of cash flow hedge accounting on accumulated other comprehensive income for the periods ended June 30, 2021 and December 31, 2020 are as follows:

(Dollars in thousands)	June 30, 2021
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	411	Interest expense on short-term borrowings and repurchase agreements	$	26

(Dollars in thousands)	December 31, 2020
	Amount of Gain		Location of (Gain)	Amount of (Gain)
	(Loss) Recognized in		Loss Reclassified	Loss Reclassified
	OCI on Derivatives		from OCI into Income	from OCI into Income
Interest rate contracts	$	(48)	Interest expense on short-term borrowings and repurchase agreements	$	(9)

Schedule of Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Income

The effect of cash flow hedge accounting on the Consolidated Statements of Income for the three and six months ended June 30, 2021 and June 30, 2020 was as follows:

Location and Amount of Gain or Loss Recognized in Income on Cash Flow Hedging Relationships

	Interest Income (Expense)				Interest Income (Expense)
	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2021		2020		2021		2020
Effects of cash flow hedging:
Gain (loss) on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	(22)	$	22	$	(26)	$	22
Total	$	(22)	$	22		(26)		22

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Accumulated Other Comprehensive Income (Components of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Beginning balance	$ 72,574	$ 77,366	$ 76,597	$ 73,707	$ 73,707
Net current period other comprehensive income (loss)	616	(860)	(3,492)	3,040
Reclassification for ASU	46,266		46,266		45,096
Ending balance	73,749	76,902	73,749	76,902	76,597
Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance	(590)	4,416	3,518	516	516
Other comprehensive income (loss) before reclassification			(3,466)		3,689
Amounts reclassified from accumulated other comprehensive income (loss)			(26)		(682)
Net current period other comprehensive income (loss)	616	(860)	(3,492)	3,040	3,007
Ending balance	26	$ 3,556	26	3,556	3,518
Unrealized Gains and Losses on Cash Flow Hedges [Member]
Beginning balance			(45)	0	0
Other comprehensive income (loss) before reclassification			325		(38)
Amounts reclassified from accumulated other comprehensive income (loss)			20		(7)
Net current period other comprehensive income (loss)			345		(45)
Ending balance	300		300		(45)
Unrealized Gains and Losses on Available for Sale Securities [Member]
Beginning balance			3,563	$ 516	516
Other comprehensive income (loss) before reclassification			(3,791)		3,727
Amounts reclassified from accumulated other comprehensive income (loss)			(46)		(675)
Net current period other comprehensive income (loss)			(3,837)		3,052
Ending balance	$ (274)		$ (274)		3,563
Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | ASU 2018-02 [Member] | Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification for ASU					(5)
Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | ASU 2018-02 [Member] | Unrealized Gains and Losses on Cash Flow Hedges [Member]
Reclassification for ASU					0
Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | ASU 2018-02 [Member] | Unrealized Gains and Losses on Available for Sale Securities [Member]
Reclassification for ASU					$ (5)

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Earnings Per Share (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share [Abstract]
Net income	$ 1,739	$ 1,605	$ 3,374	$ 2,643
Weighted-average common shares outstanding	5,008	5,091	5,013	5,097
Basic earnings per share	$ 0.35	$ 0.32	$ 0.67	$ 0.52
Common stock equivalents due to effect of stock options	8	5	8	6
Total weighted-average common shares and equivalents	5,016	5,096	5,021	5,103
Diluted earnings per share	$ 0.35	$ 0.31	$ 0.67	$ 0.52
Anti-dilutive stock options outstanding			2	3

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Securities (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) security	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) security	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) security
Proceeds from: Sales of securities available for sale | $			$ 32,869,000	$ 36,136,000
Securities in unrealized loss position	48		48		11
Equity securities | $	$ 1,178,000		$ 1,178,000		$ 1,091,000
Realized gain (loss) on equity securities | $	$ 8,000	$ 18,000	$ 101,000	$ (154,000)
Number of Securities, 12 Months or More	0		0		0
Obligations of U.S. Government Agencies and Corporations [Member]
Securities in unrealized loss position	7		7		3
Number of Securities, 12 Months or More	0		0		0
U.S. Government Sponsored Agencies [Member]
Investment portfolio percentage	12.00%		12.00%
Carrying value of pledged assets | $	$ 88,177,000		$ 88,177,000		$ 74,614,000
Securities in unrealized loss position	7		7
Obligations of State and Political Subdivisions [Member]
Securities in unrealized loss position	4		4
Number of Securities, 12 Months or More	0		0
Corporate Debt Securities [Member]
Investment portfolio percentage	8.00%		8.00%
Securities in unrealized loss position	5		5		1
Number of Securities, 12 Months or More	0		0		0
Mortgage-Backed Securities [Member]
Investment portfolio percentage	77.00%		77.00%
Securities in unrealized loss position	32		32		7
Other than temporary impairment | $			$ 0		$ 0
Number of Securities, 12 Months or More	0		0		0
Municipal Bonds [Member]
Investment portfolio percentage	3.00%		3.00%
Debt instrument term			5 years

