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, 2022
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 12, 2022
Common Stock ($1.00 par value)	5,003,059 shares

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of June 30, 2022 (Unaudited) and December 31, 2021	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Not applicable.
Item 4.	Controls and Procedures	51
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
	Signatures	54

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, 2022		December 31, 2021
ASSETS
Cash and due from banks	$	14,435	$	12,928
Interest bearing deposits with banks		8,239		598
Cash and cash equivalents		22,674		13,526
Interest bearing time deposits with banks		245		735
Equity securities		1,044		1,124
Debt securities available for sale		303,627		335,424
Restricted investment in bank stock		2,587		2,116
Total loans		441,079		418,303
Less: Allowance for loan losses		(3,813)		(3,508)
Total loans, net of allowance for loan losses		437,266		414,795
Premises and equipment, net		8,246		8,371
Other real estate owned		—		87
Bank owned life insurance and annuities		16,881		16,852
Investment in low income housing partnerships		1,906		2,306
Core deposit and other intangible assets		148		175
Goodwill		9,047		9,047
Mortgage servicing rights		101		120
Accrued interest receivable and other assets		13,891		5,840
Total assets	$	817,663	$	810,518
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	196,322	$	182,022
Interest bearing		523,535		526,425
Total deposits		719,857		708,447
Short-term borrowings and repurchase agreements		25,029		4,227
Long-term debt		20,000		20,000
Other interest bearing liabilities		1,021		1,568
Accrued interest payable and other liabilities		5,331		4,986
Total liabilities		771,238		739,228
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, 2022 and December 31, 2021; Outstanding - 5,003,059 shares at June 30, 2022 and 4,988,542 shares at December 31, 2021		5,151		5,151
Surplus		24,926		25,008
Retained earnings		49,196		47,298
Accumulated other comprehensive loss		(30,310)		(3,365)
Cost of common stock in Treasury: 148,220 shares at June 30, 2022; 162,737 shares at December 31, 2021		(2,538)		(2,802)
Total stockholders’ equity		46,425		71,290
Total liabilities and stockholders’ equity	$	817,663	$	810,518

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,
	2022		2021		2022		2021
Interest and dividend income:
Loans, including fees	$	5,052	$	4,794	$	10,160	$	9,571
Taxable securities		1,609		1,187		2,986		2,193
Tax-exempt securities		40		38		80		76
Other interest income		18		6		25		11
Total interest income		6,719		6,025		13,251		11,851
Interest expense:
Deposits		550		597		1,012		1,216
Short-term borrowings and repurchase agreements		22		21		35		53
FRB advances		—		—		—		18
Long-term debt		118		213		234		425
Other interest bearing liabilities		1		1		2		3
Total interest expense		691		832		1,283		1,715
Net interest income		6,028		5,193		11,968		10,136
Provision for loan losses		222		(200)		250		(279)
Net interest income after provision for loan losses		5,806		5,393		11,718		10,415
Non-interest income:
Customer service fees		362		320		719		645
Debit card fee income		435		451		845		864
Earnings on bank-owned life insurance and annuities		59		68		111		122
Trust fees		95		115		250		227
Commissions from sales of non-deposit products		112		105		216		185
Fees derived from loan activity		102		92		232		196
Mortgage banking income		6		10		13		18
Gain (loss) on sales and calls of securities		(1,074)		54		(1,074)		58
Change in value of equity securities		(57)		8		(80)		101
Gain from life insurance proceeds		51		—		51		—
Other non-interest income		1,291		79		1,375		158
Total non-interest income		1,382		1,302		2,658		2,574
Non-interest expense:
Employee compensation expense		2,213		2,062		4,235		4,031
Employee benefits		613		614		1,314		1,159
Occupancy		319		312		650		642
Equipment		184		192		359		381
Data processing expense		650		673		1,229		1,256
Professional fees		188		195		364		383
Taxes, other than income		133		119		264		243
FDIC Insurance premiums		72		70		164		151
Gain on other real estate owned		—		—		(7)		(49)
Amortization of intangible assets		14		17		27		33
Amortization of investment in low-income housing partnerships		200		200		400		400
Other non-interest expense		442		413		893		825
Total non-interest expense		5,028		4,867		9,892		9,455
Income before income taxes		2,160		1,828		4,484		3,534
Income tax provision		177		89		386		160
Net income	$	1,983	$	1,739	$	4,098	$	3,374
Earnings per share
Basic	$	0.40	$	0.35	$	0.82	$	0.67
Diluted	$	0.40	$	0.35	$	0.82	$	0.67

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,
	2022						2021
	Pre-Tax		Tax		Net of Tax		Pre-Tax		Tax		Net of Tax
	Amount		Effect		Amount		Amount		Effect		Amount
Net income	$	2,160	$	(177)	$	1,983	$	1,828	$	(89)	$	1,739
Other comprehensive income (loss):
Available for sale securities:
Unrealized holding gains (losses) arising during the period		(14,634)		3,073		(11,561)		1,112		(233)		879
Reclassification adjustment for (gains) losses included in net income (1) (3)		1,074		(226)		848		(54)		11		(43)
Unrealized gains (losses) on cash flow hedge		460		(97)		363		(301)		64		(237)
Reclassification adjustment for (gains) losses included in net income (2) (3)		(1,242)		261		(981)		22		(5)		17
Other comprehensive income (loss)		(14,342)		3,011		(11,331)		779		(163)		616
Total comprehensive income (loss)	$	(12,182)	$	2,834	$	(9,348)	$	2,607	$	(252)	$	2,355

(Dollars in thousands)	Six Months Ended June 30,
	2022						2021
	Pre-Tax		Tax		Net-of-Tax		Pre-Tax		Tax		Net-of-Tax
	Amount		Effect		Amount		Amount		Effect		Amount
Net income	$	4,484	$	(386)	$	4,098	$	3,534	$	(160)	$	3,374
Other comprehensive loss:
Available for sale securities:
Unrealized holding losses arising during the period		(35,065)		7,364		(27,701)		(4,799)		1,008		(3,791)
Reclassification adjustment for (gains) losses included in net income (1) (3)		1,074		(226)		848		(58)		12		(46)
Unrealized gains on cash flow hedge		1,114		(234)		880		411		(86)		325
Reclassification adjustment for (gains) losses included in net income (2) (3)		(1,231)		259		(972)		26		(6)		20
Other comprehensive loss		(34,108)		7,163		(26,945)		(4,420)		928		(3,492)
Total comprehensive loss	$	(29,624)	$	6,777	$	(22,847)	$	(886)	$	768	$	(118)

(1) Amounts are included in gain (loss) 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 and in other non-interest income 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, 2022
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Loss		Stock		Equity
Balance, April 1, 2022	4,998,858	$	5,151	$	24,864	$	48,313	$	(18,979)	$	(2,624)	$	56,725
Net income							1,983						1,983
Other comprehensive loss									(11,331)				(11,331)
Cash dividends at $0.22 per share							(1,100)						(1,100)
Stock-based compensation					79								79
Purchase of treasury stock	(825)												—
Treasury stock issued for stock plans	5,026				(17)						86		69
Balance, June 30, 2022	5,003,059	$	5,151	$	24,926	$	49,196	$	(30,310)	$	(2,538)	$	46,425

	Six months ended June 30, 2022
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Loss		Stock		Equity
Balance, January 1, 2022	4,988,542		5,151		25,008		47,298		(3,365)		(2,802)	$	71,290
Net income							4,098						4,098
Other comprehensive loss									(26,945)				(26,945)
Cash dividends at $0.44 per share							(2,200)						(2,200)
Stock-based compensation					116								116
Purchase of treasury stock	(995)										(3)		(3)
Treasury stock issued for stock plans	15,512				(198)						267		69
Balance, June 30, 2022	5,003,059	$	5,151	$	24,926	$	49,196	$	(30,310)	$	(2,538)	$	46,425

6

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

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,
	2022		2021
Operating activities:
Net income	$	4,098	$	3,374
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		250		(279)
Depreciation		321		372
Net amortization of securities premiums		275		733
Net amortization of loan origination fees		381		346
Deferred net loan origination costs		(280)		(296)
Amortization of intangibles		27		33
Amortization of investment in low income housing partnerships		400		400
Net amortization of purchase fair value adjustments		(56)		(92)
Net realized (gain) loss on sales and calls of available for sale securities		1,074		(58)
Change in value of equity securities		80		(101)
Net gain on other real estate owned		(7)		(49)
Earnings on bank owned life insurance and annuities		(111)		(122)
Deferred income tax benefit		(59)		(151)
Stock-based compensation expense		116		72
Proceeds from mortgage loans sold to others		32		38
Mortgage banking income		(13)		(18)
Gain from life insurance proceeds		(51)		—
Increase in accrued interest receivable and other assets		(946)		(576)
Decrease in accrued interest payable and other liabilities		(202)		(206)
Net cash provided by operating activities		5,329		3,420
Investing activities:
Purchases of:
Securities available for sale		(40,377)		(136,852)
FHLB stock		(471)		—
Premises and equipment		(196)		(104)
Bank owned life insurance and annuities		(13)		(18)
Proceeds from:
Sales of debt securities available for sale		17,134		32,869
Maturities of and principal repayments on securities available for sale		19,700		42,849
Redemption of FHLB stock		—		538
Life insurance claims		146		—
Sale of other real estate owned		94		—
Net decrease in interest bearing time deposits with banks		490		—
Net increase in loans		(22,766)		(8,453)
Net cash used in investing activities		(26,259)		(69,171)
Financing activities:
Net increase in deposits		11,410		85,669
Net increase (decrease) in short-term borrowings and securities sold under agreements to repurchase		20,802		(12,597)
Repayment of FRB advances		—		(27,955)
Cash dividends		(2,200)		(2,204)
Purchase of treasury stock		(3)		(675)
Treasury stock issued for employee stock plans		69		77
Net cash provided by financing activities		30,078		42,315
Net increase (decrease) in cash and cash equivalents		9,148		(23,436)
Cash and cash equivalents at beginning of year		13,526		41,621
Cash and cash equivalents at end of period	$	22,674	$	18,185
Supplemental information:
Interest paid	$	1,320	$	1,830
Income tax paid		250		75
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 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. 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, 2022 are not necessarily indicative of the results that can be expected for the year ending December 31, 2022. 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, 2021.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2022 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. 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. The Company’s CECL transition team started running parallel calculations between CECL and the incurred loss model during the second quarter to evaluate the impact of the amended guidance on its consolidated financial statements and disclosures. The team 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 will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption.

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures

Issued: March 2022

Summary: ASU 2022-02 eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have adopted Topic 326 “Financial Instruments – Credit Losses”. All other creditors must continue to apply the TDR accounting model until they adopt Topic 326. Due to the removal of the TDR accounting model, all loan modifications will now be accounted for under the general loan modification guidance in Subtopic 310-20. In addition, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. Vintage disclosure requirements will also be required to prospectively disclose current period gross write-off information by vintage (i.e., year of origination) for public business entities within the scope of the Topic 326.

Effective Date: Effective upon adoption of the amendments in ASU 2016-13 for entities that have not yet adopted ASU 2016-13. Early adoption is not permitted before adoption of ASU 2016-13. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities that adopted ASU 2016-13. Entities that have adopted Topic 326 may early adopt ASU 2022-02 and are permitted to do so on a partial basis. The Company is in the process of evaluating the amendments but does not expect the adoption of this ASU will have a material impact on the Corporation's financial statements.

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

(Dollars in thousands)
June 30, 2022	Gains on Cash Flow Hedges		Unrealized Losses on Available for Sale Securities		Total
Beginning balance, December 31, 2021	$	427	$	(3,792)	$	(3,365)
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		880		(27,701)		(26,821)
Amounts reclassified from accumulated other comprehensive income (loss)		(972)		848		(124)
Net current period other comprehensive loss		(92)		(26,853)		(26,945)
Ending balance, June 30, 2022	$	335	$	(30,645)	$	(30,310)

10

(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

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 dilutive effect on EPS 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, increasing the total number of shares outstanding. 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,
	2022		2021
Net income	$	1,983	$	1,739
Weighted-average common shares outstanding		5,000		5,008
Basic earnings per share		0.40		0.35
Weighted-average common shares outstanding	$	5,000	$	5,008
Common stock equivalents due to effect of stock options		8		8
Total weighted-average common shares and equivalents	$	5,008	$	5,016
Diluted earnings per share	$	0.40	$	0.35
Anti-dilutive stock options outstanding		—		—

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2022		2021
Net income	$	4,098	$	3,374
Weighted-average common shares outstanding		4,997		5,013
Basic earnings per share		0.82		0.67
Weighted-average common shares outstanding	$	4,997	$	5,013
Common stock equivalents due to effect of stock options		10		8
Total weighted-average common shares and equivalents	$	5,007	$	5,021
Diluted earnings per share	$	0.82	$	0.67
Anti-dilutive stock options outstanding		2		2

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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, 2022, the Company had $1.0 million in equity securities recorded at fair value and $1.1 million in equity securities were recorded at fair value at December 31, 2021. The Company recorded net losses of $57,000 and $80,000 during the respective three and six months ended June 30, 2022, and net gains of $8,000 and $101,000 during the respective three and six months ended June 30, 2021, due to changes in the fair value of the Company’s portfolio of 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 14% of the investment portfolio), mortgage-backed securities issued by Government-sponsored entities and backed by residential mortgages (approximately 76%), corporate debt securities (approximately 7%) and municipal bonds (approximately 3%) as of June 30, 2022. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates within 5 years.

At each of June 30, 2022 and December 31, 2021, the Company had holdings of securities from two issuers in excess of 10% of stockholders’ equity, other than the U.S. Government and its agencies. Holdings in Federal Farm Credit Bank and Pennsylvania Housing Finance securities had fair values of $11.4 million and $6.7 million, respectively, as of June 30, 2022, and $12.4 million and $7.5 million, respectively, as of December 31, 2021.

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The amortized cost and fair value of debt securities available for sale as of June 30, 2022 and December 31, 2021, 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, 2022
					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 one year but within five years	$	17,947	$	16,447	$	—	$	(1,500)
After five years but within ten years		28,912		25,400		—		(3,512)
		46,859		41,847		—		(5,012)
Obligations of state and political subdivisions
After one year but within five years		3,804		3,787		8		(25)
After five years but within ten years		3,871		3,281		—		(590)
After ten years		1,501		1,231		—		(270)
		9,176		8,299		8		(885)
Corporate debt securities
After one year but within five years		4,704		4,381		—		(323)
After five years but within ten years		19,516		18,188		14		(1,342)
		24,220		22,569		14		(1,665)
Mortgage-backed securities		262,163		230,912		6		(31,257)
Total	$	342,418	$	303,627	$	28	$	(38,819)

(Dollars in thousands)	December 31, 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 one year but within five years	$	6,000	$	5,807	$	—	$	(193)
After five years but within ten years		35,881		34,719		—		(1,162)
		41,881		40,526		—		(1,355)
Obligations of state and political subdivisions
After one year but within five years		3,810		3,937		129		(2)
After five years but within ten years		1,246		1,221		—		(25)
After ten years		4,118		4,062		—		(56)
		9,174		9,220		129		(83)
Corporate debt securities
After one year but within five years		2,000		1,972		—		(28)
After five years but within ten years		32,408		33,024		805		(189)
		34,408		34,996		805		(217)
Mortgage-backed securities		254,762		250,682		812		(4,892)
Total	$	340,225	$	335,424	$	1,746	$	(6,547)

Certain obligations of the U.S. Government and state and political subdivisions, as well as mortgage-backed securities 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 $87.6 million and $82.7 million on June 30, 2022 and December 31, 2021, respectively.

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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, 2022 and 2021.

(Dollars in thousands)	Six Months Ended
	June 30,
	2022		2021
Gross proceeds from sales and calls of securities	$	17,134	$	32,869
Securities available for sale:
Gross realized gains from sold and called securities	$	25	$	130
Gross realized losses from sold and called securities		(1,099)		(72)
Net gains (losses) from sales and calls of securities	$	(1,074)	$	58

The Bank sold $18.2 million, par value, of subordinated debt of unconsolidated financial institutions, classified as corporate debt securities, at a loss of $1.1 million during the second quarter of 2022. Management’s intent with respect to these securities changed in the second quarter due to the adverse regulatory impact of substantial (relative to capital) holdings of subordinated debt.

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, 2022 and December 31, 2021:

	Unrealized Losses at June 30, 2022
	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	2	$	7,237	$	(503)	7	$	34,610	$	(4,509)	9	$	41,847	$	(5,012)
Obligations of state and political subdivisions	8		5,758		(823)	1		472		(62)	9		6,230		(885)
Corporate debt securities	11		19,539		(1,665)	—		—		—	11		19,539		(1,665)
Mortgage-backed securities	61		145,673		(17,524)	21		80,244		(13,733)	82		225,917		(31,257)
Total temporarily impaired securities	82	$	178,207	$	(20,515)	29	$	115,326	$	(18,304)	111	$	293,533	$	(38,819)

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	Unrealized Losses at December 31, 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	5	$	22,130	$	(752)	3	$	18,396	$	(603)	8	$	40,526	$	(1,355)
Obligations of state and political subdivisions	7		5,781		(83)	—		—		—	7		5,781		(83)
Corporate debt securities	6		10,144		(217)	—		—		—	6		10,144		(217)
Mortgage-backed securities	36		182,328		(3,504)	5		26,443		(1,388)	41		208,771		(4,892)
Total temporarily impaired securities	54	$	220,383	$	(4,556)	8	$	44,839	$	(1,991)	62	$	265,222	$	(6,547)

At June 30, 2022, nine obligations of U.S. Government sponsored enterprises, nine obligations of state and political subdivisions, eleven corporate debt securities, and eighty-two mortgage-backed securities had unrealized losses. Twenty-nine 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, 2022 or December 31, 2021, 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 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. Should the Company no longer intend to hold loans to maturity based on asset/liability management practices, the Company transfers loans from its portfolio to held for sale at fair value. Any write-down recorded upon transfer is charged against the allowance for loan losses. Any write-downs recorded after the initial transfers are recorded as a charge to other non-interest expense. Gains or losses recognized upon sale are included in gains on sales of loans, which is a component of non-interest income.

Loans Held for Sale

The Company has originated residential mortgage loans with the intent to sell. These individual loans are normally 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. Most 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.

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

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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.

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 more than the 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 began on April 3, 2020 and provided economic relief to small businesses nationwide that were adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. It also provided for forgiveness of the PPP loans in an amount up to the full principal amount of qualifying loans. The Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”) extended the covered period for loan forgiveness to 24 weeks and amended the requirements regarding forgiveness of PPP loans by reducing the portion of PPP loan proceeds that must be used for payroll costs to be eligible for full 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. The 2021 Consolidated Appropriations Act provided several amendments to the PPP, including additional funding for first and second draws of PPP loans up to May 31, 2021.  

The Company participated in the PPP and funded 870 PPP loans totaling $51.0 million. PPP loans are included in the commercial, financial and agricultural loan class. As of June 30, 2022, thirty PPP loans, totaling $1.6 million, remained outstanding with related unamortized net fees of $62,000. As of December 31, 2021, 194 PPP loans, totaling $10.1 million remained outstanding with related unamortized net fees of $485,000.

