Juniata Valley Financial Corp. ($JUVF)

Hello, and welcome to the Annual Meeting of Shareholders of their Juniata Valley Financial Corp. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Martin Dreibelbis, Chairman of the Board. Mr. Dreibelbis, the floor is yours.

Good morning, ladies and gentlemen. My name is Martin Dreibelbis. And as Chairman, it's my privilege to call to order the 2026 Annual Shareholders Meeting of the Juniata Valley Financial Corp. Thank you for participating in today's meeting. I call your attention to the rules of conduct set forth for this meeting. They were made available to shareholders in the proxy statement and are in the documents folder in the upper right corner of your screen. Comments or questions will be received only from shareholders who have signed in with a control number. Please keep your questions and comments brief and limit them to one per shareholder. All of our questions and comments will be addressed at the end of the presentation. For your convenience, links to the annual report and proxy statement are also provided in the documents folder. At this time, I'd like to welcome and introduce other members of the Board of Directors. Vice Chairman, Gary Kelsey, Marcie Barber, Mike Buffington; Cristina Calkins Mazor, John Henry, Joe Scarnati, Steve Sliver. In addition to the Board members and management personnel, representatives from Crowe, our independent public accounting firm from Barley Schneider, our legal advisers, and from Cherry Beckert, our internal audit firm are in attendance at this meeting. The first order of business is to determine the presence of the quorum. I have been presented with a certified list of shareholders of record who are entitled to vote at this meeting. I am also in possession of copies of the notice of meeting proxy statement and proxy card, together with an affidavit as to the timely mailing to the shareholders, all of which will be filed with the minutes of this meeting. I further report that at least 50% of outstanding shares are represented by person and by proxy at this annual meeting, and therefore, I declare a quorum to be present today, the meeting will proceed. A copy of the minutes of the Annual Shareholders Meeting held May 20, 2025, has been inspected and found to be accurate and will be entered into permanent record. I will now appoint individuals to serve as judges of election for today's meeting. Lisa Snyder, Inspector of Election; Christi Birge, and Renee Williams. There are 3 matters to be voted on today. First, the election of directors. The nominating committee of the Board of Directors has nominated John Henry, Gary Kelsey and Joe Scarnati to serve as Class C directors and to continue in office until the 2029 Annual Meeting. The second matter voted on today is the nonbinding say-on-pay proposal to approve the compensation of the named executive officers as set forth in the proxy statement. The third matter voted on today is the Juniata Valley Financial Corp.'s 2026 long-term incentive plan as set forth in the proxy statement. All proxies filed with the inspector of election will be voted as indicated. If you have not yet voted or wish to change your vote, you may do so now by clicking on the Vote tab at the top right of the screen. I will pause for 1 minute to allow time for any further voting to take place. [Voting]

I now declare the polls closed and call on the appointed judges to tabulate the results. I call your attention to the disclosure regarding forward-looking statements that may be made in management's presentation. These statements are to be regarded as management's current view which are subject to change as facts and circumstances change in the future. I will now turn the meeting over to Marcie Barber, our President and Chief Executive Officer; and Mike Wolf, our Chief Financial Officer. Marcie?

Thank you, Marty. It was rewarding for all of us to witness the impact of intent growth in our home markets last year. In prior years, strong banking relationships with ad market partners contributed materially to our overall loan production. But in 2025, we [indiscernible] on purchase loan participation activity yet still enjoyed 12% growth in total outstandings. New loans booked at market rates and repricing adjustments within the existing commercial portfolio combined to enhance our net interest and gross margins. The gross margin improvement was the single most impactful metric contributing to net income growth last year. We found opportunities and market disruptions and leveraged our relationship-focused business model to move deposits and loans. Mike will now review 2025 financial performance in more detail.

Thank you, Marcy. In 2025, we saw improvements in nearly every performance metric. We reported net income of $8 million which was an increase of 28.2% from last year's results. As Marcie mentioned, the 12.6% growth in total loans outstanding resulted in a $2.3 million increase in loan interest income while we were able to reduce total interest expense by $570,000. These 2 factors combined to produce a $2.4 million increase in net interest income and a 27 basis point increase in our net interest margin. Additionally, we were able to reduce noninterest expense by $180,000 due to targeted cost containment measures, which coupled with the increased revenue led to an improvement in our efficiency ratio of more than 6%. Given these dynamics, our return on average assets increased 20 basis points and earnings per share increased by $0.35 per share in 2025. The return on average equity remains skewed due to the unrealized losses in our investment portfolio which reduces our GAAP equity. However, the Juniata Valley Bank's regulatory capital, which does not include these losses remain strong. This slide presents asset trends over the last 10 years. After 8 consecutive years of growth, assets decreased by nearly $22 million in 2024 as the result of numerous balance sheet strategies. In 2025, assets increased by more than $46 million due to more than $67 million in loan growth. The loan growth was funded largely by deposit growth of $34 million and cash flows from our investment portfolio, which left to higher cost borrowings near 2024 levels. We have maintained a stable and generally growing deposit base. Our deposit stratification has remained relatively consistent over time with the trend toward time deposits continuing in 2025, albeit at a slower pace. We were able to reverse the decrease in demand deposit account balances seen in 2024 through focused customer service initiatives and responsible pricing which resulted in increased balances in noninterest-bearing DDAs of 6.6% and interest-bearing DDAs of 5% in 2025. During 2025, our earnings were greatly enhanced by robust loan growth that can be traced back to strategies put in place 15 months earlier. In late 2023, we made the decision to decrease our reliance on purchased loan participations and focus on organic growth, which did lead to some muted loan growth throughout 2024. However, our efforts to build quality loan relationships, both within and outside of our branch footprint resulted in an increase in loan balances outstanding of more than $67 million by the end of 2025. These customer-centered efforts evidenced our commitment, flexibility and responsiveness to business owners, which resulted in a 15.9% increase in our total commercial loan portfolio. Additionally, our efforts to generate consumer mortgages led to the fourth consecutive year of growth in that portfolio after a decade of declining balances. This was accomplished despite persistently high home mortgage income -- home mortgage rates, nontraditional competition and the absence of a substantial refinance market. This growth was accomplished without lowering our underwriting standards or at the expense of credit quality, which Marcie will now review.