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Securities (Debt Securities Available for Sale) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities, Total	$ 342,378	$ 281,906
Fair Value of AFS Securities, Total	342,030	286,415
Gross Unrealized Gains on AFS Securities, Total	2,832	4,751
Gross Unrealized Losses on AFS Securities, Total	(3,180)	(242)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	41,850	22,994
Amortized Cost of AFS Securities, Total	41,850	22,994
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	40,999	22,949
Fair Value of AFS Securities, Total	40,999	22,949
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	1	7
Gross Unrealized Gains on AFS Securities, Total	1	7
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(852)	(52)
Gross Unrealized Losses on AFS Securities, Total	(852)	(52)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing Within One Year	30	31
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	6,766	4,708
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	1,235	3,289
Amortized Cost of AFS Securities, Total	8,031	8,028
Fair Value of AFS Securities Maturing Within One Year	30	31
Fair Value of AFS Securities Maturing After One Year But Within Five Years	6,939	4,767
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	1,223	3,484
Fair Value of AFS Securities, Total	8,192	8,282
Gross Unrealized Gains on AFS Securities Maturing Within One Year	0	0
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	173	59
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	0	195
Gross Unrealized Gains on AFS Securities, Total	173	254
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	0	0
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(12)	0
Gross Unrealized Losses on AFS Securities, Total	(12)	0
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing Within One Year		1,033
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	2,000
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	25,461	10,058
Amortized Cost of AFS Securities, Total	27,461	11,091
Fair Value of AFS Securities Maturing Within One Year		1,039
Fair Value of AFS Securities Maturing After One Year But Within Five Years	2,003
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	26,206	10,484
Fair Value of AFS Securities, Total	28,209	11,523
Gross Unrealized Gains on AFS Securities Maturing Within One Year		6
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	3
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	832	485
Gross Unrealized Gains on AFS Securities, Total	835	491
Gross Unrealized Losses On AFS Securities Maturing Within One Year		0
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	0
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(87)	(59)
Gross Unrealized Losses on AFS Securities, Total	(87)	(59)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Without Single Maturity Date	265,036	239,793
Fair Value of AFS Securities Without Single Maturity Date	264,630	243,661
Gross Unrealized Gains on AFS Securities Without Single Maturity Date	1,823	3,999
Gross Unrealized Losses on AFS Securities Without Single Maturity Date	$ (2,229)	$ (131)

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Securities (Summary of Proceeds Received from Sales or Calls of Available for Sale Securities) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Securities [Abstract]
Gross proceeds from sales and calls of securities			$ 32,869	$ 36,136
Gross realized gains from sold and called securities			130	592
Gross realized losses from sold and called securities			(72)	(30)
Net gains (losses) from sales and calls of securities	$ 54	$ 551	$ 58	$ 562

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Securities (Schedule of Unrealized Losses) (Details) $ in Thousands	Jun. 30, 2021 USD ($) security	Dec. 31, 2020 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	48	11
Fair Value, Less Than 12 Months	$ 218,551	$ 65,503
Unrealized Losses, Less Than 12 Months	$ (3,180)	$ (242)
Number of Securities, 12 Months or More | security	0	0
Fair Value, 12 Months or More	$ 0	$ 0
Unrealized Losses, 12 Months or More	$ 0	$ 0
Number of Securities, Total | security	48	11
Fair Value, Total	$ 218,551	$ 65,503
Unrealized Losses, Total	$ (3,180)	$ (242)
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	7	3
Fair Value, Less Than 12 Months	$ 38,214	$ 18,948
Unrealized Losses, Less Than 12 Months	$ (852)	$ (52)
Number of Securities, 12 Months or More | security	0	0
Fair Value, 12 Months or More	$ 0	$ 0
Unrealized Losses, 12 Months or More	$ 0	$ 0
Number of Securities, Total | security	7	3
Fair Value, Total	$ 38,214	$ 18,948
Unrealized Losses, Total	$ (852)	$ (52)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	4
Fair Value, Less Than 12 Months	$ 1,223
Unrealized Losses, Less Than 12 Months	$ (12)
Number of Securities, 12 Months or More | security	0
Fair Value, 12 Months or More	$ 0
Unrealized Losses, 12 Months or More	$ 0
Number of Securities, Total | security	4
Fair Value, Total	$ 1,223
Unrealized Losses, Total	$ (12)
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	5	1
Fair Value, Less Than 12 Months	$ 8,321	$ 2,972
Unrealized Losses, Less Than 12 Months	$ (87)	$ (59)
Number of Securities, 12 Months or More | security	0	0
Fair Value, 12 Months or More	$ 0	$ 0
Unrealized Losses, 12 Months or More	$ 0	$ 0
Number of Securities, Total | security	5	1
Fair Value, Total	$ 8,321	$ 2,972
Unrealized Losses, Total	$ (87)	$ (59)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	32	7
Fair Value, Less Than 12 Months	$ 170,793	$ 43,583
Unrealized Losses, Less Than 12 Months	$ (2,229)	$ (131)
Number of Securities, 12 Months or More | security	0	0
Fair Value, 12 Months or More	$ 0	$ 0
Unrealized Losses, 12 Months or More	$ 0	$ 0
Number of Securities, Total | security	32	7
Fair Value, Total	$ 170,793	$ 43,583
Unrealized Losses, Total	$ (2,229)	$ (131)