20

Loan Portfolio Classification

The following table presents the loan portfolio by class at June 30, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Commercial, financial and agricultural	$	60,043	$	62,639
Real estate - commercial		170,385		159,806
Real estate - construction		53,221		43,281
Real estate - mortgage		133,197		131,754
Obligations of states and political subdivisions		20,285		16,323
Personal		3,948		4,500
Total	$	441,079	$	418,303

The following table summarizes the activity in the allowance for loan losses by loan class, for the three and six months ended June 30, 2022 and 2021.

(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, 2022
Balance, beginning of period	$	259	$	836	$	1,170	$	47	$	1,228	$	36	$	3,576
Provision for loan losses		27		98		38		9		49		1		222
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		—		—		—		—		17		1		18
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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
Six Months Ended
June 30, 2022
Balance, beginning of period	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508
Provision for loan losses		35		(86)		324		11		(33)		(1)		250
Charge-offs		—		—		—		—		(1)		(5)		(6)
Recoveries		—		—		—		—		59		2		61
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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

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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, 2022 and December 31, 2021.

(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, 2022
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,220	$	—	$	—	$	372	$	—	$	5,592
Acquired with credit deterioration		—		303		—		—		439		—		742
Collectively evaluated for impairment		60,043		164,862		53,221		20,285		132,386		3,948		434,745
	$	60,043	$	170,385	$	53,221	$	20,285	$	133,197	$	3,948	$	441,079
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		286		934		1,208		56		1,294		35		3,813
	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
December 31, 2021
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,262	$	—	$	—	$	437	$	—	$	5,699
Acquired with credit deterioration		—		357		—		—		481		—		838
Collectively evaluated for impairment		62,639		154,187		43,281		16,323		130,836		4,500		411,766
	$	62,639	$	159,806	$	43,281	$	16,323	$	131,754	$	4,500	$	418,303
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		251		1,020		884		45		1,267		39		3,506
	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508

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.  There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2022. As of December 31, 2021, there was $85,000 in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process. 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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The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2022 and December 31, 2021. One loan was determined to have insufficient collateral as of December 31, 2021, requiring the establishment of a specific reserve of $2,000.

(Dollars in thousands)	As of June 30, 2022						As of December 31, 2021
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate – construction		—		—		—		—		649		—
Real estate - mortgage		372		1,041		—		368		1,054		—
Acquired with credit deterioration		439		646		—		481		660		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	69	$	68	$	2
Total:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate - construction		—		—		—		—		649		—
Real estate – mortgage		372		1,041		—		437		1,122		2
Acquired with credit deterioration		439		646		—		481		660		—
	$	6,334	$	7,714	$	—	$	6,537	$	8,517	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021 are summarized in the table below.

(Dollars in thousands)	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
Total:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
	$	6,442	$	70	$	10	$	5,597	$	102	$	10

23

(Dollars in thousands)	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
Total:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
	$	6,476	$	136	$	20	$	4,527	$	118	$	20

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, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Non-accrual loans:
Real estate - mortgage	$	119	$	141
Total	$	119	$	141

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The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. 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, 2022 and December 31, 2021, respectively.

													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, 2022
Commercial, financial and agricultural	$	60,017	$	26	$	—	$	—	$	26	$	60,043	$	—
Real estate - commercial		170,072		—		10		—		10		170,082		—
Real estate - construction		53,032		—		189		—		189		53,221		—
Real estate - mortgage		132,005		369		384		—		753		132,758		—
Obligations of states and political subdivisions		20,285		—		—		—		—		20,285		—
Personal		3,907		36		5		—		41		3,948		—
Subtotal		439,318		431		588		—		1,019		440,337		—
Loans acquired with credit deterioration
Real estate - commercial		303		—		—		—		—		303		—
Real estate - mortgage		439		—		—		—		—		439		—
Subtotal		742		—		—		—		—		742		—
	$	440,060	$	431	$	588	$	—	$	1,019	$	441,079	$	—

													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, 2021
Commercial, financial and agricultural	$	62,628	$	11	$	—	$	—	$	11	$	62,639	$	—
Real estate - commercial		159,396		53		—		—		53		159,449		—
Real estate - construction		43,281		—		—		—		—		43,281		—
Real estate - mortgage		130,242		440		488		103		1,031		131,273		85
Obligations of states and political subdivisions		16,323		—		—		—		—		16,323		—
Personal		4,492		8		—		—		8		4,500		—
Subtotal		416,362		512		488		103		1,103		417,465		85
Loans acquired with credit deterioration
Real estate - commercial		357		—		—		—		—		357		—
Real estate - mortgage		481		—		—		—		—		481		—
Subtotal		838		—		—		—		—		838		—
	$	417,200	$	512	$	488	$	103	$	1,103	$	418,303	$	85

(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 and/or maturity dates that have been extended.

As of June 30, 2022, the Company had a recorded investment in troubled debt restructurings of $5.5 million with no specific reserves or 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, 2022 or 2021. On December 31, 2021, the Company had a recorded investment in troubled debt restructurings of $5.6 million with no specific reserves or any charge-offs related to the troubled debt restructured loans.

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, 2022.

(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

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 more than $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

26

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, based on 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, 2022 and December 31, 2021, respectively.

(Dollars in thousands)			Special
As of June 30, 2022	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	59,345	$	—	$	698	$	—	$	60,043
Real estate - commercial		152,618		12,132		5,635		—		170,385
Real estate - construction		51,780		—		1,441		—		53,221
Real estate - mortgage		131,932		444		821		—		133,197
Obligations of states and political subdivisions		20,285		—		—		—		20,285
Personal		3,948		—		—		—		3,948
Total	$	419,908	$	12,576	$	8,595	$	—	$	441,079

(Dollars in thousands)			Special
As of December 31, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	61,372	$	577	$	690	$	—	$	62,639
Real estate - commercial		137,684		16,429		5,693		—		159,806
Real estate - construction		42,394		—		887		—		43,281
Real estate - mortgage		130,584		252		918		—		131,754
Obligations of states and political subdivisions		16,323		—		—		—		16,323
Personal		4,500		—		—		—		4,500
Total	$	392,857	$	17,258	$	8,188	$	—	$	418,303

The decline in special mention real estate – commercial loans as of June 30, 2022 compared to December 31, 2021 was largely due to a $2.9 million payoff of a special mention loan in the first quarter of 2022, as well as paydowns and the upgrade of a loan relationship to a pass rating.

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 $2.0 million. On November 30, 2015, the Company acquired FNBPA Bancorp, Inc. and, as a result, carries goodwill of $3.4 million 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 $3.6 million relating to the acquisition.

Total goodwill at June 30, 2022 and December 31, 2021 was $9.0 million. Goodwill is not amortized but is tested annually for impairment as of December 31, or more frequently if certain events occur which might indicate goodwill has been impaired. There was no goodwill impairment during the six months ended June 30, 2022 or June 30, 2021.

27

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, 2022  was $5,000 and $11,000, respectively, and $7,000 and $13,000, respectively, for the three and six months ended June 30, 2021.

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, 2022 was $8,000 and $16,000, respectively, and $10,000 and $19,000, respectively, for the three and six months ended June 30, 2021.

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, 2021		223		128
Amortization expense recorded in the twelve months
ended December 31, 2021		27		39
Unamortized balance as of December 31, 2021		53		122
Amortization expense recorded in the
six months ended June 30, 2022		11		16
Unamortized balance as of June 30, 2022	$	42	$	106
Scheduled remaining amortization expense for years ended:
December 31, 2022	$	11	$	17
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
Thereafter		—		9

8. BORROWINGS

Borrowings consisted of the following as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Securities sold under agreements to repurchase	$	5,029	$	4,227
Short-term debt with FHLB		20,000		—
Long-term debt with FHLB		20,000		20,000
	$	45,029	$	24,227

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Long-term debt is comprised only of Federal Home Loan Bank (“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, 2022.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		15,000	2.29
2025		5,000	2.41
2026		—	—
Thereafter		—	—
	$	20,000	2.32	%

9. STOCK COMPENSATION PLAN

Long-Term Incentive Plan

The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”); the Plan 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. The Plan expanded the types of awards authorized by the 2011 Plan to include, among others, restricted stock. Under the provisions of the Plan, 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 163,990 shares remained available for grant as of June 30, 2022. 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.

Through the sixth months ended June 30, 2022, 10,486 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, 2022, there was $199,000 of unrecognized compensation cost related to all non-vested restricted stock awards. This cost is expected to be recognized over the vesting period through February 2025.

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 $79,000 and $116,000 for the three and six months ended June 30, 2022, and $37,000 and $72,000 for the three and six months ended June 30, 2021.

The following table presents a summary of the status of the Company’s non-vested restricted stock awards as of June 30, 2022, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2022	22,789	$	18.48
Vested	(11,475)		18.72
Forfeited	(825)		17.32
Granted	10,486		15.90
Non-vested at June 30, 2022	20,975	$	17.10

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No stock options were awarded during the six months ended June 30, 2022. 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 may not be less than the fair market value of the stock on the day the option was granted, and 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, 2022 have exercise prices between $17.65 and $17.80, with a weighted average exercise price of $17.74 and a weighted average remaining contractual life of 1.91 years.

As of June 30, 2022, there was no unrecognized compensation cost related to options granted under the Plan and no options were exercised under the Plan during the period.

A summary of the status of the outstanding stock options as of June 30, 2022, and changes during the period then ended, is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	71,947	$	17.78
Granted	—		—
Exercised	—		—
Expired	(11,600)		18.00
Outstanding at end of year	60,347	$	17.74

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 5,026 and 4,944 shares issued from treasury under this plan during the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, there were 156,650 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 yield 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, 2022 and December 31, 2021 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no assets measured at fair value on a non-recurring basis as of June 30, 2022 or December 31, 2021.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2022	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	$	—	$	41,847	$	—	$	41,847
Obligations of state and political subdivisions		—		8,299		—		8,299
Corporate debt securities		—		14,781		7,788		22,569
Mortgage-backed securities		—		230,912		—		230,912
Total debt securities available for sale	$	—	$	295,839	$	7,788	$	303,627
Equity securities	$	1,044	$	—	$	—	$	1,044
Mortgage servicing rights	$	—	$	—	$	101	$	101
Interest rate swaps	$	—	$	424	$	—	$	424

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 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	$	—	$	40,526	$	—	$	40,526
Obligations of state and political subdivisions		—		9,220		—		9,220
Corporate debt securities		—		30,476		4,520		34,996
Mortgage-backed securities		—		250,682		—		250,682
Total debt securities available for sale	$	—	$	330,904	$	4,520	$	335,424
Equity securities	$	1,124	$	—	$	—	$	1,124
Mortgage servicing rights	$	—	$	—	$	120	$	120
Interest rate swaps	$	—	$	541	$	—	$	541

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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 month periods ended June 30, 2022 and 2021.

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Investment Securities:
Beginning balance	$	4,270	$	2,000	$	4,520	$	2,000
Total gains (loss) included in OCI		(482)		—		(732)		—
Purchases		4,000		2,500		4,000		2,500
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	7,788	$	4,500	$	7,788	$	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 after 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, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	14,435	$	14,435	$	12,928	$	12,928
Interest bearing deposits with banks		8,239		8,239		598		598
Interest bearing time deposits with banks		245		245		735		735
Securities		304,671		304,671		336,548		336,548
Restricted investment in bank stock		2,587		N/A		2,116		N/A
Loans, net of allowance for loan losses		437,266		437,485		414,795		414,984
Interest rate swaps		424		424		541		541
Accrued interest receivable		1,907		1,907		1,814		1,814
Financial liabilities:
Non-interest bearing deposits	$	196,322	$	196,322	$	182,022	$	182,022
Interest bearing deposits		523,535		521,546		526,425		528,952
Securities sold under agreements to repurchase		5,029		N/A		4,227		N/A
Short-term borrowings		20,000		19,992		—		—
Long-term debt		20,000		19,569		20,000		20,520
Other interest bearing liabilities		1,021		1,019		1,568		1,568
Accrued interest payable		215		215		252		252
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, 2022 and December 31, 2021. 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, 2022
Financial instruments - Assets
Interest bearing time deposits with banks	$	245	$	245	$	—	$	245	$	—
Loans, net of allowance for loan losses		437,266		437,485		—		—		437,485
Financial instruments - Liabilities
Interest bearing deposits	$	523,535	$	521,546	$	—	$	521,546	$	—
Long-term debt		20,000		19,569		—		19,569		—
Other interest bearing liabilities		1,021		1,019		—		1,019		—

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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, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		414,795		414,984		—		—		414,984
Financial instruments - Liabilities
Interest bearing deposits	$	526,425	$	528,952	$	—	$	528,952	$	—
Long-term debt		20,000		20,520		—		20,520		—
Other interest bearing liabilities		1,568		1,568		—		1,568		—

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, 2022, the Company had $108.3 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $107.1 million at December 31, 2021.

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 $3.6 million and  $5.7 million of financial and performance letters of credit commitments as of June 30, 2022 and December 31, 2021, respectively. Commercial letters of credit as of June 30, 2022 and December 31, 2021 totaled $9.4 million and $9.5 million, respectively. Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential number of future payments required under the corresponding guarantees. The amount of the liability as of June 30, 2022 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. 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, 2022, an interest rate swap with a notional amount totaling $20.0 million was re-designated as a cash flow hedge on brokered deposits and designated instead, as a cash flow hedge on a short-term FHLB advance. Based on updated funding need projections, including the proceeds from the sale of investment securities and continued core deposit growth, Juniata unwound two forward starting swaps at a gain of $1.2 million during the second quarter of 2022. The amounts previously recognized in accumulated other comprehensive income were reclassified to other non-interest income because it became probable the forecasted hedged transactions would not occur. As of December 31, 2021, interest rate swaps with a notional amount totaling $40.0 million, were designated as cash flow hedges, of which $20.0 million were on hedges of brokered deposits, and the other $20.0 million were hedges of  certain forecasted FHLB long-term advances. The remaining interest rate swap was determined to be fully effective during the periods presented, and as such, no amount of ineffectiveness has 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 hedge to remain fully effective during the remaining terms of the swap.

The following table reflects the notional amounts and fair values of derivatives recorded on the Consolidated Statements of Condition as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)	June 30, 2022				December 31, 2021
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
Derivatives designated as hedges:	Amount		(Liability)		Amount		(Liability)
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	—	$	—	$	20,000	$	52
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		20,000		424		—		—
Interest rate swaps - forward-starting on long-term FHLB advances		—		—		20,000		489

The effect of cash flow hedge accounting on accumulated other comprehensive income for the periods ended June 30, 2022 and December 31, 2021 are as follows:

(Dollars in thousands)	June 30, 2022
	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	$	(101)	Interest expense on short-term borrowings and repurchase agreements	$	(16)
Swap termination gain		1,215	Other non-interest income		(1,215)
Total	$	1,114		$	(1,231)

(Dollars in thousands)	December 31, 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	$	538	Interest expense on short-term borrowings and repurchase agreements	$	60
Total	$	538		$	60

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The effect of cash flow hedge accounting on the Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 is as follows:

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

	Income (Expense)				Income (Expense)
	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Effects of cash flow hedging:
Loss on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	27	$	(22)	$	16	$	(26)
Amount reclassified from AOCI into income for swap termination		1,215		—		1,215		—
Total	$	1,242	$	(22)	$	1,231	$	(26)

13. SUBSEQUENT EVENTS

On July 19, 2022, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2022, payable on September 1, 2022.

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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 Company’s future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Company’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”, "predicts”, "potential”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the negative of these terms and other comparable terminology are used in this report, Juniata is making forward-looking statements. Any forward-looking statement made by the Company in this document is based only on Juniata’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business based on information currently available to the Company and speaks only as of the date when made. Juniata undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new or updated information, future events, or otherwise. Forward-looking statements are not historical facts or guarantees of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control, and actual results may differ materially from this forward-looking information and therefore, should not be unduly relied upon.  Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, 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, 2021, 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:

● short- and long-term effects of inflation and rising costs;

● the impact of labor shortages and supply chain disruptions;

● the impact of rising interest rates;

● changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, a recession or intensified international hostilities;

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

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

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

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

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

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

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

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

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

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

● the results of regulatory examination and supervision processes;

● the failure of assumptions underlying the establishment of reserves for 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;

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

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

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

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

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

● the Company’s reliance on its subsidiary for substantially all 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 possibility of a new COVID-19 variant and the related actions taken by governmental authorities and the direct and indirect impacts on the Company, its customers and third parties.

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, 2021. 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, 2022, compared to December 31, 2021, and the consolidated results of operations for the three and six months ended June 30, 2022, compared to the same periods in 2021. 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 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, 2022, were $817.7 million, an increase of $7.1 million, or 0.9%, compared to December 31, 2021. Comparing asset balances on June 30, 2022 and December 31, 2021, total cash and cash equivalents increased by $9.1 million, or 67.6%, and total loans increased by $22.8 million, or 5.4%. Over the same period, debt securities available for sale decreased by $31.8 million, or 9.5%, as cash flows, as well as the proceeds from the sales of debt securities, were used to repay a $10.0 million brokered demand deposit and to fund loan growth. As of June 30, 2022, total deposits increased by $11.4 million, or 1.6%, compared to December 31, 2021, and short-term borrowings and repurchase agreements increased by $20.8 million, or 492.1%, over the same period because Juniata reverted to using $20.0 million in FHLB short-term advances to supplement core deposits to satisfy its funding needs in lieu of brokered demand deposits.

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The table below shows changes in deposit volumes by type of deposit between December 31, 2021 and June 30, 2022.

(Dollars in thousands)	June 30,		December 31,		Change
	2022		2021		$		%
Deposits:
Demand, non-interest bearing	$	196,322	$	182,022	$	14,300	7.9	%
Interest bearing demand and money market		233,824		240,974		(7,150)	(3.0)
Savings		153,353		142,187		11,166	7.9
Time deposits, $250,000 and more		13,378		13,547		(169)	(1.2)
Other time deposits		122,980		129,717		(6,737)	(5.2)
Total deposits	$	719,857	$	708,447	$	11,410	1.6	%

As shown in the table below, total loans increased $22.8 million, or 5.4%, between December 31, 2021 and June 30, 2022. Juniata experienced loan growth in the majority of its loan classes, partially offset by decreases in the commercial, financial and agricultural class, due to PPP loan forgiveness payments exceeding loan originations, and personal loans. The largest increases were primarily in the real estate – commercial and construction classes.

(Dollars in thousands)	June 30,		December 31,		Change
	2022		2021		$		%
Loans:
Commercial, financial and agricultural	$	60,043	$	62,639	$	(2,596)	(4.1)	%
Real estate - commercial		170,385		159,806		10,579	6.6
Real estate - construction		53,221		43,281		9,940	23.0
Real estate - mortgage		133,197		131,754		1,443	1.1
Obligations of states and political subdivisions		20,285		16,323		3,962	24.3
Personal		3,948		4,500		(552)	(12.3)
Total loans	$	441,079	$	418,303	$	22,776	5.4	%

A summary of the activity in the allowance for loan losses for each of the six month periods ended June 30, 2022 and 2021 is presented below.