Thanks, Mike. Even with sound underwriting and strong portfolio administration, credit issues can always arise from economic or industry dynamics. We should never become complacent. But the current slide illustrates that to date, we continue to enjoy extremely strong credit quality. Our allowance for credit losses at year-end was 1.18% of the loan portfolio and provisions of $923,000 were allocated. Allocations were made to support loan growth, not increasing credit risk or an identified problem credit. At year-end, we carried $634,000 in nonperforming loans, just 0.1% of total loans. Economic policies, international trade challenges, political agendas all have the potential to impact the economy as a whole or targeted industries. So we continue to communicate with clients in those sectors most vulnerable to international trade issues and oil price fluctuations. Mike will now discuss capital and liquidity.

Thank you, Marcie. A company's stability is dependent on the strength of its capital. And while our GAAP capital continues to be reduced by the unrealized losses in our investment portfolio regulatory, JVB's capital remains strong and well above statutory minimums. Liquidity continues to be a topic of great interest to back management and the regulatory agencies who supervise them. Due to the rising interest rate environment a few years ago, our available-for-sale investment portfolio was marked with large unrealized losses, and as such, we're no longer our primary source of liquidity. Fortunately, we have multiple contingent liquidity sources, including a large borrowing capacity with the Federal Home Loan Bank, the Federal Reserve Bank discount window and access to brokered deposits. These sources provide ample liquidity that thus far have been little utilized due to our ability to retain and expand core deposits. Based on our December 31, 2025 share price, we provided a dividend yield of 6.3% to our shareholders while maintaining capital to hedge against potential future challenges. Marcie will now take a look at 2026.

We're off to a great start in 2026, voting on last year's momentum. Our lending opportunities and originations in Center County easily justify increased staffing, we expect to double our loan production in that market. One of JVB's core values is connection. Already in 2026, we hosted Dinner Day McCormick's interface with 20 members of PA Bankers, discuss some of the issues facing the industry, those that could impact Pennsylvania's economic growth. We also welcomed the financial outreach division of the Philadelphia Federal Reserve to connect with local businessmen and women to share their perspectives on current [ mortar ] and legislative policies. And we partnered with the Pennsylvania State Police in our area agencies on aging to conduct fraud detection and protection training for our most vulnerable community members. We're targeting early July for the official opening of our Belleville office. We are extremely pleased with the progress we are making, not just in the actual branch construction, but in the new banking relationships that we're building in the Big Valley. Additionally, major improvements are scheduled for our Liverpool office in the latter part of the year. These renovations will enhance our drive-through ATM and nightfall access. Mike will now review our 2026 first quarter results, which supports our optimism.

Thank you, Marcie. We had a very strong start to 2026, posting net income of $2.8 million in the first quarter, which represents a nearly 40% increase over the first quarter of 2025 with more than $70 million in total loan growth since April 1, 2025, our net interest margin increased by 56 basis points over last year's quarter to 3.39%. Additionally, increases in loan fee generation resulted in an increase in total noninterest income of more than 7% compared to last year's quarter. With these improvements, our return on average assets increased by 31 basis points to 1.25%. Our credit quality remains strong, with the nonperforming loan ratio unchanged from the first quarter of 2025 and last year end at only 0.1% of total loans. We continue -- we hope to continue the first quarter's momentum by continuing to focus on the initiatives that have made the last 5 quarters, the most profitable in our long history. Marcie will now lead the Q&A session of the meeting.

We will now address any questions or comments that have been submitted during the presentation. We have received no questions. So I'd like to thank you again for joining us today and for your support of the Juniata Valley Financial Corp. We will now bring back our Chairman to wrap up today's meeting. Marty?

Thank you, Marcie. At this time, I ask Lisa Snyder, Judge in elections, for a report on the results of the voting.

Thank you. All those have been tabulated and resolve are as follows: there were sufficient votes for the 3 nominated individuals to be elected as Directors of the Juniata Valley Financial Corp. A majority of votes cast approved the non-bonding stay-on-pay proposal. A majority of those cast approved the 2026 long-term incentive plans.

Thank you, Lisa. There being no further business to be brought before the group, thank you all for your investment and trust in the Juniata Valley Financial Corp. The 2026 Annual Meeting is now adjourned.

This concludes the meeting. You may now disconnect.