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Loans and Related Allowance for Loan Losses (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($) loan	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 USD ($) loan	Dec. 31, 2020 USD ($) loan
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 431,189,000		$ 431,189,000		$ 422,661,000
Troubled debt restructured loan	5,546,000		5,546,000		3,802,000
Reserves relating to TDR	0		0		0
Restructured loan balance in default status	$ 0	$ 0	$ 0	$ 0
Modified trouble debt, number of contracts | loan	1	0	1	0
Credit quality indicators information			This analysis includes loans to commercial customers with an aggregate loan exposure greater than $500,000 and for lines of credit in excess of $50,000.
Financing receivable - Allowance for loan losses	$ 3,906,000		$ 3,906,000		$ 4,094,000
Paycheck Protection Program [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 24,563,000		$ 24,563,000
Number of Loans Funded under Paycheck Protection Program | loan					508
Amount of Loan Funded under Paycheck Protection Program					$ 32,064,000
Number of PPP loans eligible for forgiveness | loan	469		469
Deferred fees of PPP loans			$ 1,063,000
First Round PPP Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans Funded under Paycheck Protection Program | loan	107		107
Amount of Loan Funded under Paycheck Protection Program	$ 6,695,000		$ 6,695,000
Second Round PPP Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans Funded under Paycheck Protection Program | loan	362		362
Amount of Loan Funded under Paycheck Protection Program	$ 18,931,000		$ 18,931,000
Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum loan-to-value ratio			90.00%
Home Equity Installment Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Maximum loan-to-value ratio			80.00%
Commercial Portfolio Segment [Member] | Commercial Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 153,343,000		$ 153,343,000		122,698,000
Modified trouble debt, number of contracts | loan	1		1
Maximum loan-to-value ratio			80.00%
Financing receivable - Allowance for loan losses	$ 1,435,000		$ 1,435,000		908,000
Consumer Portfolio Segment [Member] | Mortgage Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	138,972,000		$ 138,972,000		141,438,000
Maximum loan-to-value ratio			80.00%
Financing receivable - Allowance for loan losses	1,164,000		$ 1,164,000		1,200,000
Loan balance in the process of foreclosure	204,000		$ 204,000		$ 152,000
Payment Deferral [Member] | Covid-19 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of borrowers approved for designated deferrals | loan			207
Number of loans remaining in payment deferral | loan			2
Amount of loans remaining in deferral status	5,023,000		$ 5,023,000
Amount of loans completing deferment period	$ 67,158,000		$ 67,158,000
Number of delinquent borrowers approved for designated deferrals			0

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Loans and Related Allowance for Loan Losses (Loan Portfolio by Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 431,189	$ 422,661
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	70,562	73,057
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	153,343	122,698
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	41,243	61,051
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	138,972	141,438
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	22,016	18,550
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 5,053	$ 5,867