(Dollars in thousands)	Six months ended June 30,
	2022			2021
Balance of allowance - January 1	$	3,508		$	4,094
Loans charged off		(6)			(8)
Recoveries of loans previously charged off		61			99
Net recoveries		55			91
Provision for loan losses		250			(279)
Balance of allowance - end of period	$	3,813		$	3,906
Ratio of net recoveries during period to average loans outstanding		(0.01)	%		(0.02)	%

While Juniata continued to experience favorable asset quality trends and net recoveries during the six months ended June 30, 2022, qualitative risk factors were considered in its allowance for loan loss analysis for certain loan segments, including continued uncertainty in the economic outlook caused by inflation, labor shortages and supply chain disruptions remain prevalent. Due to these factors, including loan growth of 5.4% during the period, the analysis resulted in a loan loss provision expense of $222,000 in the six months ended June 30,2022. In comparison, a provision credit of $279,000 was recorded in the six months ended June 30, 2021 resulting from the removal of the additional level of risk on loans previously placed in COVID deferment as those borrowers showed the ability to continue making payments under contractual debt service in 2021.

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As of June 30, 2022, 19 loans (excluding loans acquired with existing credit deterioration) with aggregate outstanding balances of $5.6 million were individually evaluated for impairment. A collateral analysis was performed on each of the loans individually evaluated for impairment to evaluate whether a reserve was required based upon the fair value of the collateral securing such loans. Following the analysis, no specific reserve was determined to be required because there were no loans determined to have insufficient collateral at June 30, 2022.

As of June 30, 2022, there were $12.6 million of loans classified as special mention compared to $17.3 million at December 31, 2021, $8.6 million classified as substandard loans at June 30, 2022 compared to $8.2 million at December 31, 2021, and no loans classified as doubtful at June 30, 2022 or December 31, 2021.

Management believes that the reserves carried are adequate to cover probable incurred losses related to these relationships as of June 30, 2022. Management believes the Company has sufficient liquidity and capital and an adequate allowance 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 table summarizes the Bank’s non-performing loans, excluding loans acquired with credit deterioration, on June 30, 2022 compared to December 31, 2021.

(Dollar amounts in thousands)	June 30, 2022			December 31, 2021
Non-performing loans
Non-accrual loans	$	119		$	141
Accruing loans past due 90 days or more		—			85
Total	$	119		$	226
Loans outstanding	$	441,079		$	418,303
Ratio of non-performing loans to loans outstanding		0.03	%		0.05	%
Ratio of non-accrual loans to loans outstanding		0.03	%		0.03	%
Allowance for loan losses to non-accrual loans		3,204.20	%		2,487.94	%

Total non-performing loans as of June 30, 2022 decreased $107,000 over total non-performing loans as of December 31, 2021, primarily due to the absence of accruing loans past due 90 days or more as of June 30, 2022.

Stockholders’ equity decreased by $24.9 million, or 34.9%, from December 31, 2021 to June 30, 2022 due to an increase in unrealized losses resulting from the change in market value of debt securities available for sale.

Subsequent to June 30, 2022, the following event took place:

On July 19, 2022, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2022, payable on September 1, 2022.

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Comparison of the Three Months Ended June 30, 2022 and 2021

Operations Overview:

Net income for the three months ended June 30, 2022 was $2.0 million, an increase of $244,000, or 14.0%, compared to the three months ended June 30, 2021. Basic and diluted earnings per share increased 14.3%, to $0.40, in the three months ended June 30, 2022 compared to basic and diluted earnings per share of $0.35 in the comparable 2021 period.

Annualized return on average assets for the three months ended June 30, 2022 was 0.97%, compared to the annualized return on average assets of 0.85% for the same period in 2021. For the three months ended June 30, annualized return on average equity was 15.53% in 2022 compared to 9.54% in 2021.

Presented below are selected key ratios for the two periods:

	Three Months Ended
	June 30,
	2022		2021
Return on average assets (annualized)	0.97	%	0.85	%
Return on average equity (annualized)	15.53	%	9.54	%
Average equity to average assets	6.23	%	8.89	%
Non-interest income, as a percentage of average assets (annualized)	0.67	%	0.64	%
Non-interest expense, as a percentage of average assets (annualized)	2.45	%	2.37	%

The discussion that follows further explains changes in the components of net income when comparing the three months ended June 30, 2022 with the three months ended June 30, 2021.

Net Interest Income:

Net interest income was $6.0 million during the three months ended June 30, 2022, an increase of $835,000, or 16.1%, compared to $5.2 million during the three months ended June 30, 2021.

Average earning assets increased $25.6 million, or 3.3%, to $792.5 million during the three months ended June 30, 2022, compared to the same period in 2021. The increase in average earning assets between periods was predominantly due to an increase of $39.5 million, or 12.2%, in average investment securities, which was partially offset by a decline of $7.2 million, or 1.7%, in average loans as loan originations only partially offset the $27.9 million decline in average PPP loan balances between periods.

The yield on earning assets increased 25 basis points, to 3.40%, during the three months ended June 30, 2022 compared to same period in 2021, partly due to the increase in market interest rates as both the prime rate and federal funds target range increased by 125 basis points, as well as from $211,000 in interest collected on a previously charged off nonaccrual loan. Over the same three month periods, the cost to fund interest earning assets with interest bearing liabilities decreased 11 basis points, to 0.48%, primarily due to a greater amount of higher-cost long-term debt present in the 2021 period.

During the three months ended June 30, 2022, average interest bearing liabilities increased by $10.4 million, or 1.9%, compared to the comparable 2021 period, mainly due to growth in interest-bearing demand and savings deposits, partially offset by declines in time deposits and short-and long-term debt.

The net interest margin, on a fully tax equivalent basis, increased from 2.76% during the three months ended June 30, 2021 to 3.08% during the three months ended June 30, 2022.

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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, 2022 and 2021.

Average Balance Sheets and Net Interest Income Analysis

	Three Months Ended						Three Months Ended
(Dollars in thousands)	June 30, 2022						June 30, 2021						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)	$	398,661	$	4,864	4.89	%	$	400,109	$	4,549	4.56	%	$	(16)	$	331	$	315
Tax-exempt loans		25,943		188	2.91			31,667		245	3.10			(45)		(12)		(57)
Total loans		424,604		5,052	4.77			431,776		4,794	4.45			(61)		319		258
Taxable investment securities		355,431		1,609	1.81			317,086		1,187	1.50			143		279		422
Tax-exempt investment securities		7,423		40	2.16			6,299		38	2.41			7		(5)		2
Total investment securities		362,854		1,649	1.82			323,385		1,225	1.52			150		274		424
Interest bearing deposits		5,039		18	1.46			6,126		6	0.37			(1)		13		12
Federal funds sold		—		—	0.01			5,605		—	0.00			—		—		—
Total interest earning assets		792,497		6,719	3.40			766,892		6,025	3.15			88		606		694
Other assets (7)		27,656						53,169
Total assets	$	820,153					$	820,061
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	242,083		191	0.32		$	225,907		86	0.15		$	6	$	99	$	105
Savings deposits		151,953		19	0.05			138,873		17	0.05			2		—		2
Time deposits		137,546		340	0.99			151,590		494	1.31			(46)		(108)		(154)
Short-term and long-term borrowings and other interest bearing liabilities		41,453		141	1.36			46,249		235	2.04			(24)		(70)		(94)
Total interest bearing liabilities		573,035		691	0.48			562,619		832	0.59			(62)		(79)		(141)
Non-interest bearing liabilities:
Demand deposits		190,847						179,586
Other		5,204						4,921
Stockholders’ equity		51,067						72,935
Total liabilities and stockholders’ equity	$	820,153					$	820,061
Net interest income and net interest rate spread			$	6,028	2.93	%			$	5,193	2.56	%	$	150	$	685	$	835
Net interest margin on interest earning assets (3)					3.05	%					2.72	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	6,089	3.08	%			$	5,268	2.76	%

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:

During the three months ended June 30, 2022, a $222,000 loan loss provision expense was recorded, compared to a provision credit of $200,000 during the three months ended June 30, 2021. Loan growth, coupled with the continued uncertainty in the economic outlook due to inflation, labor shortages and supply chain disruptions, resulted in an increased loan loss provision, despite favorable asset quality trends and net recoveries during the three months ended June 30, 2022.

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 during the three months ended June 30, 2022 was $1.4 million compared to $1.3 million in the three months ended June 30, 2021, an increase of $80,000, or 6.1%.

Most significantly impacting non-interest income in the comparative three month periods was a $1.1 million loss on sales and calls of securities during the three months ended June 30, 2022 which was offset by $1.2 million in gains from the termination of two derivatives contracts recorded in other non-interest income as part of a balance sheet and regulatory capital management strategy. See Notes 5 and 12 in the Notes to Consolidated Financial Statements. Also affecting the change in non-interest income between the three months ended June 30, 2022 and 2021 was a $65,000 decline in the value of equity securities, which was partially offset by $51,000 in life insurance proceeds recorded in the 2022 period.

As a percentage of average assets, annualized non-interest income was 0.67% during the three months ended June 30, 2022 compared to 0.64% during the three months ended June 30, 2021.

Non-interest Expense:

Non-interest expense was $5.0 million for the three months ended June 30, 2022, compared to $4.9 million for the same period in 2021, an increase of $161,000, or 3.3%.

Most significantly impacting non-interest expense in the comparative three month periods was a $151,000 increase in employee compensation expense during the three months ended June 30, 2022 due to temporary duplication of compensation expense as a result of employee transitions, which was partially offset by a $23,000 decline in data processing expense over the same periods.

As a percentage of average assets, annualized non-interest expense was 2.45% during the three months ended June 30, 2022 compared to 2.37% during the three months ended June 30, 2021.

Provision for income taxes:

An income tax provision of $177,000 was recorded in the three months ended June 30, 2022, compared to an income tax provision of $89,000 recorded during the three months ended June 30, 2021, predominantly due to higher taxable income recorded in the 2022 period.

The Company qualifies for a federal tax credit for low-income housing project investments, and the tax provisions for each period reflect the application of the tax credit. For the three months ended June 30, 2022 and 2021, the tax credit was $226,000, offsetting $403,000 and $315,000 in tax expense in the 2022 and 2021 periods, respectively. For the three months ended June 30, 2022, the tax credit lowered the effective tax rate from 18.7% to 8.2% compared to the same period in 2021, when the tax credit lowered the effective tax rate from 17.2% to 4.9%.

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Comparison of the Six Months Ended June 30, 2022 and 2021

Operations Overview:

Net income for the six months ended June 30, 2022 was $4.1 million, an increase of $724,000, or 21.5%, compared to the six months ended June 30, 2021, while basic and diluted earnings per share increased by 22.4%, to $0.82, during the first six months of 2022 compared to basic and diluted earnings per share of $0.67 during the comparable 2021 period. Annualized return on average assets for the six months ended June 30, 2022 was 1.00%, compared to 0.84% for the same period in 2021. For the six months ended June 30, annualized return on average equity was 13.85% in 2022, compared to 9.10% in 2021.

Presented below are selected key ratios for the two periods:

	Six Months Ended
	June 30,
	2022		2021
Return on average assets (annualized)	1.00	%	0.84	%
Return on average equity (annualized)	13.85	%	9.10	%
Average equity to average assets	7.25	%	9.18	%
Non-interest income, as a percentage of average assets (annualized)	0.65	%	0.64	%
Non-interest expense, as a percentage of average assets (annualized)	2.42	%	2.34	%

The discussion that follows further explains changes in the components of net income when comparing the six months ended June 30, 2022 to the six months ended June 30, 2021.

Net Interest Income:

Net interest income was $12.0 million during the six months ended June 30, 2022, an increase of $1.8 million, or 18.1%, compared to $10.1 million recorded during the six months ended June 30, 2021.

Average earning assets increased $26.7 million, or 3.5%, to $780.6 million, during the six months ended June 30, 2022, compared to the same period in 2021, due to an increase of $43.7 million, or 14.2%, in average investment securities. The increase in average investment securities was partially offset by a decline of $9.8 million, or 2.3%, in average loans due to the forgiveness of PPP loans as average PPP loans declined $22.8 million between periods. While the average loan volume declined during the first six months of 2022 compared to the 2021 period, total loan yield increased by 39 basis points to 4.87%, due to the collection of $645,000 in interest on a previously charged off nonaccrual loan during the six months ended June 30, 2022, as well as from the increase in market interest rates as both the prime rate and federal funds target range increased by 150 basis points during the first half of 2022.

The yield on earning assets increased 25 basis points, to 3.42%, in the first half of 2022 compared to same period in 2021, while the cost to fund interest earning assets with interest bearing liabilities decreased 16 basis points, to 0.46%.

During the six months ended June 30, 2022, average interest bearing liabilities increased by $9.7 million, or 1.8%, compared to the comparable 2021 period, due to growth in interest-bearing demand and savings deposits, which were partially offset by declines in time deposits, as well as short- and long-term borrowings due to reductions in FRB advances, which were repaid in the first quarter of 2021, and FHLB borrowings as $15.0 million in long-term debt were prepaid at the end of 2021.

The net interest margin, on a fully tax equivalent basis, increased from 2.75% during the six months ended June 30, 2021, to 3.12% during the six months ended June 30, 2022.

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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, 2022 and 2021.

	Six Months Ended						Six Months Ended
(Dollars in thousands)	June 30, 2022						June 30, 2021						Increase (Decrease) Due To (6)
	Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Volume		Rate		Total
ASSETS
Interest earning assets:
Loans:
Taxable loans (5)	$	394,035	$	9,778	5.00	%	$	399,391	$	9,093	4.59	%	$	(123)	$	808	$	685
Tax-exempt loans		27,069		382	2.84			31,536		478	3.06			(68)		(28)		(96)
Total loans		421,104		10,160	4.87			430,927		9,571	4.48			(191)		780		589
Investment securities:
Taxable investment securities		344,487		2,986	1.73			301,935		2,193	1.45			309		484		793
Tax-exempt investment securities		7,425		80	2.15			6,301		76	2.41			13		(9)		4
Total investment securities		351,912		3,066	1.74			308,236		2,269	1.47			322		475		797
Interest bearing deposits		7,535		25	0.68			8,477		11	0.26			(1)		15		14
Federal funds sold		—		—	—			6,243		0	0.01			—		—		—
Total interest earning assets		780,551		13,251	3.42			753,883		11,851	3.17			130		1,270		1,400
Other assets (7)		35,871						53,656
Total assets	$	816,422					$	807,539
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	241,561		276	0.23		$	204,369		153	0.15		$	28	$	95	$	123
Savings deposits		149,365		37	0.05			134,167		33	0.05			4		—		4
Time deposits		139,129		699	1.01			152,371		1,030	1.36			(90)		(241)		(331)
Short-term and long-term borrowings and other interest bearing liabilities		34,005		271	1.61			63,423		499	1.59			(233)		5		(228)
Total interest bearing liabilities		564,060		1,283	0.46			554,330		1,715	0.62			(291)		(141)		(432)
Non-interest bearing liabilities:
Demand deposits		188,108						174,255
Other		5,060						4,817
Stockholders’ equity		59,194						74,137
Total liabilities and stockholders’ equity	$	816,422					$	807,539
Net interest income and net interest rate spread			$	11,968	2.96	%			$	10,136	2.55	%	$	421	$	1,411	$	1,832
Net interest margin on interest earning assets (3)					3.09	%					2.71	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	12,091	3.12	%			$	10,283	2.75	%

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:

A loan loss provision expense of $250,000 was recorded during the six months ended June 30, 2022, compared to a provision credit of $279,000 in the six months ended June 30, 2021. While Juniata continued to experience favorable asset quality trends and net recoveries during the first half of 2022, elevated qualitative risk factors were considered in its allowance for loan loss analysis for certain loan segments, including continued uncertainty in the economic outlook caused by inflation, labor shortages and supply chain disruptions. Additionally, loan growth of 5.4% as of June 30, 2022 compared to December 31, 2021 also factored into the increase in Juniata’s loan loss provision during the six months ended June 30, 2022.

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 was $2.7 million during the six months ended June 30, 2022 compared to $2.6 million during the six months ended June 30, 2021, an increase of $84,000, or 3.3%.

Most significantly impacting the comparative six month periods was a $1.1 million loss on sales and calls of securities in 2022 due to the execution of a balance sheet and regulatory capital management strategy in which $1.1 million in security losses were offset by $1.2 million in gains from the termination of two derivatives contracts, recorded in other non-interest income. See Notes 5 and 12 in the Notes to Consolidated Financial Statements. Additionally, the value of equity securities during the six months ended June 30, 2022 declined by $181,000 compared to the six months ended June 30, 2021 due to declines in bank stock market values, which were partially offset by increases of $74,000 in customer service fees and $51,000 in life insurance proceeds in the 2022 period.

As a percentage of average assets, annualized non-interest income was 0.65% in the first six months of 2022 compared to 0.64% in the comparable 2021 period.

Non-interest Expense:

Non-interest expense was $9.9 million during the six months ended June 30, 2022 compared to $9.5 million during the six months ended June 30, 2021, an increase of $437,000, or 4.6%.

Most significantly impacting non-interest expense in the comparative six month periods was a $359,000 increase in employee compensation and benefits expense due to temporary duplication of compensation and benefits expense as a result of employee transitions, as well as increased medical claims expenses in the six months ended June 30, 2022. Also contributing to the increase in non-interest expense was a $42,000 decline in the gain on other real estate owned during the six months ended June 30, 2022 versus the comparable 2021 period.

As a percentage of average assets, annualized non-interest expense was 2.42% during the six months ended June 30, 2022 compared to 2.34% during the six months ended June 30, 2021.

Provision for income taxes:

An income tax provision of $386,000 was recorded during the six months ended June 30, 2022 compared to an income tax expense of $160,000 recorded during the six months ended June 30, 2021, primarily due to higher taxable income earned in the 2022 period.

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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 2022 and 2021, the tax credits were $451,000 in both periods, offsetting $837,000 in tax expense recorded during the six months ended June 30, 2022 and $611,000 in tax expense recorded in the comparable 2021 period. The tax credit lowered the effective tax rate from 18.7% to 8.6% during the first six months of 2022 compared to the same period in 2021, when the tax credit lowered the effective tax rate from 17.3% to 4.5%.

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 a primary goal of the Company to maintain an adequate 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 to supplement other sources of liquidity liability. During the six months ended June 30, 2022, overnight borrowings from the Federal Home Loan Bank averaged $241,000. As of June 30, 2022, the Company had $20.0 million in both short-term borrowings and long-term debt with the Federal Home Loan Bank with a remaining unused borrowing capacity with the FHLB of $147.7 million.

The Company may use brokered deposits as an additional funding alternative. Brokered deposits of $30.0 million were included in total interest-bearing deposits as of December 31, 2021. The Company had no brokered deposits as of June 30, 2022.

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 can provide 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. As of June 30, 2022 and December 31, 2021, the Company had $3.6 million and $5.7 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of June 30, 2022 and December 31, 2021 totaled $9.4 million and $9.5 million, 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 letters of credit. The current amount of the liability as of June 30, 2022 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.

49

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 4.0%, 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 risk-based 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, 2022, the Bank exceeded the regulatory requirements to be considered a "well capitalized" financial institution under Basel III.

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, 2022, $39.3 million 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.