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Loans and Related Allowance for Loan Losses (Activity in the Allowance for Loan Losses by Loan Class) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 4,056	$ 3,333	$ 4,094	$ 2,961
Provision for loan losses	(200)	196	(279)	552
Charge-offs	(3)	(7)	(8)	(28)
Recoveries	53	36	99	73
Ending balance	3,906	3,558	3,906	3,558
Loans allocated by: individually evaluated for impairment	5,800		5,800		$ 4,227
Loans allocated by: collectively evaluated for impairment	424,416		424,416		417,472
Financing receivable - Loans allocated	431,189		431,189		422,661
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		2
Allowance for loan losses allocated by: collectively evaluated for impairment	3,906		3,906		4,092
Financing receivable - Allowance for loan losses	3,906		3,906		4,094
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	296	433	302	321
Provision for loan losses	(14)	(122)	(20)	(10)
Charge-offs	0	0	0	0
Recoveries	7	0	7	0
Ending balance	289	311	289	311
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	70,562		70,562		73,057
Financing receivable - Loans allocated	70,562		70,562		73,057
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	289		289		302
Financing receivable - Allowance for loan losses	289		289		302
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,520	758	908	754
Provision for loan losses	(85)	120	527	124
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	1,435	878	1,435	878
Loans allocated by: individually evaluated for impairment	5,276		5,276		3,483
Loans allocated by: collectively evaluated for impairment	147,698		147,698		118,876
Financing receivable - Loans allocated	153,343		153,343		122,698
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	1,435		1,435		908
Financing receivable - Allowance for loan losses	1,435		1,435		908
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	946	904	1,586	718
Provision for loan losses	(50)	203	(718)	357
Charge-offs	0	0	0	0
Recoveries	28	30	56	62
Ending balance	924	1,137	924	1,137
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	41,243		41,243		61,051
Financing receivable - Loans allocated	41,243		41,243		61,051
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	924		924		1,586
Financing receivable - Allowance for loan losses	924		924		1,586
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	30	23	28	17
Provision for loan losses	3	(1)	5	5
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	33	22	33	22
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	22,016		22,016		18,550
Financing receivable - Loans allocated	22,016		22,016		18,550
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	33		33		28
Financing receivable - Allowance for loan losses	33		33		28
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,183	1,147	1,200	1,081
Provision for loan losses	(32)	4	(65)	69
Charge-offs	0	(4)	0	(4)
Recoveries	13	2	29	3
Ending balance	1,164	1,149	1,164	1,149
Loans allocated by: individually evaluated for impairment	524		524		744
Loans allocated by: collectively evaluated for impairment	137,844		137,844		140,071
Financing receivable - Loans allocated	138,972		138,972		141,438
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		2
Allowance for loan losses allocated by: collectively evaluated for impairment	1,164		1,164		1,198
Financing receivable - Allowance for loan losses	1,164		1,164		1,200
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	81	68	70	70
Provision for loan losses	(22)	(8)	(8)	7
Charge-offs	(3)	(3)	(8)	(24)
Recoveries	5	4	7	8
Ending balance	61	$ 61	61	$ 61
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	5,053		5,053		5,867
Financing receivable - Loans allocated	5,053		5,053		5,867
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	61		61		70
Financing receivable - Allowance for loan losses	61		61		70
Acquired with Credit Deterioration [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	973		973		962
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	369		369		339
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	604		604		623
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Acquired with Credit Deterioration [Member] | Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: individually evaluated for impairment	$ 0		$ 0		$ 0

XML

Loans and Related Allowance for Loan Losses (Impaired Loans by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Impaired [Line Items]
Impaired Loans: Related Allowance		$ 2
Recorded Investment, Total	$ 6,773	5,189
Unpaid Principal Balance, Total	9,112	7,134
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	5,276	3,483
Impaired Loans with No Allowance: Unpaid Principal Balance	5,824	3,580
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	5,276	3,483
Unpaid Principal Balance, Total	5,824	3,580
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	369	339
Impaired Loans with No Allowance: Unpaid Principal Balance	376	386
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	369	339
Unpaid Principal Balance, Total	376	386
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	0	0
Impaired Loans with No Allowance: Unpaid Principal Balance	871	894
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	0	0
Unpaid Principal Balance, Total	871	894
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	524	666
Impaired Loans with No Allowance: Unpaid Principal Balance	1,255	1,396
Impaired Loans with an Allowance: Recorded Investment		78
Impaired Loans with an Allowance: Unpaid Principal Balance		77
Impaired Loans: Related Allowance	0	2
Recorded Investment, Total	524	744
Unpaid Principal Balance, Total	1,255	1,473
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	604	623
Impaired Loans with No Allowance: Unpaid Principal Balance	786	801
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	604	623
Unpaid Principal Balance, Total	$ 786	$ 801

XML

Loans and Related Allowance for Loan Losses (Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 5,597	$ 6,013	$ 4,527	$ 5,301
Interest Income Recognized, Total	102	9	118	18
Cash Basis Interest Income, Total	10	19	20	42
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	0	581	0	384
Impaired Loans with No Allowance, Interest Income Recognized	0	0	0	0
Impaired Loans with No Allowance, Cash Basis Interest Income	0	0	0	0
Average Recorded Investment, Total	0	581	0	384
Interest Income Recognized, Total	0	0	0	0
Cash Basis Interest Income, Total	0	0	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	4,082	3,412	2,957	2,746
Impaired Loans with No Allowance, Interest Income Recognized	98	5	111	10
Impaired Loans with No Allowance, Cash Basis Interest Income	0	8	0	20
Average Recorded Investment, Total	4,082	3,412	2,957	2,746
Interest Income Recognized, Total	98	5	111	10
Cash Basis Interest Income, Total	0	8	0	20
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	576	877	628	1,010
Impaired Loans with No Allowance, Interest Income Recognized	4	4	7	8
Impaired Loans with No Allowance, Cash Basis Interest Income	10	11	20	22
Impaired Loans with an Allowance, Average Recorded Investment	0	121	0	121
Impaired Loans with an Allowance, Interest Income Recognized	0	0	0	0
Impaired Loans with an Allowance, Cash Basis Interest Income	0	0	0	0
Average Recorded Investment, Total	576	998	628	1,131
Interest Income Recognized, Total	4	4	7	8
Cash Basis Interest Income, Total	10	11	20	22
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment			0	5
Impaired Loans with No Allowance, Interest Income Recognized			0	0
Impaired Loans with No Allowance, Cash Basis Interest Income			0	0
Average Recorded Investment, Total			0	5
Interest Income Recognized, Total			0	0
Cash Basis Interest Income, Total			0	0
Acquired with Credit Deterioration [Member] | Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	339	354	336	357
Impaired Loans with No Allowance, Interest Income Recognized	0	0	0	0
Impaired Loans with No Allowance, Cash Basis Interest Income	0	0	0	0
Average Recorded Investment, Total	339	354	336	357
Interest Income Recognized, Total	0	0	0	0
Cash Basis Interest Income, Total	0	0	0	0
Acquired with Credit Deterioration [Member] | Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	600	668	606	678
Impaired Loans with No Allowance, Interest Income Recognized	0	0	0	0
Impaired Loans with No Allowance, Cash Basis Interest Income	0	0	0	0
Average Recorded Investment, Total	600	668	606	678
Interest Income Recognized, Total	0	0	0	0
Cash Basis Interest Income, Total	$ 0	$ 0	$ 0	$ 0

XML

Loans and Related Allowance for Loan Losses (Nonaccrual Loans by Classes of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 250	$ 422
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	37	41
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 213	$ 381

XML

Loans and Related Allowance for Loan Losses (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 4,041	$ 1,245
Current	427,148	421,416
Total loans	431,189	422,661
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	180	114
Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,949	1,057
Current	426,267	420,642
Total loans	430,216	421,699
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	88	22
Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	92	188
Current	881	774
Total loans	973	962
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	92	92
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,771	408
30-59 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,771	358
30-59 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	50
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	513
60-89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	467
60-89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	46
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	270	324
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	178	232
Greater than 90 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	92	92
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	70,562	73,057
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	30	29
Current	70,532	73,028
Total loans	70,562	73,057
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	22
Commercial, Financial and Agricultural [Member] | Commercial 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	30	7
Commercial, Financial and Agricultural [Member] | Commercial 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	0	0
Commercial, Financial and Agricultural [Member] | Commercial 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	0	22
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	153,343	122,698
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	94	41
Current	152,880	122,318
Total loans	152,974	122,359
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	46
Current	369	293
Total loans	369	339
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	0
Commercial Loan [Member] | Commercial 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	57	0
Commercial Loan [Member] | Commercial 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	0	0
Commercial Loan [Member] | Commercial 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	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | 60-89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	46
Commercial Loan [Member] | Commercial 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	37	41
Commercial Loan [Member] | Commercial 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	0	0
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	41,243	61,051
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,634	0
Current	37,609	61,051
Total loans	41,243	61,051
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	0
Construction Loan [Member] | Commercial 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	3,634	0
Construction Loan [Member] | Commercial 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	0	0
Construction Loan [Member] | Commercial 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	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	138,972	141,438
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	180	973
Current	138,188	139,842
Total loans	138,368	140,815
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	88	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	92	142
Current	512	481
Total loans	604	623
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	92	92
Mortgage Loan [Member] | Consumer 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	39	351
Mortgage Loan [Member] | Consumer 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	0	50
Mortgage Loan [Member] | Consumer 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	0	453
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Mortgage Loan [Member] | Consumer 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	141	169
Mortgage Loan [Member] | Consumer 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	92	92
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	22,016	18,550
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	22,016	18,550
Total loans	22,016	18,550
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	0
Obligations of State and Political Subdivisions [Member] | Commercial 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	0	0
Obligations of State and Political Subdivisions [Member] | Commercial 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	0	0
Obligations of State and Political Subdivisions [Member] | Commercial 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	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	5,053	5,867
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	11	14
Current	5,042	5,853
Total loans	5,053	5,867
Financing Receivable, Recorded Investment, 89 Days Past Due and Still Accruing	0	0
Personal Loan [Member] | Consumer 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	11	0
Personal Loan [Member] | Consumer 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	0	14
Personal Loan [Member] | Consumer 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	$ 0	$ 0

XML

Loans and Related Allowance for Loan Losses (Troubled Debt Restructurings on Financing Receivables) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 loan	Jun. 30, 2021 USD ($) loan	Jun. 30, 2020 loan
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	1	0	1	0
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 2,254		$ 2,254
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,254		2,254
Financing Receivable, Modifications, Recorded Investment	$ 1,803		$ 1,803
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	1		1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 2,254		$ 2,254
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,254		2,254
Financing Receivable, Modifications, Recorded Investment	$ 1,803		$ 1,803