50

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2022, 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 evaluations, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective, because of a material weakness in our internal control over financial reporting, specifically the Company did not maintain controls over the computation of Tier 1 regulatory capital deductions related to the Bank’s investments in subordinated debt issued by other financial institutions. In the second quarter of 2022, management determined the Bank’s call reports for the quarters ended September 30, 2021, December 31, 2021, and March 31, 2022, included an error in the computation of Tier 1 regulatory capital in connection with the Bank’s investments in subordinated debt issued by other financial institutions, which was a result of the material weakness discussed above. While the impact of the error was immaterial, and the Bank was well capitalized during these periods, the material weakness could result in a misstatement of the Tier I regulatory capital that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. As a result, management concluded a material weakness in internal control over financial reporting was present during those periods and has not been remediated as of June 30, 2022.

Management's Plan to Remediate Material Weakness

We are in the process of developing a detailed plan for remediation of the material weakness, including enhancing management's review of controls over the preparation of Call Report schedule RC-R Part I regarding the limitation on subordinated debt issued by other financial institutions. We intend to remediate this material weakness as soon as possible, and we will continue to assess the effectiveness of our remediation efforts in connection with our future assessment of the effectiveness of internal control over financial reporting and disclosure controls and procedures. We estimate that we will remediate this material weakness by December 31, 2022. Until this material weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial statements are prepared in accordance with GAAP.

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, 2022, that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting.

51

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, 2021.

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

The Company periodically repurchases shares of its common stock under a share repurchase program approved by the Board of Directors. In November of 2021, the Board of Directors authorized the repurchase of an additional 200,000 shares of its common stock through the Company’s share repurchase program for a total of 209,307 shares authorized to be repurchased at that time. The program will remain authorized until all approved shares are repurchased, unless terminated by the Board of Directors. As of June 30, 2022, 208,312 shares remained available to purchase under that program. Transactions pursuant to the repurchase program in the three month period ended June 30, 2022 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, 2022	—	$	—	—	209,137
May 1-31, 2022	825		—	825	208,312
June 1-30, 2022				—	208,312
Totals	825			825	208,312

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

52

Item 6.        EXHIBITS

3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Current Report on Form 8-K filed with the SEC on November 12, 2015)
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed with the SEC on February 27, 2019)
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of President and Chief Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of President and Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.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).

53

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 12, 2022	By:	/s/ Marcie A. Barber
			Marcie A. Barber, President
			Chief Executive Officer
			(Principal Executive Officer)
Date:	August 12, 2022	By:	/s/ Michael W. Wolf
			Michael W. Wolf
			Chief Financial Officer
			(Principal Accounting Officer and
			Principal Financial Officer)

54

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 12, 2022	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, Michael W. Wolf, 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 12, 2022	By:	/s/ Michael W. Wolf
			Michael W. Wolf
			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 12, 2022

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/ Michael W. Wolf
Michael W. Wolf
Chief Financial Officer
Dated:	August 12, 2022

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 12, 2022
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, 2022
Entity Registrant Name	JUNIATA VALLEY FINANCIAL CORP
Entity Central Index Key	0000714712
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
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		5,003,059

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 14,435	$ 12,928
Interest bearing deposits with banks	8,239	598
Cash and cash equivalents	22,674	13,526
Interest bearing time deposits with banks	245	735
Equity securities	1,044	1,124
Debt securities available for sale	303,627	335,424
Restricted investment in bank stock	2,587	2,116
Total loans	441,079	418,303
Less: Allowance for loan losses	(3,813)	(3,508)
Total loans, net of allowance for loan losses	437,266	414,795
Premises and equipment, net	8,246	8,371
Other real estate owned	0	87
Bank owned life insurance and annuities	16,881	16,852
Investment in low income housing partnerships	1,906	2,306
Core deposit and other intangible assets	148	175
Goodwill	9,047	9,047
Mortgage servicing rights	101	120
Accrued interest receivable and other assets	13,891	5,840
Total assets	817,663	810,518
Liabilities:
Deposits: Non-interest bearing	196,322	182,022
Deposits: Interest bearing	523,535	526,425
Total deposits	719,857	708,447
Short-term borrowings and repurchase agreements	25,029	4,227
Long-term debt	20,000	20,000
Other interest bearing liabilities	1,021	1,568
Accrued interest payable and other liabilities	5,331	4,986
Total liabilities	771,238	739,228
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, 2022 and December 31, 2021; Outstanding - 5,003,059 shares at June 30, 2022 and 4,988,542 shares at December 31, 2021	5,151	5,151
Surplus	24,926	25,008
Retained earnings	49,196	47,298
Accumulated other comprehensive loss	(30,310)	(3,365)
Cost of common stock in Treasury: 148,220 shares at June 30, 2022; 162,737 shares at December 31, 2021	(2,538)	(2,802)
Total stockholders' equity	46,425	71,290
Total liabilities and stockholders' equity	$ 817,663	$ 810,518

XML

Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
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	5,003,059	4,988,542
Treasury Stock, Shares	148,220	162,737

XML

Consolidated Statements of Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest and dividend income:
Loans, including fees	$ 5,052,000	$ 4,794,000	$ 10,160,000	$ 9,571,000
Taxable securities	1,609,000	1,187,000	2,986,000	2,193,000
Tax-exempt securities	40,000	38,000	80,000	76,000
Other interest income	18,000	6,000	25,000	11,000
Total interest income	6,719,000	6,025,000	13,251,000	11,851,000
Interest expense:
Deposits	550,000	597,000	1,012,000	1,216,000
Short-term borrowings and repurchase agreements	22,000	21,000	35,000	53,000
FRB advances			0	18,000
Long-term debt	118,000	213,000	234,000	425,000
Other interest bearing liabilities	1,000	1,000	2,000	3,000
Total interest expense	691,000	832,000	1,283,000	1,715,000
Net interest income	6,028,000	5,193,000	11,968,000	10,136,000
Provision for loan losses	222,000	(200,000)	250,000	(279,000)
Net interest income after provision for loan losses	5,806,000	5,393,000	11,718,000	10,415,000
Non-interest income:
Earnings on bank-owned life insurance and annuities	59,000	68,000	111,000	122,000
Gain (loss) on sales and calls of securities	(1,074,000)	54,000	(1,074,000)	58,000
Change in value of equity securities	(57,000)	8,000	(80,000)	101,000
Gain from life insurance proceeds	51,000		51,000	0
Other non-interest income	1,291,000	79,000	1,375,000	158,000
Total non-interest income	1,382,000	1,302,000	2,658,000	2,574,000
Non-interest expense:
Employee compensation expense	2,213,000	2,062,000	4,235,000	4,031,000
Employee benefits	613,000	614,000	1,314,000	1,159,000
Occupancy	319,000	312,000	650,000	642,000
Equipment	184,000	192,000	359,000	381,000
Data processing expense	650,000	673,000	1,229,000	1,256,000
Professional fees	188,000	195,000	364,000	383,000
Taxes, other than income	133,000	119,000	264,000	243,000
FDIC Insurance premiums	72,000	70,000	164,000	151,000
Gain on other real estate owned			(7,000)	(49,000)
Amortization of intangible assets	14,000	17,000	27,000	33,000
Amortization of investment in low-income housing partnerships	200,000	200,000	400,000	400,000
Other non-interest expense	442,000	413,000	893,000	825,000
Total non-interest expense	5,028,000	4,867,000	9,892,000	9,455,000
Income before income taxes	2,160,000	1,828,000	4,484,000	3,534,000
Income tax provision	177,000	89,000	386,000	160,000
Net income	$ 1,983,000	$ 1,739,000	$ 4,098,000	$ 3,374,000
Earnings per share
Basic	$ 0.40	$ 0.35	$ 0.82	$ 0.67
Diluted	$ 0.40	$ 0.35	$ 0.82	$ 0.67
Customer Service Fees [Member]
Non-interest income:
Non-interest income	$ 362,000	$ 320,000	$ 719,000	$ 645,000
Debit Card fee Income [Member]
Non-interest income:
Non-interest income	435,000	451,000	845,000	864,000
Trust Fees [Member]
Non-interest income:
Non-interest income	95,000	115,000	250,000	227,000
Commissions from Sales of Non-Deposit Products [Member]
Non-interest income:
Non-interest income	112,000	105,000	216,000	185,000
Fees Derived From Loan Activity [Member]
Non-interest income:
Non-interest income	102,000	92,000	232,000	196,000
Mortgage Banking Income [Member]
Non-interest income:
Non-interest income	$ 6,000	$ 10,000	$ 13,000	$ 18,000

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022		Jun. 30, 2021		Jun. 30, 2022	Jun. 30, 2021
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income: Pre-Tax Amount	$ 2,160		$ 1,828		$ 4,484	$ 3,534
Net Income: Tax Effect	(177)		(89)		(386)	(160)
Net income	1,983		1,739		4,098	3,374
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period, Pre-Tax Amount	(14,634)		1,112		(35,065)	(4,799)
Unrealized holding gains (losses) arising during the period, Tax Effect	3,073		(233)		7,364	1,008
Unrealized holding gains (losses) arising during the period, Net-of-Tax Amount	(11,561)		879		(27,701)	(3,791)
Reclassification adjustment for gains (losses) included in net income, Pre-Tax Amount	1,074	[1],[2]	(54)	[1],[2]	1,074	(58)
Reclassification adjustment for gains (losses) included in net income, Tax Effect	(226)	[1],[2]	11	[1],[2]	(226)	(12)
Reclassification adjustment for gains (losses) included in net income, Net-of-Tax Amount	848	[1],[2]	(43)	[1],[2]	848	(46)
Unrealized gains (losses) on cash flow hedge, Pre-Tax Amount	460		(301)		1,114	411
Unrealized gains (losses) on cash flow hedge, Tax Effect	(97)		64		(234)	(86)
Unrealized gains (losses) on cash flow hedge, Net-of-Tax Amount	363		(237)		880	325
Reclassification adjustment for gains (losses) included in net income, Pre-Tax Amount	(1,242)	[1],[2]	22	[1],[2]	(1,231)	26
Reclassification adjustment for gains (losses) included in net income, Tax Effect	261	[1],[2]	(5)	[1],[2]	259	(6)
Reclassification adjustment for gains (losses) included in net income, Net-of-Tax	(981)	[1],[2]	17	[1],[2]	(972)	20
Other comprehensive income (loss), Pre-Tax Amount	(14,342)		779		(34,108)	(4,420)
Other comprehensive income (loss), Tax Effect	3,011		(163)		7,163	928
Net current period other comprehensive income (loss)	(11,331)		616		(26,945)	(3,492)
Total comprehensive income, Pre-Tax Amount	(12,182)		2,607		(29,624)	(886)
Total comprehensive income, Tax Effect	2,834		(252)		6,777	768
Total comprehensive income, Net-of-Tax Amount	$ (9,348)		$ 2,355		$ (22,847)	$ (118)

[1] Amounts are included in gain (loss) 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.

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total
Beginning balance at Dec. 31, 2020	$ 5,151	$ 25,011	$ 45,096	$ 3,518	$ (2,179)	$ 76,597
Beginning balance, shares at Dec. 31, 2020	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
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
Beginning balance at Dec. 31, 2021	$ 5,151	25,008	47,298	(3,365)	(2,802)	$ 71,290
Beginning balance, shares at Dec. 31, 2021	4,988,542					4,988,542
Net income			4,098			$ 4,098
Other comprehensive income (loss)				(26,945)		(26,945)
Cash dividends			(2,200)			(2,200)
Stock-based compensation		116				116
Purchase of treasury stock					(3)	(3)
Purchase of treasury stock, shares	(995)
Treasury stock issued for stock plans		(198)			267	69
Treasury stock issued for stock plans, shares	15,512
Ending balance at Jun. 30, 2022	$ 5,151	24,926	49,196	(30,310)	(2,538)	$ 46,425
Ending balance, shares at Jun. 30, 2022	5,003,059					5,003,059
Beginning balance at Mar. 31, 2022	$ 5,151	24,864	48,313	(18,979)	(2,624)	$ 56,725
Beginning balance, shares at Mar. 31, 2022	4,998,858
Net income			1,983			1,983
Other comprehensive income (loss)				(11,331)		(11,331)
Cash dividends			(1,100)			(1,100)
Stock-based compensation		79				79
Purchase of treasury stock, shares	(825)
Treasury stock issued for stock plans		(17)			86	69
Treasury stock issued for stock plans, shares	5,026
Ending balance at Jun. 30, 2022	$ 5,151	$ 24,926	$ 49,196	$ (30,310)	$ (2,538)	$ 46,425
Ending balance, shares at Jun. 30, 2022	5,003,059					5,003,059

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Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Operating activities:
Net income			$ 4,098,000	$ 3,374,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	$ 222,000	$ (200,000)	250,000	(279,000)
Depreciation			321,000	372,000
Net amortization of securities premiums			275,000	733,000
Net amortization of loan origination fees			381,000	346,000
Deferred net loan origination costs			(280,000)	(296,000)
Amortization of intangibles	14,000	17,000	27,000	33,000
Amortization of investment in low-income housing partnerships	200,000	200,000	400,000	400,000
Net amortization of purchase fair value adjustments			(56,000)	(92,000)
Net realized (gain) loss on sales and calls of available for sale securities			1,074,000	(58,000)
Change in value of equity securities	57,000	(8,000)	80,000	(101,000)
Net gain on other real estate owned			(7,000)	(49,000)
Earnings on bank owned life insurance and annuities	(59,000)	(68,000)	(111,000)	(122,000)
Deferred income tax benefit			(59,000)	(151,000)
Stock-based compensation expense	79,000	37,000	116,000	72,000
Proceeds from mortgage loans sold to others			32,000	38,000
Mortgage banking income			(13,000)	(18,000)
Gain from life insurance proceeds	(51,000)		(51,000)	0
Increase in accrued interest receivable and other assets			(946,000)	(576,000)
Decrease in accrued interest payable and other liabilities			(202,000)	(206,000)
Net cash provided by operating activities			5,329,000	3,420,000
Investing activities:
Purchases of: Securities available for sale			(40,377,000)	(136,852,000)
Purchases of: FHLB stock			(471,000)	0
Purchases of: Premises and equipment			(196,000)	(104,000)
Purchases of: Bank owned life insurance and annuities			(13,000)	(18,000)
Proceeds from: Sales of debt securities available for sale			17,134,000	32,869,000
Proceeds from: Maturities of and principal repayments on securities available for sale			19,700,000	42,849,000
Proceeds from: Redemption of FHLB stock			0	538,000
Proceeds from: Life insurance claims			146,000	0
Proceeds from: Sale of other real estate owned			94,000	0
Net decrease in interest bearing time deposits with banks			490,000	0
Net increase in loans			(22,766,000)	(8,453,000)
Net cash used in investing activities			(26,259,000)	(69,171,000)
Financing activities:
Net increase in deposits			11,410,000	85,669,000
Net increase (decrease) in short-term borrowings and securities sold under agreements to repurchase			20,802,000	(12,597,000)
Repayment of FRB advances			0	(27,955,000)
Cash dividends			(2,200,000)	(2,204,000)
Purchase of treasury stock			(3,000)	(675,000)
Treasury stock issued for employee stock plans			69,000	77,000
Net cash provided by financing activities			30,078,000	42,315,000
Net increase (decrease) in cash and cash equivalents			9,148,000	(23,436,000)
Cash and cash equivalents at beginning of year			13,526,000	41,621,000	$ 41,621,000
Cash and cash equivalents at end of period	$ 22,674,000	$ 18,185,000	22,674,000	18,185,000	$ 13,526,000
Supplemental information:
Interest paid			1,320,000	1,830,000
Income tax paid			250,000	75,000
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned			0	61,000
Transfer of loans to repossessed vehicles			$ 0	$ 1,000

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BASIS OF PRESENTATION AND ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

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 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. 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, 2022 are not necessarily indicative of the results that can be expected for the year ending December 31, 2022. 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, 2021.

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of financial condition date of June 30, 2022 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 UPDATES

6 Months Ended

Jun. 30, 2022

RECENT ACCOUNTING STANDARDS UPDATES

RECENT ACCOUNTING STANDARDS UPDATES

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. 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. The Company’s CECL transition team started running parallel calculations between CECL and the incurred loss model during the second quarter to evaluate the impact of the amended guidance on its consolidated financial statements and disclosures. The team 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 will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption.

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures

Issued: March 2022

Summary: ASU 2022-02 eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have adopted Topic 326 “Financial Instruments – Credit Losses”. All other creditors must continue to apply the TDR accounting model until they adopt Topic 326. Due to the removal of the TDR accounting model, all loan modifications will now be accounted for under the general loan modification guidance in Subtopic 310-20. In addition, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. Vintage disclosure requirements will also be required to prospectively disclose current period gross write-off information by vintage (i.e., year of origination) for public business entities within the scope of the Topic 326.

Effective Date: Effective upon adoption of the amendments in ASU 2016-13 for entities that have not yet adopted ASU 2016-13. Early adoption is not permitted before adoption of ASU 2016-13. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities that adopted ASU 2016-13. Entities that have adopted Topic 326 may early adopt ASU 2022-02 and are permitted to do so on a partial basis. The Company is in the process of evaluating the amendments but does not expect the adoption of this ASU will have a material impact on the Corporation's financial statements.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2022

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

(Dollars in thousands)
June 30, 2022	Gains on Cash Flow Hedges		Unrealized Losses on Available for Sale Securities		Total
Beginning balance, December 31, 2021	$	427	$	(3,792)	$	(3,365)
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		880		(27,701)		(26,821)
Amounts reclassified from accumulated other comprehensive income (loss)		(972)		848		(124)
Net current period other comprehensive loss		(92)		(26,853)		(26,945)
Ending balance, June 30, 2022	$	335	$	(30,645)	$	(30,310)

(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

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2022

EARNINGS PER SHARE

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 dilutive effect on EPS 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, increasing the total number of shares outstanding. 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,
	2022		2021
Net income	$	1,983	$	1,739
Weighted-average common shares outstanding		5,000		5,008
Basic earnings per share		0.40		0.35
Weighted-average common shares outstanding	$	5,000	$	5,008
Common stock equivalents due to effect of stock options		8		8
Total weighted-average common shares and equivalents	$	5,008	$	5,016
Diluted earnings per share	$	0.40	$	0.35
Anti-dilutive stock options outstanding		—		—

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2022		2021
Net income	$	4,098	$	3,374
Weighted-average common shares outstanding		4,997		5,013
Basic earnings per share		0.82		0.67
Weighted-average common shares outstanding	$	4,997	$	5,013
Common stock equivalents due to effect of stock options		10		8
Total weighted-average common shares and equivalents	$	5,007	$	5,021
Diluted earnings per share	$	0.82	$	0.67
Anti-dilutive stock options outstanding		2		2

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SECURITIES

6 Months Ended

Jun. 30, 2022

SECURITIES

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, 2022, the Company had $1.0 million in equity securities recorded at fair value and $1.1 million in equity securities were recorded at fair value at December 31, 2021. The Company recorded net losses of $57,000 and $80,000 during the respective three and six months ended June 30, 2022, and net gains of $8,000 and $101,000 during the respective three and six months ended June 30, 2021, due to changes in the fair value of the Company’s portfolio of 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 14% of the investment portfolio), mortgage-backed securities issued by Government-sponsored entities and backed by residential mortgages (approximately 76%), corporate debt securities (approximately 7%) and municipal bonds (approximately 3%) as of June 30, 2022. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates within 5 years.

At each of June 30, 2022 and December 31, 2021, the Company had holdings of securities from two issuers in excess of 10% of stockholders’ equity, other than the U.S. Government and its agencies. Holdings in Federal Farm Credit Bank and Pennsylvania Housing Finance securities had fair values of $11.4 million and $6.7 million, respectively, as of June 30, 2022, and $12.4 million and $7.5 million, respectively, as of December 31, 2021.

The amortized cost and fair value of debt securities available for sale as of June 30, 2022 and December 31, 2021, 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, 2022
					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 one year but within five years	$	17,947	$	16,447	$	—	$	(1,500)
After five years but within ten years		28,912		25,400		—		(3,512)
		46,859		41,847		—		(5,012)
Obligations of state and political subdivisions
After one year but within five years		3,804		3,787		8		(25)
After five years but within ten years		3,871		3,281		—		(590)
After ten years		1,501		1,231		—		(270)
		9,176		8,299		8		(885)
Corporate debt securities
After one year but within five years		4,704		4,381		—		(323)
After five years but within ten years		19,516		18,188		14		(1,342)
		24,220		22,569		14		(1,665)
Mortgage-backed securities		262,163		230,912		6		(31,257)
Total	$	342,418	$	303,627	$	28	$	(38,819)

(Dollars in thousands)	December 31, 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 one year but within five years	$	6,000	$	5,807	$	—	$	(193)
After five years but within ten years		35,881		34,719		—		(1,162)
		41,881		40,526		—		(1,355)
Obligations of state and political subdivisions
After one year but within five years		3,810		3,937		129		(2)
After five years but within ten years		1,246		1,221		—		(25)
After ten years		4,118		4,062		—		(56)
		9,174		9,220		129		(83)
Corporate debt securities
After one year but within five years		2,000		1,972		—		(28)
After five years but within ten years		32,408		33,024		805		(189)
		34,408		34,996		805		(217)
Mortgage-backed securities		254,762		250,682		812		(4,892)
Total	$	340,225	$	335,424	$	1,746	$	(6,547)

Certain obligations of the U.S. Government and state and political subdivisions, as well as mortgage-backed securities 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 $87.6 million and $82.7 million on June 30, 2022 and December 31, 2021, 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, 2022 and 2021.

(Dollars in thousands)	Six Months Ended
	June 30,
	2022		2021
Gross proceeds from sales and calls of securities	$	17,134	$	32,869
Securities available for sale:
Gross realized gains from sold and called securities	$	25	$	130
Gross realized losses from sold and called securities		(1,099)		(72)
Net gains (losses) from sales and calls of securities	$	(1,074)	$	58

The Bank sold $18.2 million, par value, of subordinated debt of unconsolidated financial institutions, classified as corporate debt securities, at a loss of $1.1 million during the second quarter of 2022. Management’s intent with respect to these securities changed in the second quarter due to the adverse regulatory impact of substantial (relative to capital) holdings of subordinated debt.

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, 2022 and December 31, 2021:

	Unrealized Losses at June 30, 2022
	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	2	$	7,237	$	(503)	7	$	34,610	$	(4,509)	9	$	41,847	$	(5,012)
Obligations of state and political subdivisions	8		5,758		(823)	1		472		(62)	9		6,230		(885)
Corporate debt securities	11		19,539		(1,665)	—		—		—	11		19,539		(1,665)
Mortgage-backed securities	61		145,673		(17,524)	21		80,244		(13,733)	82		225,917		(31,257)
Total temporarily impaired securities	82	$	178,207	$	(20,515)	29	$	115,326	$	(18,304)	111	$	293,533	$	(38,819)

	Unrealized Losses at December 31, 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	5	$	22,130	$	(752)	3	$	18,396	$	(603)	8	$	40,526	$	(1,355)
Obligations of state and political subdivisions	7		5,781		(83)	—		—		—	7		5,781		(83)
Corporate debt securities	6		10,144		(217)	—		—		—	6		10,144		(217)
Mortgage-backed securities	36		182,328		(3,504)	5		26,443		(1,388)	41		208,771		(4,892)
Total temporarily impaired securities	54	$	220,383	$	(4,556)	8	$	44,839	$	(1,991)	62	$	265,222	$	(6,547)

At June 30, 2022, nine obligations of U.S. Government sponsored enterprises, nine obligations of state and political subdivisions, eleven corporate debt securities, and eighty-two mortgage-backed securities had unrealized losses. Twenty-nine 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, 2022 or December 31, 2021, respectively.

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2022

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

LOANS AND RELATED ALLOWANCE FOR CREDIT 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 and future payments are reasonably assured.

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

Loans Held for Sale

The Company has originated residential mortgage loans with the intent to sell. These individual loans are normally 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. Most 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.

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.

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 more than the 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 began on April 3, 2020 and provided economic relief to small businesses nationwide that were adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. It also provided for forgiveness of the PPP loans in an amount up to the full principal amount of qualifying loans. The Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”) extended the covered period for loan forgiveness to 24 weeks and amended the requirements regarding forgiveness of PPP loans by reducing the portion of PPP loan proceeds that must be used for payroll costs to be eligible for full 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. The 2021 Consolidated Appropriations Act provided several amendments to the PPP, including additional funding for first and second draws of PPP loans up to May 31, 2021.  

The Company participated in the PPP and funded 870 PPP loans totaling $51.0 million. PPP loans are included in the commercial, financial and agricultural loan class. As of June 30, 2022, thirty PPP loans, totaling $1.6 million, remained outstanding with related unamortized net fees of $62,000. As of December 31, 2021, 194 PPP loans, totaling $10.1 million remained outstanding with related unamortized net fees of $485,000.

Loan Portfolio Classification

The following table presents the loan portfolio by class at June 30, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Commercial, financial and agricultural	$	60,043	$	62,639
Real estate - commercial		170,385		159,806
Real estate - construction		53,221		43,281
Real estate - mortgage		133,197		131,754
Obligations of states and political subdivisions		20,285		16,323
Personal		3,948		4,500
Total	$	441,079	$	418,303

The following table summarizes the activity in the allowance for loan losses by loan class, for the three and six months ended June 30, 2022 and 2021.

(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, 2022
Balance, beginning of period	$	259	$	836	$	1,170	$	47	$	1,228	$	36	$	3,576
Provision for loan losses		27		98		38		9		49		1		222
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		—		—		—		—		17		1		18
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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
Six Months Ended
June 30, 2022
Balance, beginning of period	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508
Provision for loan losses		35		(86)		324		11		(33)		(1)		250
Charge-offs		—		—		—		—		(1)		(5)		(6)
Recoveries		—		—		—		—		59		2		61
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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

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, 2022 and December 31, 2021.

(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, 2022
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,220	$	—	$	—	$	372	$	—	$	5,592
Acquired with credit deterioration		—		303		—		—		439		—		742
Collectively evaluated for impairment		60,043		164,862		53,221		20,285		132,386		3,948		434,745
	$	60,043	$	170,385	$	53,221	$	20,285	$	133,197	$	3,948	$	441,079
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		286		934		1,208		56		1,294		35		3,813
	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
December 31, 2021
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,262	$	—	$	—	$	437	$	—	$	5,699
Acquired with credit deterioration		—		357		—		—		481		—		838
Collectively evaluated for impairment		62,639		154,187		43,281		16,323		130,836		4,500		411,766
	$	62,639	$	159,806	$	43,281	$	16,323	$	131,754	$	4,500	$	418,303
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		251		1,020		884		45		1,267		39		3,506
	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508

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.  There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2022. As of December 31, 2021, there was $85,000 in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process. 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, 2022 and December 31, 2021. One loan was determined to have insufficient collateral as of December 31, 2021, requiring the establishment of a specific reserve of $2,000.

(Dollars in thousands)	As of June 30, 2022						As of December 31, 2021
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate – construction		—		—		—		—		649		—
Real estate - mortgage		372		1,041		—		368		1,054		—
Acquired with credit deterioration		439		646		—		481		660		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	69	$	68	$	2
Total:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate - construction		—		—		—		—		649		—
Real estate – mortgage		372		1,041		—		437		1,122		2
Acquired with credit deterioration		439		646		—		481		660		—
	$	6,334	$	7,714	$	—	$	6,537	$	8,517	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021 are summarized in the table below.

(Dollars in thousands)	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
Total:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
	$	6,442	$	70	$	10	$	5,597	$	102	$	10

(Dollars in thousands)	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
Total:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
	$	6,476	$	136	$	20	$	4,527	$	118	$	20

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, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Non-accrual loans:
Real estate - mortgage	$	119	$	141
Total	$	119	$	141

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, 2022 and December 31, 2021, respectively.

													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, 2022
Commercial, financial and agricultural	$	60,017	$	26	$	—	$	—	$	26	$	60,043	$	—
Real estate - commercial		170,072		—		10		—		10		170,082		—
Real estate - construction		53,032		—		189		—		189		53,221		—
Real estate - mortgage		132,005		369		384		—		753		132,758		—
Obligations of states and political subdivisions		20,285		—		—		—		—		20,285		—
Personal		3,907		36		5		—		41		3,948		—
Subtotal		439,318		431		588		—		1,019		440,337		—
Loans acquired with credit deterioration
Real estate - commercial		303		—		—		—		—		303		—
Real estate - mortgage		439		—		—		—		—		439		—
Subtotal		742		—		—		—		—		742		—
	$	440,060	$	431	$	588	$	—	$	1,019	$	441,079	$	—

													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, 2021
Commercial, financial and agricultural	$	62,628	$	11	$	—	$	—	$	11	$	62,639	$	—
Real estate - commercial		159,396		53		—		—		53		159,449		—
Real estate - construction		43,281		—		—		—		—		43,281		—
Real estate - mortgage		130,242		440		488		103		1,031		131,273		85
Obligations of states and political subdivisions		16,323		—		—		—		—		16,323		—
Personal		4,492		8		—		—		8		4,500		—
Subtotal		416,362		512		488		103		1,103		417,465		85
Loans acquired with credit deterioration
Real estate - commercial		357		—		—		—		—		357		—
Real estate - mortgage		481		—		—		—		—		481		—
Subtotal		838		—		—		—		—		838		—
	$	417,200	$	512	$	488	$	103	$	1,103	$	418,303	$	85

(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 and/or maturity dates that have been extended.

As of June 30, 2022, the Company had a recorded investment in troubled debt restructurings of $5.5 million with no specific reserves or 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, 2022 or 2021. On December 31, 2021, the Company had a recorded investment in troubled debt restructurings of $5.6 million with no specific reserves or any charge-offs related to the troubled debt restructured loans.

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, 2022.

(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

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 more than $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, based on 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, 2022 and December 31, 2021, respectively.

(Dollars in thousands)			Special
As of June 30, 2022	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	59,345	$	—	$	698	$	—	$	60,043
Real estate - commercial		152,618		12,132		5,635		—		170,385
Real estate - construction		51,780		—		1,441		—		53,221
Real estate - mortgage		131,932		444		821		—		133,197
Obligations of states and political subdivisions		20,285		—		—		—		20,285
Personal		3,948		—		—		—		3,948
Total	$	419,908	$	12,576	$	8,595	$	—	$	441,079

(Dollars in thousands)			Special
As of December 31, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	61,372	$	577	$	690	$	—	$	62,639
Real estate - commercial		137,684		16,429		5,693		—		159,806
Real estate - construction		42,394		—		887		—		43,281
Real estate - mortgage		130,584		252		918		—		131,754
Obligations of states and political subdivisions		16,323		—		—		—		16,323
Personal		4,500		—		—		—		4,500
Total	$	392,857	$	17,258	$	8,188	$	—	$	418,303

The decline in special mention real estate – commercial loans as of June 30, 2022 compared to December 31, 2021 was largely due to a $2.9 million payoff of a special mention loan in the first quarter of 2022, as well as paydowns and the upgrade of a loan relationship to a pass rating.

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

GOODWILL AND OTHER INTANGIBLE ASSETS

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 $2.0 million. On November 30, 2015, the Company acquired FNBPA Bancorp, Inc. and, as a result, carries goodwill of $3.4 million 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 $3.6 million relating to the acquisition.

Total goodwill at June 30, 2022 and December 31, 2021 was $9.0 million. Goodwill is not amortized but is tested annually for impairment as of December 31, or more frequently if certain events occur which might indicate goodwill has been impaired. There was no goodwill impairment during the six months ended June 30, 2022 or June 30, 2021.

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, 2022  was $5,000 and $11,000, respectively, and $7,000 and $13,000, respectively, for the three and six months ended June 30, 2021.

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, 2022 was $8,000 and $16,000, respectively, and $10,000 and $19,000, respectively, for the three and six months ended June 30, 2021.

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, 2021		223		128
Amortization expense recorded in the twelve months
ended December 31, 2021		27		39
Unamortized balance as of December 31, 2021		53		122
Amortization expense recorded in the
six months ended June 30, 2022		11		16
Unamortized balance as of June 30, 2022	$	42	$	106
Scheduled remaining amortization expense for years ended:
December 31, 2022	$	11	$	17
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
Thereafter		—		9

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BORROWINGS

6 Months Ended

Jun. 30, 2022

BORROWINGS

BORROWINGS

8. BORROWINGS

Borrowings consisted of the following as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Securities sold under agreements to repurchase	$	5,029	$	4,227
Short-term debt with FHLB		20,000		—
Long-term debt with FHLB		20,000		20,000
	$	45,029	$	24,227

Long-term debt is comprised only of Federal Home Loan Bank (“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, 2022.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		15,000	2.29
2025		5,000	2.41
2026		—	—
Thereafter		—	—
	$	20,000	2.32	%

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STOCK COMPENSATION PLAN

6 Months Ended

Jun. 30, 2022

STOCK COMPENSATION PLAN

STOCK COMPENSATION PLAN

9. STOCK COMPENSATION PLAN

Long-Term Incentive Plan

The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”); the Plan 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. The Plan expanded the types of awards authorized by the 2011 Plan to include, among others, restricted stock. Under the provisions of the Plan, 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 163,990 shares remained available for grant as of June 30, 2022. 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.

Through the sixth months ended June 30, 2022, 10,486 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, 2022, there was $199,000 of unrecognized compensation cost related to all non-vested restricted stock awards. This cost is expected to be recognized over the vesting period through February 2025.

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 $79,000 and $116,000 for the three and six months ended June 30, 2022, and $37,000 and $72,000 for the three and six months ended June 30, 2021.

The following table presents a summary of the status of the Company’s non-vested restricted stock awards as of June 30, 2022, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2022	22,789	$	18.48
Vested	(11,475)		18.72
Forfeited	(825)		17.32
Granted	10,486		15.90
Non-vested at June 30, 2022	20,975	$	17.10

No stock options were awarded during the six months ended June 30, 2022. 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 may not be less than the fair market value of the stock on the day the option was granted, and 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, 2022 have exercise prices between $17.65 and $17.80, with a weighted average exercise price of $17.74 and a weighted average remaining contractual life of 1.91 years.

As of June 30, 2022, there was no unrecognized compensation cost related to options granted under the Plan and no options were exercised under the Plan during the period.

A summary of the status of the outstanding stock options as of June 30, 2022, and changes during the period then ended, is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	71,947	$	17.78
Granted	—		—
Exercised	—		—
Expired	(11,600)		18.00
Outstanding at end of year	60,347	$	17.74

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 5,026 and 4,944 shares issued from treasury under this plan during the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, there were 156,650 shares reserved for issuance under the Employee Stock Purchase Plan.

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FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2022

FAIR VALUE MEASUREMENT

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 yield 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, 2022 and December 31, 2021 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no assets measured at fair value on a non-recurring basis as of June 30, 2022 or December 31, 2021.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2022	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	$	—	$	41,847	$	—	$	41,847
Obligations of state and political subdivisions		—		8,299		—		8,299
Corporate debt securities		—		14,781		7,788		22,569
Mortgage-backed securities		—		230,912		—		230,912
Total debt securities available for sale	$	—	$	295,839	$	7,788	$	303,627
Equity securities	$	1,044	$	—	$	—	$	1,044
Mortgage servicing rights	$	—	$	—	$	101	$	101
Interest rate swaps	$	—	$	424	$	—	$	424

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 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	$	—	$	40,526	$	—	$	40,526
Obligations of state and political subdivisions		—		9,220		—		9,220
Corporate debt securities		—		30,476		4,520		34,996
Mortgage-backed securities		—		250,682		—		250,682
Total debt securities available for sale	$	—	$	330,904	$	4,520	$	335,424
Equity securities	$	1,124	$	—	$	—	$	1,124
Mortgage servicing rights	$	—	$	—	$	120	$	120
Interest rate swaps	$	—	$	541	$	—	$	541

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 month periods ended June 30, 2022 and 2021.

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Investment Securities:
Beginning balance	$	4,270	$	2,000	$	4,520	$	2,000
Total gains (loss) included in OCI		(482)		—		(732)		—
Purchases		4,000		2,500		4,000		2,500
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	7,788	$	4,500	$	7,788	$	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 after 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, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	14,435	$	14,435	$	12,928	$	12,928
Interest bearing deposits with banks		8,239		8,239		598		598
Interest bearing time deposits with banks		245		245		735		735
Securities		304,671		304,671		336,548		336,548
Restricted investment in bank stock		2,587		N/A		2,116		N/A
Loans, net of allowance for loan losses		437,266		437,485		414,795		414,984
Interest rate swaps		424		424		541		541
Accrued interest receivable		1,907		1,907		1,814		1,814
Financial liabilities:
Non-interest bearing deposits	$	196,322	$	196,322	$	182,022	$	182,022
Interest bearing deposits		523,535		521,546		526,425		528,952
Securities sold under agreements to repurchase		5,029		N/A		4,227		N/A
Short-term borrowings		20,000		19,992		—		—
Long-term debt		20,000		19,569		20,000		20,520
Other interest bearing liabilities		1,021		1,019		1,568		1,568
Accrued interest payable		215		215		252		252
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, 2022 and December 31, 2021. 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, 2022
Financial instruments - Assets
Interest bearing time deposits with banks	$	245	$	245	$	—	$	245	$	—
Loans, net of allowance for loan losses		437,266		437,485		—		—		437,485
Financial instruments - Liabilities
Interest bearing deposits	$	523,535	$	521,546	$	—	$	521,546	$	—
Long-term debt		20,000		19,569		—		19,569		—
Other interest bearing liabilities		1,021		1,019		—		1,019		—

					(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, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		414,795		414,984		—		—		414,984
Financial instruments - Liabilities
Interest bearing deposits	$	526,425	$	528,952	$	—	$	528,952	$	—
Long-term debt		20,000		20,520		—		20,520		—
Other interest bearing liabilities		1,568		1,568		—		1,568		—

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COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES

6 Months Ended

Jun. 30, 2022

COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES

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, 2022, the Company had $108.3 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $107.1 million at December 31, 2021.