XML

Loans and Related Allowance for Loan Losses (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 431,189	$ 422,661
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	374,560	372,347
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	46,813	40,626
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	9,779	9,602
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	37	86
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	70,562	73,057
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	68,672	71,983
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	794	495
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,096	579
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	153,343	122,698
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	104,197	99,828
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	42,114	15,198
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,995	7,631
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	37	41
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	41,243	61,051
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	37,048	36,332
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,635	24,644
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	560	75
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	138,972	141,438
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	137,574	139,787
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	270	289
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,128	1,317
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	45
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	22,016	18,550
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	22,016	18,550
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	5,053	5,867
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	5,053	5,867
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 0	$ 0

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Goodwill included in acquisition price				$ 9,047,000		$ 9,047,000		$ 9,047,000
Amortization of intangible assets				17,000	$ 19,000	33,000	$ 38,000
Other intangible assets				137,000		137,000		$ 158,000
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
FNBPA Bancorp, Inc [Member]
Acquisition date		Nov. 30, 2015
Goodwill included in acquisition price		$ 3,402,000
Intangible assets included in purchase price		$ 303,000
Intangible assets amortization period		10 years
Amortization of intangible assets				7,000		13,000
Liverpool Community Bank [Member]
Acquisition date	Apr. 30, 2018
Goodwill included in acquisition price	$ 3,599,000
Intangible assets included in purchase price	$ 289,000
Intangible assets amortization period	10 years
Amortization of intangible assets				$ 10,000		$ 19,000

XML

Goodwill and Other Intangible Assets (Amortization Schedule for Intangible Assets) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Apr. 30, 2018	Nov. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 17,000	$ 19,000	$ 33,000	$ 38,000
FNBPA Bancorp, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								$ 303,000
Amortization of intangible assets	7,000		13,000
FNBPA Bancorp, Inc [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								$ 303,000
Amortization of intangible assets			13,000		$ 33,000	$ 190,000
Unamortized balance	67,000		67,000		80,000
Scheduled remaining amortization expense for years ended:
December 31, 2021	14,000		14,000
December 31, 2022	22,000		22,000
December 31, 2023	16,000		16,000
December 31, 2024	10,000		10,000
December 31, 2025	5,000		5,000
Liverpool Community Bank [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date							$ 289,000
Amortization of intangible assets	10,000		19,000
Liverpool Community Bank [Member] | Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date							$ 289,000
Amortization of intangible assets			19,000		44,000	$ 84,000
Unamortized balance	142,000		142,000		$ 161,000
Scheduled remaining amortization expense for years ended:
December 31, 2021	20,000		20,000
December 31, 2022	33,000		33,000
December 31, 2023	28,000		28,000
December 31, 2024	23,000		23,000
December 31, 2025	17,000		17,000
December 31, 2026	12,000		12,000
After December 31, 2026	$ 9,000		$ 9,000

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Borrowings (Schedule of Borrowings) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Borrowings [Abstract]
Securities sold under agreements to repurchase	$ 4,027	$ 4,750
Overnight advances with FHLB	8,126	0
Short-term debt with FHLB	0	20,000
Federal Reserve Bank advances	0	27,955
Long-term debt with FHLB	35,000	35,000
Total borrowings	$ 47,153	$ 87,705

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Borrowings (Scheduled Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Scheduled Maturities
2022	$ 0
2023	0
2024	20,000
2025	15,000
2026	0
Thereafter	0
Long-term Debt, Total	$ 35,000	$ 35,000
Weighted Average Interest Rate
2022	0.00%
2023	0.00%
2024	2.42%
2025	2.41%
2026	0.00%
Thereafter	0.00%
Weighted average interest rate	2.42%

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Stock Compensation Plan (Narrative) (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Stock-based compensation expense	$ 37,000		$ 34,000	$ 72,000	$ 63,000
Weighted average exercise price	$ 17.78			$ 17.78		$ 17.78
Long-Term Incentive Plan [Member]
Shares available for grant	152,451			152,451
Long-Term Incentive Plan [Member] | Maximum [Member]
Shares authorized under share-based payment awards	300,000			300,000
Employee Stock Purchase Plan [Member]
Number of share per year in addition to prior unissued shares				5,000
Shares issued during period under employee stock purchase plans				4,944	4,459
Shares reserved for future issuance	161,676			161,676
Employee Stock Purchase Plan [Member] | Maximum [Member]
Shares authorized under share-based payment awards	250,000			250,000
Option price as a percentage of fair value				100.00%
Employee Stock Purchase Plan [Member] | Minimum [Member]
Option price as a percentage of fair value				95.00%
Employee Stock Option [Member]
Stock options awarded				0
Employee Stock Option [Member] | Long-Term Incentive Plan [Member]
Stock Options compensation costs not yet recognized	$ 0			$ 0
Award expiration period				10 years
Award expiration date				Feb. 17, 2025
Exercise price, lower range limit				$ 17.65
Exercise price, upper range limit				18.00
Weighted average exercise price	$ 17.78			$ 17.78
Weighted average remaining contractual life				2 years 3 months 10 days
Cash received from option exercises				$ 0
Employee Stock Option [Member] | Long-Term Incentive Plan [Member] | Maximum [Member]
Award vesting period				5 years
Employee Stock Option [Member] | Long-Term Incentive Plan [Member] | Minimum [Member]
Award vesting period				3 years
Restricted Stock [Member]
Number of shares awarded		8,839		8,839
Award vesting period				3 years
Restricted stocks. compensation costs not yet recognized	$ 248,000			$ 248,000
Compensation cost not yet recognized, period for recognition				3 years