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 $3.6 million and  $5.7 million of financial and performance letters of credit commitments as of June 30, 2022 and December 31, 2021, respectively. Commercial letters of credit as of June 30, 2022 and December 31, 2021 totaled $9.4 million and $9.5 million, respectively. Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential number of future payments required under the corresponding guarantees. The amount of the liability as of June 30, 2022 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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DERIVATIVES

6 Months Ended

Jun. 30, 2022

DERIVATIVES

DERIVATIVES

12. 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, 2022, an interest rate swap with a notional amount totaling $20.0 million was re-designated as a cash flow hedge on brokered deposits and designated instead, as a cash flow hedge on a short-term FHLB advance. Based on updated funding need projections, including the proceeds from the sale of investment securities and continued core deposit growth, Juniata unwound two forward starting swaps at a gain of $1.2 million during the second quarter of 2022. The amounts previously recognized in accumulated other comprehensive income were reclassified to other non-interest income because it became probable the forecasted hedged transactions would not occur. As of December 31, 2021, interest rate swaps with a notional amount totaling $40.0 million, were designated as cash flow hedges, of which $20.0 million were on hedges of brokered deposits, and the other $20.0 million were hedges of  certain forecasted FHLB long-term advances. The remaining interest rate swap was determined to be fully effective during the periods presented, and as such, no amount of ineffectiveness has 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 hedge to remain fully effective during the remaining terms of the swap.

The following table reflects the notional amounts and fair values of derivatives recorded on the Consolidated Statements of Condition as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)	June 30, 2022				December 31, 2021
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
Derivatives designated as hedges:	Amount		(Liability)		Amount		(Liability)
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	—	$	—	$	20,000	$	52
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		20,000		424		—		—
Interest rate swaps - forward-starting on long-term FHLB advances		—		—		20,000		489

The effect of cash flow hedge accounting on accumulated other comprehensive income for the periods ended June 30, 2022 and December 31, 2021 are as follows:

(Dollars in thousands)	June 30, 2022
	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	$	(101)	Interest expense on short-term borrowings and repurchase agreements	$	(16)
Swap termination gain		1,215	Other non-interest income		(1,215)
Total	$	1,114		$	(1,231)

(Dollars in thousands)	December 31, 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	$	538	Interest expense on short-term borrowings and repurchase agreements	$	60
Total	$	538		$	60

The effect of cash flow hedge accounting on the Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 is as follows:

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

	Income (Expense)				Income (Expense)
	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Effects of cash flow hedging:
Loss on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	27	$	(22)	$	16	$	(26)
Amount reclassified from AOCI into income for swap termination		1,215		—		1,215		—
Total	$	1,242	$	(22)	$	1,231	$	(26)

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

13. SUBSEQUENT EVENTS

On July 19, 2022, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2022, payable on September 1, 2022.

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RECENT ACCOUNTING STANDARDS UPDATES (Policy)

6 Months Ended

Jun. 30, 2022

Accounting Standards Update 2016-13

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

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. 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. The Company’s CECL transition team started running parallel calculations between CECL and the incurred loss model during the second quarter to evaluate the impact of the amended guidance on its consolidated financial statements and disclosures. The team 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 will depend on economic conditions and the composition of the Company’s loan portfolio at the time of adoption.

Accounting Standards Update 2022-02

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Adoption of New Accounting Standards

ASU 2022-02, Financial Instruments – Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures

Issued: March 2022

Summary: ASU 2022-02 eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have adopted Topic 326 “Financial Instruments – Credit Losses”. All other creditors must continue to apply the TDR accounting model until they adopt Topic 326. Due to the removal of the TDR accounting model, all loan modifications will now be accounted for under the general loan modification guidance in Subtopic 310-20. In addition, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. Vintage disclosure requirements will also be required to prospectively disclose current period gross write-off information by vintage (i.e., year of origination) for public business entities within the scope of the Topic 326.

Effective Date: Effective upon adoption of the amendments in ASU 2016-13 for entities that have not yet adopted ASU 2016-13. Early adoption is not permitted before adoption of ASU 2016-13. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities that adopted ASU 2016-13. Entities that have adopted Topic 326 may early adopt ASU 2022-02 and are permitted to do so on a partial basis. The Company is in the process of evaluating the amendments but does not expect the adoption of this ASU will have a material impact on the Corporation's financial statements.

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Policy)

6 Months Ended

Jun. 30, 2022

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

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.  There were no consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2022. As of December 31, 2021, there was $85,000 in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process. 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 (LOSS) (Tables)

6 Months Ended

Jun. 30, 2022

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Components of Accumulated Other Comprehensive Income

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

(Dollars in thousands)
June 30, 2022	Gains on Cash Flow Hedges		Unrealized Losses on Available for Sale Securities		Total
Beginning balance, December 31, 2021	$	427	$	(3,792)	$	(3,365)
Current period other comprehensive income (loss):
Other comprehensive income (loss) before reclassification		880		(27,701)		(26,821)
Amounts reclassified from accumulated other comprehensive income (loss)		(972)		848		(124)
Net current period other comprehensive loss		(92)		(26,853)		(26,945)
Ending balance, June 30, 2022	$	335	$	(30,645)	$	(30,310)

(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

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2022

EARNINGS PER SHARE

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,
	2022		2021
Net income	$	1,983	$	1,739
Weighted-average common shares outstanding		5,000		5,008
Basic earnings per share		0.40		0.35
Weighted-average common shares outstanding	$	5,000	$	5,008
Common stock equivalents due to effect of stock options		8		8
Total weighted-average common shares and equivalents	$	5,008	$	5,016
Diluted earnings per share	$	0.40	$	0.35
Anti-dilutive stock options outstanding		—		—

(Amounts in thousands, except earnings per share data)	Six months ended June 30,
	2022		2021
Net income	$	4,098	$	3,374
Weighted-average common shares outstanding		4,997		5,013
Basic earnings per share		0.82		0.67
Weighted-average common shares outstanding	$	4,997	$	5,013
Common stock equivalents due to effect of stock options		10		8
Total weighted-average common shares and equivalents	$	5,007	$	5,021
Diluted earnings per share	$	0.82	$	0.67
Anti-dilutive stock options outstanding		2		2

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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2022

SECURITIES

Debt Securities Available for Sale

The amortized cost and fair value of debt securities available for sale as of June 30, 2022 and December 31, 2021, 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, 2022
					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 one year but within five years	$	17,947	$	16,447	$	—	$	(1,500)
After five years but within ten years		28,912		25,400		—		(3,512)
		46,859		41,847		—		(5,012)
Obligations of state and political subdivisions
After one year but within five years		3,804		3,787		8		(25)
After five years but within ten years		3,871		3,281		—		(590)
After ten years		1,501		1,231		—		(270)
		9,176		8,299		8		(885)
Corporate debt securities
After one year but within five years		4,704		4,381		—		(323)
After five years but within ten years		19,516		18,188		14		(1,342)
		24,220		22,569		14		(1,665)
Mortgage-backed securities		262,163		230,912		6		(31,257)
Total	$	342,418	$	303,627	$	28	$	(38,819)

(Dollars in thousands)	December 31, 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 one year but within five years	$	6,000	$	5,807	$	—	$	(193)
After five years but within ten years		35,881		34,719		—		(1,162)
		41,881		40,526		—		(1,355)
Obligations of state and political subdivisions
After one year but within five years		3,810		3,937		129		(2)
After five years but within ten years		1,246		1,221		—		(25)
After ten years		4,118		4,062		—		(56)
		9,174		9,220		129		(83)
Corporate debt securities
After one year but within five years		2,000		1,972		—		(28)
After five years but within ten years		32,408		33,024		805		(189)
		34,408		34,996		805		(217)
Mortgage-backed securities		254,762		250,682		812		(4,892)
Total	$	340,225	$	335,424	$	1,746	$	(6,547)

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, 2022 and 2021.

(Dollars in thousands)	Six Months Ended
	June 30,
	2022		2021
Gross proceeds from sales and calls of securities	$	17,134	$	32,869
Securities available for sale:
Gross realized gains from sold and called securities	$	25	$	130
Gross realized losses from sold and called securities		(1,099)		(72)
Net gains (losses) from sales and calls of securities	$	(1,074)	$	58

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, 2022 and December 31, 2021:

	Unrealized Losses at June 30, 2022
	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	2	$	7,237	$	(503)	7	$	34,610	$	(4,509)	9	$	41,847	$	(5,012)
Obligations of state and political subdivisions	8		5,758		(823)	1		472		(62)	9		6,230		(885)
Corporate debt securities	11		19,539		(1,665)	—		—		—	11		19,539		(1,665)
Mortgage-backed securities	61		145,673		(17,524)	21		80,244		(13,733)	82		225,917		(31,257)
Total temporarily impaired securities	82	$	178,207	$	(20,515)	29	$	115,326	$	(18,304)	111	$	293,533	$	(38,819)

	Unrealized Losses at December 31, 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	5	$	22,130	$	(752)	3	$	18,396	$	(603)	8	$	40,526	$	(1,355)
Obligations of state and political subdivisions	7		5,781		(83)	—		—		—	7		5,781		(83)
Corporate debt securities	6		10,144		(217)	—		—		—	6		10,144		(217)
Mortgage-backed securities	36		182,328		(3,504)	5		26,443		(1,388)	41		208,771		(4,892)
Total temporarily impaired securities	54	$	220,383	$	(4,556)	8	$	44,839	$	(1,991)	62	$	265,222	$	(6,547)

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Tables)

6 Months Ended

Jun. 30, 2022

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio by Class

The following table presents the loan portfolio by class at June 30, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Commercial, financial and agricultural	$	60,043	$	62,639
Real estate - commercial		170,385		159,806
Real estate - construction		53,221		43,281
Real estate - mortgage		133,197		131,754
Obligations of states and political subdivisions		20,285		16,323
Personal		3,948		4,500
Total	$	441,079	$	418,303

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, 2022 and 2021.

(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, 2022
Balance, beginning of period	$	259	$	836	$	1,170	$	47	$	1,228	$	36	$	3,576
Provision for loan losses		27		98		38		9		49		1		222
Charge-offs		—		—		—		—		—		(3)		(3)
Recoveries		—		—		—		—		17		1		18
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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
Six Months Ended
June 30, 2022
Balance, beginning of period	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508
Provision for loan losses		35		(86)		324		11		(33)		(1)		250
Charge-offs		—		—		—		—		(1)		(5)		(6)
Recoveries		—		—		—		—		59		2		61
Balance, end of period	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
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

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, 2022 and December 31, 2021.

(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, 2022
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,220	$	—	$	—	$	372	$	—	$	5,592
Acquired with credit deterioration		—		303		—		—		439		—		742
Collectively evaluated for impairment		60,043		164,862		53,221		20,285		132,386		3,948		434,745
	$	60,043	$	170,385	$	53,221	$	20,285	$	133,197	$	3,948	$	441,079
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		286		934		1,208		56		1,294		35		3,813
	$	286	$	934	$	1,208	$	56	$	1,294	$	35	$	3,813
December 31, 2021
Loans allocated by:
Individually evaluated for impairment	$	—	$	5,262	$	—	$	—	$	437	$	—	$	5,699
Acquired with credit deterioration		—		357		—		—		481		—		838
Collectively evaluated for impairment		62,639		154,187		43,281		16,323		130,836		4,500		411,766
	$	62,639	$	159,806	$	43,281	$	16,323	$	131,754	$	4,500	$	418,303
Allowance for loan losses allocated by:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Acquired with credit deterioration		—		—		—		—		—		—		—
Collectively evaluated for impairment		251		1,020		884		45		1,267		39		3,506
	$	251	$	1,020	$	884	$	45	$	1,269	$	39	$	3,508

Impaired Loans by Loan Portfolio Class

The following table summarizes information regarding impaired loans by portfolio class as of June 30, 2022 and December 31, 2021. One loan was determined to have insufficient collateral as of December 31, 2021, requiring the establishment of a specific reserve of $2,000.

(Dollars in thousands)	As of June 30, 2022						As of December 31, 2021
	Recorded		Unpaid Principal		Related		Recorded		Unpaid Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans
With no related allowance recorded:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate – construction		—		—		—		—		649		—
Real estate - mortgage		372		1,041		—		368		1,054		—
Acquired with credit deterioration		439		646		—		481		660		—
With an allowance recorded:
Real estate - mortgage	$	—	$	—	$	—	$	69	$	68	$	2
Total:
Real estate - commercial	$	5,220	$	5,672	$	—	$	5,262	$	5,720	$	—
Acquired with credit deterioration		303		355		—		357		366		—
Real estate - construction		—		—		—		—		649		—
Real estate – mortgage		372		1,041		—		437		1,122		2
Acquired with credit deterioration		439		646		—		481		660		—
	$	6,334	$	7,714	$	—	$	6,537	$	8,517	$	2

Average recorded investment of impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021 are summarized in the table below.

(Dollars in thousands)	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
Total:
Real estate - commercial	$	5,241	$	68	$	—	$	4,082	$	98	$	—
Acquired with credit deterioration		348		—		—		339		—		—
Real estate - mortgage		399		2		10		576		4		10
Acquired with credit deterioration		454		—		—		600		—		—
	$	6,442	$	70	$	10	$	5,597	$	102	$	10

(Dollars in thousands)	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	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:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
Total:
Real estate - commercial	$	5,252	$	131	$	—	$	2,957	$	111	$	—
Acquired with credit deterioration		350		—		—		336		—		—
Real estate - mortgage		412		5		20		628		7		20
Acquired with credit deterioration		462		—		—		606		—		—
	$	6,476	$	136	$	20	$	4,527	$	118	$	20

Nonaccrual Loans by Classes of the Loan Portfolio

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)
	June 30, 2022		December 31, 2021
Non-accrual loans:
Real estate - mortgage	$	119	$	141
Total	$	119	$	141

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, 2022 and December 31, 2021, respectively.

													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, 2022
Commercial, financial and agricultural	$	60,017	$	26	$	—	$	—	$	26	$	60,043	$	—
Real estate - commercial		170,072		—		10		—		10		170,082		—
Real estate - construction		53,032		—		189		—		189		53,221		—
Real estate - mortgage		132,005		369		384		—		753		132,758		—
Obligations of states and political subdivisions		20,285		—		—		—		—		20,285		—
Personal		3,907		36		5		—		41		3,948		—
Subtotal		439,318		431		588		—		1,019		440,337		—
Loans acquired with credit deterioration
Real estate - commercial		303		—		—		—		—		303		—
Real estate - mortgage		439		—		—		—		—		439		—
Subtotal		742		—		—		—		—		742		—
	$	440,060	$	431	$	588	$	—	$	1,019	$	441,079	$	—

													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, 2021
Commercial, financial and agricultural	$	62,628	$	11	$	—	$	—	$	11	$	62,639	$	—
Real estate - commercial		159,396		53		—		—		53		159,449		—
Real estate - construction		43,281		—		—		—		—		43,281		—
Real estate - mortgage		130,242		440		488		103		1,031		131,273		85
Obligations of states and political subdivisions		16,323		—		—		—		—		16,323		—
Personal		4,492		8		—		—		8		4,500		—
Subtotal		416,362		512		488		103		1,103		417,465		85
Loans acquired with credit deterioration
Real estate - commercial		357		—		—		—		—		357		—
Real estate - mortgage		481		—		—		—		—		481		—
Subtotal		838		—		—		—		—		838		—
	$	417,200	$	512	$	488	$	103	$	1,103	$	418,303	$	85

(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, 2022.

(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, 2022 and December 31, 2021, respectively.

(Dollars in thousands)			Special
As of June 30, 2022	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	59,345	$	—	$	698	$	—	$	60,043
Real estate - commercial		152,618		12,132		5,635		—		170,385
Real estate - construction		51,780		—		1,441		—		53,221
Real estate - mortgage		131,932		444		821		—		133,197
Obligations of states and political subdivisions		20,285		—		—		—		20,285
Personal		3,948		—		—		—		3,948
Total	$	419,908	$	12,576	$	8,595	$	—	$	441,079

(Dollars in thousands)			Special
As of December 31, 2021	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial and agricultural	$	61,372	$	577	$	690	$	—	$	62,639
Real estate - commercial		137,684		16,429		5,693		—		159,806
Real estate - construction		42,394		—		887		—		43,281
Real estate - mortgage		130,584		252		918		—		131,754
Obligations of states and political subdivisions		16,323		—		—		—		16,323
Personal		4,500		—		—		—		4,500
Total	$	392,857	$	17,258	$	8,188	$	—	$	418,303

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

GOODWILL AND OTHER INTANGIBLE ASSETS

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, 2021		223		128
Amortization expense recorded in the twelve months
ended December 31, 2021		27		39
Unamortized balance as of December 31, 2021		53		122
Amortization expense recorded in the
six months ended June 30, 2022		11		16
Unamortized balance as of June 30, 2022	$	42	$	106
Scheduled remaining amortization expense for years ended:
December 31, 2022	$	11	$	17
December 31, 2023		16		28
December 31, 2024		10		23
December 31, 2025		5		17
December 31, 2026		—		12
Thereafter		—		9

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BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2022

BORROWINGS

Schedule of Borrowings

Borrowings consisted of the following as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Securities sold under agreements to repurchase	$	5,029	$	4,227
Short-term debt with FHLB		20,000		—
Long-term debt with FHLB		20,000		20,000
	$	45,029	$	24,227

Scheduled Maturities of Long-Term Debt

Long-term debt is comprised only of Federal Home Loan Bank (“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, 2022.

(Dollars in thousands)	Scheduled		Weighted Average
Year	Maturities		Interest Rate
2022	$	—	—	%
2023		—	—
2024		15,000	2.29
2025		5,000	2.41
2026		—	—
Thereafter		—	—
	$	20,000	2.32	%

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STOCK COMPENSATION PLAN (Tables)

6 Months Ended

Jun. 30, 2022

STOCK COMPENSATION PLAN

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, 2022, and changes during the period then ended is presented below:

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2022	22,789	$	18.48
Vested	(11,475)		18.72
Forfeited	(825)		17.32
Granted	10,486		15.90
Non-vested at June 30, 2022	20,975	$	17.10

Schedule of Stock Options Activity

A summary of the status of the outstanding stock options as of June 30, 2022, and changes during the period then ended, is presented below:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at beginning of year	71,947	$	17.78
Granted	—		—
Exercised	—		—
Expired	(11,600)		18.00
Outstanding at end of year	60,347	$	17.74

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FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 2022

FAIR VALUE MEASUREMENT

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, 2022 and December 31, 2021 segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no assets measured at fair value on a non-recurring basis as of June 30, 2022 or December 31, 2021.

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
June 30, 2022	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	$	—	$	41,847	$	—	$	41,847
Obligations of state and political subdivisions		—		8,299		—		8,299
Corporate debt securities		—		14,781		7,788		22,569
Mortgage-backed securities		—		230,912		—		230,912
Total debt securities available for sale	$	—	$	295,839	$	7,788	$	303,627
Equity securities	$	1,044	$	—	$	—	$	1,044
Mortgage servicing rights	$	—	$	—	$	101	$	101
Interest rate swaps	$	—	$	424	$	—	$	424

	(Level 1)		(Level 2)		(Level 3)
	Quoted Prices in		Significant		Significant
(Dollars in thousands)	Active Markets		Other		Other
	for Identical		Observable		Unobservable
December 31, 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	$	—	$	40,526	$	—	$	40,526
Obligations of state and political subdivisions		—		9,220		—		9,220
Corporate debt securities		—		30,476		4,520		34,996
Mortgage-backed securities		—		250,682		—		250,682
Total debt securities available for sale	$	—	$	330,904	$	4,520	$	335,424
Equity securities	$	1,124	$	—	$	—	$	1,124
Mortgage servicing rights	$	—	$	—	$	120	$	120
Interest rate swaps	$	—	$	541	$	—	$	541

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 month periods ended June 30, 2022 and 2021.