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Stock Compensation Plan (Non-Vested Restricted Shares Activity) (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Jun. 30, 2021
Number of shares
Non-vested at January 1, 2021	20,175	20,175
Vested		(4,460)
Forfeited		(200)
Granted	8,839	8,839
Non-vested at June 30, 2021		24,354
Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021	$ 19.62	$ 19.62
Vested		19.80
Forfeited		17.90
Granted		16.55
Non-vested at June 30, 2021		$ 18.49

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Stock Compensation Plan (Stock Options Activity) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of year, Shares	81,547
Granted, Shares	0
Exercised, Shares	0
Forfeited, Shares	0
Outstanding at end of period, Shares	81,547
Weighted average exercise price	$ 17.78	$ 17.78
Granted, Weighted average exercise price	0
Exercised, Weighted average exercise price	0
Forfeited, Weighted average exercise price	$ 0

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Fair Value Measurements (Fair Value Measurements by Level of Valuation Inputs) (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	$ 342,030,000	$ 286,415,000
Other real estate owned	110,000	0
Equity securities	1,178,000	1,091,000
Impaired loans	6,773,000	5,189,000
Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	40,999,000	22,949,000
Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	8,192,000	8,282,000
Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	28,209,000	11,523,000
Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	342,030,000	286,415,000
Interest rate swaps, assets	381,000
Interest rate swaps, liabilities		57,000
Fair Value, Measurements, Recurring [Member] | Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	40,999,000	22,949,000
Fair Value, Measurements, Recurring [Member] | Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	8,192,000	8,282,000
Fair Value, Measurements, Recurring [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	1,178,000	1,091,000
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	28,209,000	11,523,000
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	264,630,000	243,661,000
Fair Value, Measurements, Recurring [Member] | (Level 1) Quoted Prices in Active Markets for Identical Assets or Liabilities | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	1,178,000	1,091,000
Fair Value, Measurements, Recurring [Member] | (Level 2) Significant Other Observable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	337,530,000	284,415,000
Interest rate swaps, assets	381,000
Interest rate swaps, liabilities		57,000
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]
Debt securities available for sale	40,999,000	22,949,000
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]
Debt securities available for sale	8,192,000	8,282,000
Fair Value, Measurements, Recurring [Member] | (Level 2) Significant Other Observable Inputs [Member] | Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	23,709,000	9,523,000
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]
Debt securities available for sale	264,630,000	243,661,000
Fair Value, Measurements, Recurring [Member] | (Level 3) Significant Other Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	4,500,000	2,000,000
Fair Value, Measurements, Recurring [Member] | (Level 3) Significant Other Unobservable Inputs [Member] | Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	4,500,000	2,000,000
Fair Value, Measurements, Recurring [Member] | Mortgage Servicing Rights [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	137,000	158,000
Fair Value, Measurements, Recurring [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	137,000	158,000
Fair Value Measurements, Non-Recurring Basis [Member] | Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans	37,000	84,000
Fair Value Measurements, 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	$ 37,000	$ 84,000

XML

Fair Value Measurements (Carrying Amounts and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financial assets:
Interest bearing deposits with banks	$ 1,020	$ 19,753
Interest bearing time deposits with banks	735	735
Restricted investment in bank stock	2,885	3,423
Financial liabilities:
Deposits: Non-interest bearing	179,363	168,115
Deposits: Interest bearing	529,176	454,751
Short-term borrowings	12,153	24,750
Federal Reserve Bank advances	0	27,955
Long-term debt	35,000	35,000
Other interest bearing liabilities	1,572	1,584
Carrying Value [Member]
Financial assets:
Cash and due from banks	17,165	11,868
Interest bearing deposits with banks	1,020	19,753
Interest bearing time deposits with banks	735	735
Securities	343,208	287,506
Restricted investment in bank stock	2,885	3,423
Loans, net of allowance for loan losses	427,283	418,567
Interest rate swaps, assets	381	0
Accrued interest receivable	2,230	2,105
Financial liabilities:
Deposits: Non-interest bearing	179,363	168,115
Deposits: Interest bearing	529,176	454,751
Securities sold under agreements to repurchase	4,027	4,750
Short-term borrowings	0	20,000
Federal Reserve Bank advances	0	27,955
Long-term debt	35,000	35,000
Interest rate swaps, liabilities	0	57
Other interest bearing liabilities	1,572	1,584
Accrued interest payable	333	448
Off-balance sheet financial instruments:
Commitments to extend credit	0	0
Letters of credit	0	0
Fair Value [Member]
Financial assets:
Cash and due from banks	17,165	11,868
Interest bearing deposits with banks	1,020	19,753
Interest bearing time deposits with banks	735	735
Securities	343,208	287,506
Loans, net of allowance for loan losses	428,351	424,791
Interest rate swaps, assets	381	0
Accrued interest receivable	2,230	2,105
Financial liabilities:
Deposits: Non-interest bearing	179,363	168,115
Deposits: Interest bearing	532,879	459,224
Short-term borrowings	20,002	20,002
Federal Reserve Bank advances	0	27,955
Long-term debt	36,594	37,365
Interest rate swaps, liabilities	0	57
Other interest bearing liabilities	1,572	1,585
Accrued interest payable	333	448
Off-balance sheet financial instruments:
Commitments to extend credit	0	0
Letters of credit	$ 0	$ 0

XML

Fair Value Measurements (Reconciliation of Investment Securities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value Measurement [Abstract]
Beginning balance	$ 2,000	$ 0	$ 2,000	$ 0
Total gains (loss) included in OCI	0	0	0	0
Purchases	2,500	0	2,500	0
Principal payments and other	0	0	0	0
Sales	0	0	0	0
Ending balance	$ 4,500	$ 0	$ 4,500	$ 0

XML

Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	$ 735	$ 735
Deposits: Interest bearing	529,176	454,751
Long-term debt	35,000	35,000
Other interest bearing liabilities	1,572	1,584
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	735	735
Loans, net of allowance for loan losses	427,283	418,567
Deposits: Interest bearing	529,176	454,751
Long-term debt	35,000	35,000
Other interest bearing liabilities	1,572	1,584
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	735	735
Loans, net of allowance for loan losses	428,351	424,791
Deposits: Interest bearing	532,879	459,224
Long-term debt	36,594	37,365
Other interest bearing liabilities	1,572	1,585
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	735	735
Deposits: Interest bearing	532,879	459,224
Long-term debt	36,594	37,365
Other interest bearing liabilities	1,572	1,585
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	$ 428,351	$ 424,791

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Commitments, Contingent Liabilities And Guarantees (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
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	$ 109,410,000	$ 95,089,000
Outstanding Letters of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	3,991,000	1,541,000
Performance Letters of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	2,379,000	2,365,000
Commercial Letter Of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	$ 7,475,000	$ 6,975,000

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Revenue Recognition (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Asset Management Services [Member]
Trust and Estate fees recognized	$ 92,000	$ 86,000	$ 184,000	$ 171,000
Estate Management Services [Member]
Trust and Estate fees recognized	$ 23,000	$ 5,000	$ 43,000	$ 33,000
Percentage of total estate fee recognized when all estate assets are collected and debts paid			25.00%
Percentage of total estate fee recognized when the inheritance tax return is filed			50.00%
Percentage of total estate fee recognized when the first and final account is confirmed			25.00%

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Derivatives (Narrative) (Details) - Designated as Hedging Instrument [Member] - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Notional Amount	$ 40,000,000	$ 40,000,000
Interest rate swaps, ineffectiveness	no amount of ineffectiveness have been included in net income

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Derivatives (Derivatives Recorded on the Consolidated Statements of Condition) (Details) - Designated as Hedging Instrument [Member] - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Notional Amount	$ 40,000,000	$ 40,000,000
Interest Rate Swap Three Months Brokered Deposit [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	20,000,000	0
Fair Value Asset (Liability)	(64,000)	0
Interest Rate Swap Three Months FHLB Advance [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	0	20,000,000
Fair Value Asset (Liability)	0	(123,000)
Interest Rate Swap Forward Long Term FHLB Advances [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	20,000,000	20,000,000
Fair Value Asset (Liability)	$ 445,000	$ 66,000

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Derivatives (Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivatives		$ 301	$ 184	$ (411)	$ 184
Amount reclassified from AOCI into income (expense)	[1],[2]	$ (22)	$ 22	(26)	$ 22
Interest Rate Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivatives				411		$ (48)
Amount reclassified from AOCI into income (expense)				$ 26		$ (9)

[1] Amounts are included in interest expense on short-term borrowings and repurchase agreements on the Consolidated Statements of Income.

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

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Derivatives (Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Income) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)	[1],[2]	$ (22)	$ 22	$ (26)	$ 22
Interest Income (Expense) [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)		(22)	22	(26)	22
Total		$ (22)	$ 22	$ (26)	$ 22

[1] Amounts are included in interest expense on short-term borrowings and repurchase agreements on the Consolidated Statements of Income.

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

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Subsequent Events (Narrative) (Details) - Subsequent Event [Member]	Jul. 20, 2021 $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Jul. 20, 2021
Dividends payable per share	$ 0.22
Dividends payable, date of record	Aug. 16, 2021
Dividends payable, date to be paid	Sep. 01, 2021