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Investment Securities:
Beginning balance	$	4,270	$	2,000	$	4,520	$	2,000
Total gains (loss) included in OCI		(482)		—		(732)		—
Purchases		4,000		2,500		4,000		2,500
Principal payments and other		—		—		—		—
Sales		—		—		—		—
Balance, end of period	$	7,788	$	4,500	$	7,788	$	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, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Financial assets:
Cash and due from banks	$	14,435	$	14,435	$	12,928	$	12,928
Interest bearing deposits with banks		8,239		8,239		598		598
Interest bearing time deposits with banks		245		245		735		735
Securities		304,671		304,671		336,548		336,548
Restricted investment in bank stock		2,587		N/A		2,116		N/A
Loans, net of allowance for loan losses		437,266		437,485		414,795		414,984
Interest rate swaps		424		424		541		541
Accrued interest receivable		1,907		1,907		1,814		1,814
Financial liabilities:
Non-interest bearing deposits	$	196,322	$	196,322	$	182,022	$	182,022
Interest bearing deposits		523,535		521,546		526,425		528,952
Securities sold under agreements to repurchase		5,029		N/A		4,227		N/A
Short-term borrowings		20,000		19,992		—		—
Long-term debt		20,000		19,569		20,000		20,520
Other interest bearing liabilities		1,021		1,019		1,568		1,568
Accrued interest payable		215		215		252		252
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, 2022 and December 31, 2021. 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, 2022
Financial instruments - Assets
Interest bearing time deposits with banks	$	245	$	245	$	—	$	245	$	—
Loans, net of allowance for loan losses		437,266		437,485		—		—		437,485
Financial instruments - Liabilities
Interest bearing deposits	$	523,535	$	521,546	$	—	$	521,546	$	—
Long-term debt		20,000		19,569		—		19,569		—
Other interest bearing liabilities		1,021		1,019		—		1,019		—

					(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, 2021
Financial instruments - Assets
Interest bearing time deposits with banks	$	735	$	735	$	—	$	735	$	—
Loans, net of allowance for loan losses		414,795		414,984		—		—		414,984
Financial instruments - Liabilities
Interest bearing deposits	$	526,425	$	528,952	$	—	$	528,952	$	—
Long-term debt		20,000		20,520		—		20,520		—
Other interest bearing liabilities		1,568		1,568		—		1,568		—

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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2022

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, 2022 and December 31, 2021.

(Dollars in thousands)	June 30, 2022				December 31, 2021
			Fair				Fair
			Value				Value
	Notional		Asset		Notional		Asset
Derivatives designated as hedges:	Amount		(Liability)		Amount		(Liability)
Interest rate swap - pay fixed / receive floating on 3-month brokered deposit	$	—	$	—	$	20,000	$	52
Interest rate swap - pay fixed / receive floating on 3-month FHLB advance		20,000		424		—		—
Interest rate swaps - forward-starting on long-term FHLB advances		—		—		20,000		489

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, 2022 and December 31, 2021 are as follows:

(Dollars in thousands)	June 30, 2022
	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	$	(101)	Interest expense on short-term borrowings and repurchase agreements	$	(16)
Swap termination gain		1,215	Other non-interest income		(1,215)
Total	$	1,114		$	(1,231)

(Dollars in thousands)	December 31, 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	$	538	Interest expense on short-term borrowings and repurchase agreements	$	60
Total	$	538		$	60

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, 2022 and 2021 is as follows:

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

	Income (Expense)				Income (Expense)
	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2022		2021		2022		2021
Effects of cash flow hedging:
Loss on cash flow hedging relationships:
Amount reclassified from AOCI into income	$	27	$	(22)	$	16	$	(26)
Amount reclassified from AOCI into income for swap termination		1,215		—		1,215		—
Total	$	1,242	$	(22)	$	1,231	$	(26)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Components of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Beginning balance	$ 56,725	$ 72,574	$ 71,290	$ 76,597
Amounts reclassified from accumulated other comprehensive income (loss)	1,242	(22)
Net current period other comprehensive income (loss)	(11,331)	616	(26,945)	(3,492)
Ending balance	46,425	73,749	46,425	73,749
Accumulated Other Comprehensive Loss [Member]
Beginning balance	(18,979)	(590)	(3,365)	3,518
Other comprehensive income (loss) before reclassification			(26,821)	(3,466)
Amounts reclassified from accumulated other comprehensive income (loss)			(124)	(26)
Net current period other comprehensive income (loss)	(11,331)	616	(26,945)	(3,492)
Ending balance	(30,310)	26	(30,310)	26
Unrealized Gains and Losses on Cash Flow Hedges [Member]
Beginning balance			427	(45)
Other comprehensive income (loss) before reclassification			880	325
Amounts reclassified from accumulated other comprehensive income (loss)			(972)	20
Net current period other comprehensive income (loss)			(92)	345
Ending balance	335	300	335	300
Unrealized Gains and Losses on Available for Sale Securities [Member]
Beginning balance			(3,792)	3,563
Other comprehensive income (loss) before reclassification			(27,701)	(3,791)
Amounts reclassified from accumulated other comprehensive income (loss)			848	(46)
Net current period other comprehensive income (loss)			(26,853)	(3,837)
Ending balance	$ (30,645)	$ (274)	$ (30,645)	$ (274)

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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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
EARNINGS PER SHARE
Net income	$ 1,983	$ 1,739	$ 4,098	$ 3,374
Weighted-average common shares outstanding	5,000	5,008	4,997	5,013
Basic earnings per share	$ 0.40	$ 0.35	$ 0.82	$ 0.67
Common stock equivalents due to effect of stock options	8	8	10	8
Total weighted-average common shares and equivalents	5,008	5,016	5,007	5,021
Diluted earnings per share	$ 0.40	$ 0.35	$ 0.82	$ 0.67
Anti-dilutive stock options outstanding			2	2

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SECURITIES (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) security
Sales of debt securities available for sale			$ 17,134,000	$ 32,869,000
Debt securities available for sale	$ 303,627,000		$ 303,627,000		$ 335,424,000
Securities in unrealized loss position | security	111		111		62
Equity securities	$ 1,044,000		$ 1,044,000		$ 1,124,000
Realized gain (loss) on equity securities	$ (57,000)	$ 8,000	$ (80,000)	$ 101,000
Number of Securities, 12 Months or More | security	29		29		8
Obligations of U.S. Government Agencies and Corporations [Member]
Investment portfolio percentage	14.00%		14.00%
Debt securities available for sale	$ 41,847,000		$ 41,847,000		$ 40,526,000
Carrying value of pledged assets	$ 87,600,000		$ 87,600,000		$ 82,700,000
Securities in unrealized loss position | security	9		9		8
Number of Securities, 12 Months or More | security	7		7		3
Obligations of State and Political Subdivisions [Member]
Investment portfolio percentage	3.00%		3.00%
Debt securities available for sale	$ 8,299,000		$ 8,299,000		$ 9,220,000
Debt Securities Maturity Term			5 years
Securities in unrealized loss position | security	9		9		7
Number of Securities, 12 Months or More | security	1		1		0
Corporate Debt Securities [Member]
Investment portfolio percentage	7.00%		7.00%
Debt securities available for sale	$ 22,569,000		$ 22,569,000		$ 34,996,000
Securities in unrealized loss position | security	11		11		6
Number of Securities, 12 Months or More | security	0		0		0
Debt security	$ 18,200,000		$ 18,200,000
Realized gain (loss) on debt securities	$ 1,100,000
Mortgage-Backed Securities [Member]
Investment portfolio percentage	76.00%		76.00%
Securities in unrealized loss position | security	82		82		41
Other than temporary impairment			$ 0		$ 0
Number of Securities, 12 Months or More | security	21		21		5
Federal Farm Credit Bank [Member]
Debt securities available for sale	$ 11,400,000		$ 11,400,000		$ 12,400,000
Pennsylvania Housing Finance [Member]
Debt securities available for sale	$ 6,700,000		$ 6,700,000		$ 7,500,000

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SECURITIES (Debt Securities Available for Sale) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities, Total	$ 342,418	$ 340,225
Fair Value of AFS Securities, Total	303,627	335,424
Gross Unrealized Gains on AFS Securities, Total	28	1,746
Gross Unrealized Losses on AFS Securities, Total	(38,819)	(6,547)
Obligations of U.S. Government Agencies and Corporations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	17,947	6,000
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	28,912	35,881
Amortized Cost of AFS Securities, Total	46,859	41,881
Fair Value of AFS Securities Maturing After One Year But Within Five Years	16,447	5,807
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	25,400	34,719
Fair Value of AFS Securities, Total	41,847	40,526
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	0	0
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	0	0
Gross Unrealized Gains on AFS Securities, Total	0	0
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(1,500)	(193)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(3,512)	(1,162)
Gross Unrealized Losses on AFS Securities, Total	(5,012)	(1,355)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	3,804	3,810
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	3,871	1,246
Amortized Cost of AFS Securities Maturing After Ten Years	1,501	4,118
Amortized Cost of AFS Securities, Total	9,176	9,174
Fair Value of AFS Securities Maturing After One Year But Within Five Years	3,787	3,937
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	3,281	1,221
Fair Value of AFS Securities Maturing After Ten Years	1,231	4,062
Fair Value of AFS Securities, Total	8,299	9,220
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	8	129
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	0	0
Gross Unrealized Gains on AFS Securities Maturing After ten Years	0	0
Gross Unrealized Gains on AFS Securities, Total	8	129
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(25)	(2)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(590)	(25)
Gross Unrealized Losses on AFS Securities Maturing After Ten Years	(270)	(56)
Gross Unrealized Losses on AFS Securities, Total	(885)	(83)
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Maturing After One Year But Within Five Years	4,704	2,000
Amortized Cost of AFS Securities Maturing After Five Years But Within Ten Years	19,516	32,408
Amortized Cost of AFS Securities, Total	24,220	34,408
Fair Value of AFS Securities Maturing After One Year But Within Five Years	4,381	1,972
Fair Value of AFS Securities Maturing After Five Years But Within Ten Years	18,188	33,024
Fair Value of AFS Securities, Total	22,569	34,996
Gross Unrealized Gains on AFS Securities Maturing After One Year But Within Five Years	0	0
Gross Unrealized Gains on AFS Securities Maturing After Five Years But Within ten Years	14	805
Gross Unrealized Gains on AFS Securities, Total	14	805
Gross Unrealized Losses on AFS Securities Maturing After One Year But Within Five Years	(323)	(28)
Gross Unrealized Losses on AFS Securities Maturing After Five Years But Within Ten Years	(1,342)	(189)
Gross Unrealized Losses on AFS Securities, Total	(1,665)	(217)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of AFS Securities Without Single Maturity Date	262,163	254,762
Fair Value of AFS Securities Without Single Maturity Date	230,912	250,682
Gross Unrealized Gains on AFS Securities Without Single Maturity Date	6	812
Gross Unrealized Losses on AFS Securities Without Single Maturity Date	$ (31,257)	$ (4,892)

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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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
SECURITIES
Gross proceeds from sales and calls of securities			$ 17,134	$ 32,869
Gross realized gains from sold and called securities			25	130
Gross realized losses from sold and called securities			(1,099)	(72)
Net gains (losses) from sales and calls of securities	$ (1,074)	$ 54	$ (1,074)	$ 58

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SECURITIES (Schedule of Unrealized Losses) (Details) $ in Thousands	Jun. 30, 2022 USD ($) security	Dec. 31, 2021 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	82	54
Fair Value, Less Than 12 Months	$ 178,207	$ 220,383
Unrealized Losses, Less Than 12 Months	$ (20,515)	$ (4,556)
Number of Securities, 12 Months or More | security	29	8
Fair Value, 12 Months or More	$ 115,326	$ 44,839
Unrealized Losses, 12 Months or More	$ (18,304)	$ (1,991)
Number of Securities, Total | security	111	62
Fair Value, Total	$ 293,533	$ 265,222
Unrealized Losses, Total	$ (38,819)	$ (6,547)
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	2	5
Fair Value, Less Than 12 Months	$ 7,237	$ 22,130
Unrealized Losses, Less Than 12 Months	$ (503)	$ (752)
Number of Securities, 12 Months or More | security	7	3
Fair Value, 12 Months or More	$ 34,610	$ 18,396
Unrealized Losses, 12 Months or More	$ (4,509)	$ (603)
Number of Securities, Total | security	9	8
Fair Value, Total	$ 41,847	$ 40,526
Unrealized Losses, Total	$ (5,012)	$ (1,355)
Obligations of State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	8	7
Fair Value, Less Than 12 Months	$ 5,758	$ 5,781
Unrealized Losses, Less Than 12 Months	$ (823)	$ (83)
Number of Securities, 12 Months or More | security	1	0
Fair Value, 12 Months or More	$ 472	$ 0
Unrealized Losses, 12 Months or More	$ (62)	$ 0
Number of Securities, Total | security	9	7
Fair Value, Total	$ 6,230	$ 5,781
Unrealized Losses, Total	$ (885)	$ (83)
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	11	6
Fair Value, Less Than 12 Months	$ 19,539	$ 10,144
Unrealized Losses, Less Than 12 Months	$ (1,665)	$ (217)
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	11	6
Fair Value, Total	$ 19,539	$ 10,144
Unrealized Losses, Total	$ (1,665)	$ (217)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Less Than 12 Months | security	61	36
Fair Value, Less Than 12 Months	$ 145,673	$ 182,328
Unrealized Losses, Less Than 12 Months	$ (17,524)	$ (3,504)
Number of Securities, 12 Months or More | security	21	5
Fair Value, 12 Months or More	$ 80,244	$ 26,443
Unrealized Losses, 12 Months or More	$ (13,733)	$ (1,388)
Number of Securities, Total | security	82	41
Fair Value, Total	$ 225,917	$ 208,771
Unrealized Losses, Total	$ (31,257)	$ (4,892)

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($) loan	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) loan	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) loan	May 31, 2021 USD ($) loan
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	$ 441,079,000		$ 441,079,000		$ 418,303,000
Troubled debt restructured loan	5,500,000		5,500,000		5,600,000
Reserves relating to TDR	0		0		0
Restructured loan balance in default status	$ 0	$ 0	$ 0	$ 0
Modified trouble debt, number of contracts | loan	0		0
Recorded charge-offs	$ 3,000	3,000	$ 6,000	8,000
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 more than $50,000.
Financing receivable - Allowance for loan losses	$ 3,813,000		$ 3,813,000		$ 3,508,000
Number of loans with insufficient collateral | loan					1
Amount of loans with insufficient collateral requiring specific reserve					$ 2,000
Amount of payoff of a special mention loan			$ 2,900,000
Paycheck Protection Program [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans Funded under Paycheck Protection Program | loan	30		30		194	870
Amount of Loan Funded under Paycheck Protection Program	$ 1,600,000		$ 1,600,000		$ 10,100,000	$ 51,000,000.0
Deferred fees of PPP loans			$ 62,000		485,000
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	170,385,000		$ 170,385,000		159,806,000
Recorded charge-offs	0	0	$ 0	0
Maximum loan-to-value ratio			80.00%
Financing receivable - Allowance for loan losses	934,000		$ 934,000		1,020,000
Consumer Portfolio Segment [Member] | Mortgage Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans	133,197,000		133,197,000		131,754,000
Recorded charge-offs	0	$ 0	$ 1,000	$ 0
Maximum loan-to-value ratio			80.00%
Financing receivable - Allowance for loan losses	1,294,000		$ 1,294,000		1,269,000
Loan balance in the process of foreclosure	$ 0		$ 0		$ 85,000

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Loan Portfolio by Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 441,079	$ 418,303
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	60,043	62,639
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	170,385	159,806
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	53,221	43,281
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	133,197	131,754
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	20,285	16,323
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 3,948	$ 4,500

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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Activity in the Allowance for Loan Losses by Loan Class) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	$ 3,576	$ 4,056	$ 3,508	$ 4,094
Provision for loan losses	222	(200)	250	(279)
Charge-offs	(3)	(3)	(6)	(8)
Recoveries	18	53	61	99
Ending balance	3,813	3,906	3,813	3,906
Loans allocated by: individually evaluated for impairment	5,592		5,592		$ 5,699
Loans allocated by: collectively evaluated for impairment	434,745		434,745		411,766
Financing receivable - Loans allocated	441,079		441,079		418,303
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		2
Allowance for loan losses allocated by: collectively evaluated for impairment	3,813		3,813		3,506
Financing receivable - Allowance for loan losses	3,813		3,813		3,508
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	259	296	251	302
Provision for loan losses	27	(14)	35	(20)
Charge-offs	0	0	0	0
Recoveries	0	7	0	7
Ending balance	286	289	286	289
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	60,043		60,043		62,639
Financing receivable - Loans allocated	60,043		60,043		62,639
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	286		286		251
Financing receivable - Allowance for loan losses	286		286		251
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	836	1,520	1,020	908
Provision for loan losses	98	(85)	(86)	527
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	934	1,435	934	1,435
Loans allocated by: individually evaluated for impairment	5,220		5,220		5,262
Loans allocated by: collectively evaluated for impairment	164,862		164,862		154,187
Financing receivable - Loans allocated	170,385		170,385		159,806
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	934		934		1,020
Financing receivable - Allowance for loan losses	934		934		1,020
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,170	946	884	1,586
Provision for loan losses	38	(50)	324	(718)
Charge-offs	0	0	0	0
Recoveries	0	28	0	56
Ending balance	1,208	924	1,208	924
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	53,221		53,221		43,281
Financing receivable - Loans allocated	53,221		53,221		43,281
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	1,208		1,208		884
Financing receivable - Allowance for loan losses	1,208		1,208		884
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	47	30	45	28
Provision for loan losses	9	3	11	5
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	56	33	56	33
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	20,285		20,285		16,323
Financing receivable - Loans allocated	20,285		20,285		16,323
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	56		56		45
Financing receivable - Allowance for loan losses	56		56		45
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	1,228	1,183	1,269	1,200
Provision for loan losses	49	(32)	(33)	(65)
Charge-offs	0	0	(1)	0
Recoveries	17	13	59	29
Ending balance	1,294	1,164	1,294	1,164
Loans allocated by: individually evaluated for impairment	372		372		437
Loans allocated by: collectively evaluated for impairment	132,386		132,386		130,836
Financing receivable - Loans allocated	133,197		133,197		131,754
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		2
Allowance for loan losses allocated by: collectively evaluated for impairment	1,294		1,294		1,267
Financing receivable - Allowance for loan losses	1,294		1,294		1,269
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning Balance	36	81	39	70
Provision for loan losses	1	(22)	(1)	(8)
Charge-offs	(3)	(3)	(5)	(8)
Recoveries	1	5	2	7
Ending balance	35	$ 61	35	$ 61
Loans allocated by: individually evaluated for impairment	0		0		0
Loans allocated by: collectively evaluated for impairment	3,948		3,948		4,500
Financing receivable - Loans allocated	3,948		3,948		4,500
Allowance for loan losses allocated by: individually evaluated for impairment	0		0		0
Allowance for loan losses allocated by: collectively evaluated for impairment	35		35		39
Financing receivable - Allowance for loan losses	35		35		39
Acquired with Credit Deterioration [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans allocated by: individually evaluated for impairment	742		742		838
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	303		303		357
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	439		439		481
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 CREDIT LOSSES (Impaired Loans by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Impaired [Line Items]
Impaired Loans: Related Allowance		$ 2
Recorded Investment, Total	$ 6,334	6,537
Unpaid Principal Balance, Total	7,714	8,517
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	5,220	5,262
Impaired Loans with No Allowance: Unpaid Principal Balance	5,672	5,720
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	5,220	5,262
Unpaid Principal Balance, Total	5,672	5,720
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	303	357
Impaired Loans with No Allowance: Unpaid Principal Balance	355	366
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	303	357
Unpaid Principal Balance, Total	355	366
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	0	649
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	0	0
Unpaid Principal Balance, Total	0	649
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	372	368
Impaired Loans with No Allowance: Unpaid Principal Balance	1,041	1,054
Impaired Loans with an Allowance: Recorded Investment		69
Impaired Loans with an Allowance: Unpaid Principal Balance		68
Impaired Loans: Related Allowance	0	2
Recorded Investment, Total	372	437
Unpaid Principal Balance, Total	1,041	1,122
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance: Recorded Investment	439	481
Impaired Loans with No Allowance: Unpaid Principal Balance	646	660
Impaired Loans: Related Allowance	0	0
Recorded Investment, Total	439	481
Unpaid Principal Balance, Total	$ 646	$ 660

XML

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 6,442	$ 5,597	$ 6,476	$ 4,527
Interest Income Recognized, Total	70	102	136	118
Cash Basis Interest Income, Total	10	10	20	20
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	5,241	4,082	5,252	2,957
Impaired Loans with No Allowance, Interest Income Recognized	68	98	131	111
Impaired Loans with No Allowance, Cash Basis Interest Income	0	0	0	0
Average Recorded Investment, Total	5,241	4,082	5,252	2,957
Interest Income Recognized, Total	68	98	131	111
Cash Basis Interest Income, Total	0	0	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans with No Allowance, Average Recorded Investment	399	576	412	628
Impaired Loans with No Allowance, Interest Income Recognized	2	4	5	7
Impaired Loans with No Allowance, Cash Basis Interest Income	10	10	20	20
Average Recorded Investment, Total	399	576	412	628
Interest Income Recognized, Total	2	4	5	7
Cash Basis Interest Income, Total	10	10	20	20
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	348	339	350	336
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	348	339	350	336
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	454	600	462	606
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	454	600	462	606
Interest Income Recognized, Total	0	0	0	0
Cash Basis Interest Income, Total	$ 0	$ 0	$ 0	$ 0

XML

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Nonaccrual Loans by Classes of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 119	$ 141
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Financing receivable, recorded investment, nonaccrual status	$ 119	$ 141

XML

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	$ 441,079	$ 418,303
Total loans	441,079	418,303
Loans Past Due Greater than 89 Days and Accruing	0	85
Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	440,337	417,465
Loans Past Due Greater than 89 Days and Accruing	0	85
Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	742	838
Loans Past Due Greater than 89 Days and Accruing	0	0
Current [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	440,060	417,200
Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	439,318	416,362
Current [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	742	838
Total Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	1,019	1,103
Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	1,019	1,103
Total Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	431	512
30-59 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	431	512
30-59 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	588	488
60-89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	588	488
60-89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	103
Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	103
Greater than 89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	60,043	62,639
Total loans	60,043	62,639
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 loans	60,043	62,639
Loans Past Due Greater than 89 Days and Accruing	0	0
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	60,017	62,628
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	26	11
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]
Financing receivables, gross	26	11
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]
Financing receivables, gross	0	0
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	170,385	159,806
Total loans	170,385	159,806
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	170,082	159,449
Loans Past Due Greater than 89 Days and Accruing	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	303	357
Loans Past Due Greater than 89 Days and Accruing	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	170,072	159,396
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Current [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	303	357
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	10	53
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Total Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	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]
Financing receivables, gross	0	53
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]
Financing receivables, gross	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]
Financing receivables, gross	10	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]
Financing receivables, gross	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	53,221	43,281
Total loans	53,221	43,281
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	53,221	43,281
Loans Past Due Greater than 89 Days and Accruing	0	0
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	53,032	43,281
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	189	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]
Financing receivables, gross	0	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]
Financing receivables, gross	189	0
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	133,197	131,754
Total loans	133,197	131,754
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	132,758	131,273
Loans Past Due Greater than 89 Days and Accruing	0	85
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	439	481
Loans Past Due Greater than 89 Days and Accruing	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	132,005	130,242
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Current [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	439	481
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	753	1,031
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Total Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
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]
Financing receivables, gross	369	440
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]
Financing receivables, gross	0	0
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]
Financing receivables, gross	384	488
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]
Financing receivables, gross	0	0
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	103
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	20,285	16,323
Total loans	20,285	16,323
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 loans	20,285	16,323
Loans Past Due Greater than 89 Days and Accruing	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	20,285	16,323
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	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]
Financing receivables, gross	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]
Financing receivables, gross	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	3,948	4,500
Total loans	3,948	4,500
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans	3,948	4,500
Loans Past Due Greater than 89 Days and Accruing	0	0
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Current [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	3,907	4,492
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Total Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	41	8
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]
Financing receivables, gross	36	8
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]
Financing receivables, gross	5	0
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Greater than 89 Days Past Due [Member] | Excluding Loans Acquired with Credit Deterioration [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing receivables, gross	$ 0	$ 0

XML

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Troubled Debt Restructurings on Financing Receivables) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022 loan	Jun. 30, 2022 loan	Jun. 30, 2021 USD ($) item
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | loan	0	0
Restructured Loan [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | item			1
Financing Receivable, Modifications, Pre-Modification Recorded Investment			$ 2,254
Financing Receivable, Modifications, Post-Modification Recorded Investment			2,254
Financing Receivable, Modifications, Recorded Investment			$ 1,803
Restructured Loan [Member] | Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Accruing Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Number of Contracts | item			1
Financing Receivable, Modifications, Pre-Modification Recorded Investment			$ 2,254
Financing Receivable, Modifications, Post-Modification Recorded Investment			2,254
Financing Receivable, Modifications, Recorded Investment			$ 1,803

XML

LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 441,079	$ 418,303
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	419,908	392,857
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	12,576	17,258
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	8,595	8,188
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	60,043	62,639
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	59,345	61,372
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	577
Commercial, Financial and Agricultural [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	698	690
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	170,385	159,806
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	152,618	137,684
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	12,132	16,429
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	5,635	5,693
Commercial Loan [Member] | Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Construction Loan [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	53,221	43,281
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	51,780	42,394
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Construction Loan [Member] | Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,441	887
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	133,197	131,754
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	131,932	130,584
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	444	252
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	821	918
Mortgage Loan [Member] | Consumer Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	0	0
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	20,285	16,323
Obligations of State and Political Subdivisions [Member] | Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	20,285	16,323
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	3,948	4,500
Personal Loan [Member] | Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans	3,948	4,500
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

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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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Goodwill included in acquisition price				$ 9,047,000		$ 9,047,000		$ 9,047,000
Amortization of intangible assets				14,000	$ 17,000	27,000	$ 33,000
Other intangible assets				101,000		101,000		$ 120,000
Goodwill impairment loss						0	0
Branch Office in Richfield, PA [Member]
Acquisition date			Sep. 08, 2006
Goodwill included in acquisition price			$ 2,000,000.0
FNBPA Bancorp, Inc [Member]
Acquisition date		Nov. 30, 2015
Goodwill included in acquisition price		$ 3,400,000
Intangible assets included in purchase price		$ 303,000
Intangible assets amortization period		10 years
Amortization of intangible assets				5,000	7,000	11,000	13,000
Liverpool Community Bank [Member]
Acquisition date	Apr. 30, 2018
Goodwill included in acquisition price	$ 3,600,000
Intangible assets included in purchase price	$ 289,000
Intangible assets amortization period	10 years
Amortization of intangible assets				$ 8,000	$ 10,000	$ 16,000	$ 19,000

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GOODWILL AND OTHER INTANGIBLE ASSETS (Amortization Schedule for Intangible Assets) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2020	Apr. 30, 2018	Nov. 30, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 14,000	$ 17,000	$ 27,000	$ 33,000
FNBPA Bancorp, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Beginning Balance at Acquisition Date								$ 303,000
Amortization of intangible assets	5,000	7,000	11,000	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			11,000		$ 27,000	$ 223,000
Unamortized balance	42,000		42,000		53,000
Scheduled remaining amortization expense for years ended:
December 31, 2022	11,000		11,000
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	8,000	$ 10,000	16,000	$ 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			16,000		39,000	$ 128,000
Unamortized balance	106,000		106,000		$ 122,000
Scheduled remaining amortization expense for years ended:
December 31, 2022	17,000		17,000
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
December 31, 2027	$ 9,000		$ 9,000

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BORROWINGS (Schedule of Borrowings) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
BORROWINGS
Securities sold under agreements to repurchase	$ 5,029	$ 4,227
Short-term debt with FHLB	20,000	0
Long-term debt with FHLB	20,000	20,000
Total borrowings	$ 45,029	$ 24,227

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BORROWINGS (Scheduled Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Scheduled Maturities
2022	$ 0
2023	0
2024	15,000
2025	5,000
2026	0
Thereafter	0
Long-term Debt, Total	$ 20,000	$ 20,000
Weighted Average Interest Rate
2022	0.00%
2023	0.00%
2024	2.29%
2025	2.41%
2026	0.00%
Thereafter	0.00%
Weighted average interest rate	2.32%

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STOCK COMPENSATION PLAN (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Stock-based compensation expense	$ 79,000	$ 37,000	$ 116,000	$ 72,000
Weighted average exercise price	$ 17.74		$ 17.74		$ 17.78
Long-Term Incentive Plan [Member]
Shares available for grant	163,990		163,990
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
Treasury stock issued			5,026	4,944
Shares reserved for future issuance	156,650		156,650
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			17.80
Weighted average exercise price	$ 17.74		$ 17.74
Weighted average remaining contractual life			1 year 10 months 28 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			10,486
Award vesting period			3 years
Restricted stocks. compensation costs not yet recognized	$ 199,000		$ 199,000
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]	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Number of shares
Beginning Balance | shares	22,789
Vested | shares	(11,475)
Forfeited | shares	(825)
Granted | shares	10,486
Ending Balance | shares	20,975
Weighted Average Grant Date Fair Value
Beginning Balance | $ / shares	$ 18.48
Vested | $ / shares	18.72
Forfeited | $ / shares	17.32
Granted | $ / shares	15.90
Ending Balance | $ / shares	$ 17.10

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STOCK COMPENSATION PLAN (Stock Options Activity) (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding beginning balance, Shares | shares	71,947
Granted, Shares | shares	0
Exercised, Shares | shares	0
Forfeited, Shares | shares	(11,600)
Outstanding ending balance, Shares | shares	60,347
Beginning, weighted average exercise price | $ / shares	$ 17.78
Granted, Weighted average exercise price | $ / shares	0
Exercised, Weighted average exercise price | $ / shares	0
Expired, Weighted average exercise price | $ / shares	18.00
Ending, weighted average exercise price | $ / shares	$ 17.74

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FAIR VALUE MEASUREMENT (Fair Value Measurements by Level of Valuation Inputs) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	$ 303,627	$ 335,424
Equity securities	1,044	1,124
Obligations of U.S. Government Agencies and Corporations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	41,847	40,526
Obligations of State and Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	8,299	9,220
Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	22,569	34,996
Fair Value, Measurements, Recurring [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	303,627	335,424
Interest rate swaps, assets	424	541
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	41,847	40,526
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	8,299	9,220
Fair Value, Measurements, Recurring [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	1,044	1,124
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	22,569	34,996
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt securities available for sale	230,912	250,682
Fair Value, Measurements, Recurring [Member] | (Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	1,044	1,124
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	295,839	330,904
Interest rate swaps, assets	424	541
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	41,847	40,526
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	8,299	9,220
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	14,781	30,476
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	230,912	250,682
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	7,788	4,520
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	7,788	4,520
Fair Value, Measurements, Recurring [Member] | Mortgage Servicing Rights [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage servicing rights	101	120
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	$ 101	$ 120

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FAIR VALUE MEASUREMENT (Reconciliation of Investment Securities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
FAIR VALUE MEASUREMENT
Beginning balance	$ 4,270	$ 2,000	$ 4,520	$ 2,000
Total gains (loss) included in OCI	(482)	0	(732)	0
Purchases	4,000	2,500	4,000	2,500
Principal payments and other	0	0	0	0
Sales	0	0	0	0
Ending balance	$ 7,788	$ 4,500	$ 7,788	$ 4,500

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FAIR VALUE MEASUREMENT (Carrying Amounts and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financial assets:
Interest bearing deposits with banks	$ 8,239	$ 598
Interest bearing time deposits with banks	245	735
Restricted investment in bank stock	2,587	2,116
Financial liabilities:
Non-interest bearing deposits	196,322	182,022
Interest bearing deposits	523,535	526,425
Short-term borrowings	25,029	4,227
Long-term debt	20,000	20,000
Other interest bearing liabilities	1,021	1,568
Carrying Value [Member]
Financial assets:
Cash and due from banks	14,435	12,928
Interest bearing deposits with banks	8,239	598
Interest bearing time deposits with banks	245	735
Securities	304,671	336,548
Restricted investment in bank stock	2,587	2,116
Loans, net of allowance for loan losses	437,266	414,795
Interest rate swaps, assets	424	541
Accrued interest receivable	1,907	1,814
Financial liabilities:
Non-interest bearing deposits	196,322	182,022
Interest bearing deposits	523,535	526,425
Securities sold under agreements to repurchase	5,029	4,227
Short-term borrowings	20,000	0
Long-term debt	20,000	20,000
Other interest bearing liabilities	1,021	1,568
Accrued interest payable	215	252
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	14,435	12,928
Interest bearing deposits with banks	8,239	598
Interest bearing time deposits with banks	245	735
Securities	304,671	336,548
Loans, net of allowance for loan losses	437,485	414,984
Interest rate swaps, assets	424	541
Accrued interest receivable	1,907	1,814
Financial liabilities:
Non-interest bearing deposits	196,322	182,022
Interest bearing deposits	521,546	528,952
Short-term borrowings	19,992	0
Long-term debt	19,569	20,520
Other interest bearing liabilities	1,019	1,568
Accrued interest payable	215	252
Off-balance sheet financial instruments:
Commitments to extend credit	0	0
Letters of credit	$ 0	$ 0

XML

FAIR VALUE MEASUREMENT (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	$ 245	$ 735
Interest bearing deposits	523,535	526,425
Long-term debt	20,000	20,000
Other interest bearing liabilities	1,021	1,568
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	245	735
Loans, net of allowance for loan losses	437,266	414,795
Interest bearing deposits	523,535	526,425
Long-term debt	20,000	20,000
Other interest bearing liabilities	1,021	1,568
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest bearing time deposits with banks	245	735
Loans, net of allowance for loan losses	437,485	414,984
Interest bearing deposits	521,546	528,952
Long-term debt	19,569	20,520
Other interest bearing liabilities	1,019	1,568
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	245	735
Interest bearing deposits	521,546	528,952
Long-term debt	19,569	20,520
Other interest bearing liabilities	1,019	1,568
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	$ 437,485	$ 414,984

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COMMITMENTS, CONTINGENT LIABILITIES AND GUARANTEES (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
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	$ 108.3	$ 107.1
Outstanding Letters of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	3.6	5.7
Commercial Letter Of Credit [Member]
Loss Contingencies [Line Items]
Outstanding loans commitments and other unused lines of credit	$ 9.4	$ 9.5

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DERIVATIVES (Narrative) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022 USD ($) agreement	Jun. 30, 2022 USD ($) agreement	Dec. 31, 2021 USD ($)
Gain on sale of derivatives	$ 1,200
Number of forward swap agreement | agreement	2	2
Interest Rate Swap Three Months Brokered Deposit [Member]
Notional Amount	$ 20,000	$ 20,000	$ 20,000
Interest Rate Swap Forward Long Term FHLB Advances [Member]
Notional Amount			20,000
Designated as Hedging Instrument [Member]
Notional Amount			40,000
Interest rate swaps, ineffectiveness		no amount of ineffectiveness has been included in net income
Designated as Hedging Instrument [Member] | Interest Rate Swap Three Months Brokered Deposit [Member]
Notional Amount	0	$ 0	20,000
Designated as Hedging Instrument [Member] | Interest Rate Swap Forward Long Term FHLB Advances [Member]
Notional Amount	$ 0	$ 0	$ 20,000

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DERIVATIVES (Derivatives Recorded on the Consolidated Statements of Condition) (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Interest Rate Swap Three Months Brokered Deposit [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	$ 20,000	$ 20,000
Interest Rate Swap Three Months FHLB Advance [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	20,000	0
Fair Value Asset (Liability)	424	0
Interest Rate Swap Forward Long Term FHLB Advances [Member]
Derivatives, Fair Value [Line Items]
Notional Amount		20,000
Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Notional Amount		40,000
Designated as Hedging Instrument [Member] | Interest Rate Swap Three Months Brokered Deposit [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	0	20,000
Fair Value Asset (Liability)	0	52
Designated as Hedging Instrument [Member] | Interest Rate Swap Forward Long Term FHLB Advances [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	0	20,000
Fair Value Asset (Liability)	$ 0	$ 489

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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, 2022		Jun. 30, 2021		Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivatives	$ 460		$ (301)		$ 1,114	$ 411	$ 538
Amount reclassified from AOCI into income (expense)	(1,242)	[1],[2]	22	[1],[2]	(1,231)	$ 26	(60)
Other Non Interest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)					(1,215)
Interest Rate Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivatives					(101)		538
Amount reclassified from AOCI into income (expense)					(16)		$ (60)
Swap Termination Gain [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in OCI on Derivatives					$ 1,215
Amount reclassified from AOCI into income (expense)	$ (1,215)		$ 0

[1] Amounts are included in gain (loss) 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.

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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		12 Months Ended
	Jun. 30, 2022		Jun. 30, 2021		Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)	$ 1,242	[1],[2]	$ (22)	[1],[2]	$ 1,231	$ (26)	$ 60
Total	(1,242)		22
Interest Income (Expense) [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)	27		(22)		16	(26)
Total					(1,231)	26
Interest Rate Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)					16		$ 60
Swap Termination Gain [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)	$ 1,215		$ 0
Swap Termination Gain [Member] | Interest Income (Expense) [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount reclassified from AOCI into income (expense)					$ 1,215	$ 0

[1] Amounts are included in gain (loss) 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.

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SUBSEQUENT EVENTS (Narrative) (Details) - Subsequent Event [Member]	Jul. 19, 2022 $ / shares
Subsequent Event [Line Items]
Dividends payable, date declared	Jul. 19, 2022
Dividends payable per share	$ 0.22
Dividends payable, date to be paid	Sep. 01, 2022