##### 



Exhibit 13.1
Excerpts from Annual Report to Shareholders
Five-Year Financial Summary - Selected Financial Data
 2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands of dollars, except share and per share data)BALANCE SHEET INFORMATIONat December 31Assets
    
    $
    420,146
    
    
    $
    415,931
    
    
    $
    410,802
    
    
    $
    397,074
    
    
    $
    387,780Deposits
    
    
    359,457
    
    
    
    355,169
    
    
    
    343,466
    
    
    
    332,642
    
    
    
    332,984Loans, net of allowance for loan losses
    
    
    295,678
    
    
    
    303,246
    
    
    
    295,300
    
    
    
    276,759
    
    
    
    249,960Investments
    
    
    73,676
    
    
    
    65,619
    
    
    
    77,208
    
    
    
    84,157
    
    
    
    103,798Intangible assets
    
    
    389
    
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    Goodwill
    
    
    2,046
    
    
    
    2,046
    
    
    
    
    
    
    
    
    
    
    
    Short-term borrowings
    
    
    5,431
    
    
    
    6,112
    
    
    
    9,801
    
    
    
    4,716
    
    
    
    Long-term debt
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    Stockholders equity
    
    
    48,572
    
    
    
    47,786
    
    
    
    47,119
    
    
    
    50,153
    
    
    
    50,483Number of shares outstanding *
    
    
    4,409,445
    
    
    
    4,457,934
    
    
    
    4,503,392
    
    
    
    4,561,258
    
    
    
    4,569,406Average for the yearAssets
    
    
    424,847
    
    
    
    414,048
    
    
    
    406,706
    
    
    
    393,554
    
    
    
    386,574Stockholders equity
    
    
    47,635
    
    
    
    47,503
    
    
    
    48,403
    
    
    
    48,776
    
    
    
    47,629Weighted average shares outstanding *
    
    
    4,434,859
    
    
    
    4,480,245
    
    
    
    4,550,483
    
    
    
    4,559,168
    
    
    
    4,581,922INCOME STATEMENT INFORMATIONYears Ended December 31Total interest income
    
    $
    26,723
    
    
    $
    24,663
    
    
    $
    22,707
    
    
    $
    21,717
    
    
    $
    22,500Total interest expense
    
    
    11,060
    
    
    
    10,111
    
    
    
    8,015
    
    
    
    6,438
    
    
    
    7,472Net interest income
    
    
    15,663
    
    
    
    14,552
    
    
    
    14,692
    
    
    
    15,279
    
    
    
    15,028Provision for loan losses
    
    
    120
    
    
    
    54
    
    
    
    28
    
    
    
    326
    
    
    
    304Other income
    
    
    4,199
    
    
    
    3,830
    
    
    
    3,323
    
    
    
    3,445
    
    
    
    2,760Other expenses
    
    
    12,209
    
    
    
    11,245
    
    
    
    11,680
    
    
    
    10,600
    
    
    
    10,017Income before income taxes
    
    
    7,533
    
    
    
    7,083
    
    
    
    6,307
    
    
    
    7,798
    
    
    
    7,467Federal income tax expense
    
    
    2,099
    
    
    
    2,081
    
    
    
    1,741
    
    
    
    1,969
    
    
    
    1,820Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647PER SHARE DATA *Earnings per
share - basic
    
    $
    1.23
    
    
    $
    1.12
    
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24Earnings per
share - diluted
    
    
    1.22
    
    
    
    1.11
    
    
    
    1.00
    
    
    
    1.27
    
    
    
    1.23Cash dividends
    
    
    0.95
    
    
    
    0.66
    
    
    
    1.11
    
    
    
    1.07
    
    
    
    0.50Book value
    
    
    11.02
    
    
    
    10.72
    
    
    
    10.46
    
    
    
    11.00
    
    
    
    11.05FINANCIAL RATIOSReturn on average assets
    
    
    1.28
    %
    
    
    1.21
    %
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %Return on average equity
    
    
    11.41
    
    
    
    10.53
    
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86Dividend payout
    
    
    77.48
    
    
    
    59.12
    
    
    
    110.71
    
    
    
    83.70
    
    
    
    40.43Average equity to average assets
    
    
    11.21
    
    
    
    11.47
    
    
    
    11.90
    
    
    
    12.39
    
    
    
    12.32Loans to deposits (year end)
    
    
    82.26
    
    
    
    85.38
    
    
    
    85.98
    
    
    
    83.20
    
    
    
    75.07
 
 *
    
    All share and per-share data have been restated for effect of the 2 for 1 stock split on October 31, 2005.




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
  FORWARD LOOKING STATEMENTS
  Nature of Operations




---



##### 



Economic and Industry-Wide Factors Relevant to Juniata
   Focus of Management
  Customer Relationships
  Shareholder Satisfaction
  Balance Sheet Growth
  Operating Results




---



##### 



Commitment to the Community
  Juniatas Opportunities
    Juniatas Challenges
 Competition
  Rate environment
  Public perception




---



##### 



Regulated Company
  APPLICATION OF CRITICAL ACCOUNTING POLICIES




---



##### 



RESULTS OF OPERATIONS
 2007
Financial Performance Overview
  2007
    
    2006
    
    2005
    
    2004
    
    2003Return on average assets
    
    
    1.28
    %
    
    
    1.21
    %
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %Return on average equity
    
    
    11.41
    
    
    
    10.53
    
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86Yield on earning assets
    
    
    6.88
    
    
    
    6.43
    
    
    
    6.00
    
    
    
    5.98
    
    
    
    6.33Cost to fund earning assets
    
    
    2.85
    
    
    
    2.63
    
    
    
    2.12
    
    
    
    1.77
    
    
    
    2.10Net interest margin (fully tax equivalent)
    
    
    4.17
    
    
    
    3.91
    
    
    
    4.00
    
    
    
    4.34
    
    
    
    4.42Noninterest income (excluding gains on
sales of securities and security
impairment charges) to average assets
    
    
    0.99
    
    
    
    0.88
    
    
    
    0.77
    
    
    
    0.78
    
    
    
    0.71Noninterest expense to average assets
    
    
    2.87
    
    
    
    2.72
    
    
    
    2.87
    
    
    
    2.69
    
    
    
    2.59Net noninterest expense to average assets
    
    
    1.88
    
    
    
    1.84
    
    
    
    2.10
    
    
    
    1.91
    
    
    
    1.88
  
    
    Interest rate environment  an increase in net interest margin despite a sustained
flat/inverted yield curve
    
    Full-year effect of acquisitions made in 2006
    
    Restructured investment portfolio
    
    Noninterest income improvement




---



##### 



2007
    
    2006% of Average
    
    
    
    
    
    % of AverageAssets
    
    
    
    
    
    AssetsNet interest income
    
    $
    15,663
    
    
    
    3.69
    %
    
    $
    14,552
    
    
    
    3.51
    %Provision for loan losses
    
    
    (120
    )
    
    
    (0.03
    )
    
    
    (54
    )
    
    
    (0.01
    )Trust fees
    
    
    444
    
    
    
    0.10
    
    
    
    435
    
    
    
    0.11Deposit service fees
    
    
    1,656
    
    
    
    0.39
    
    
    
    1,497
    
    
    
    0.36BOLI
    
    
    440
    
    
    
    0.10
    
    
    
    433
    
    
    
    0.10Commissions from sales of non-deposit product
    
    
    711
    
    
    
    0.17
    
    
    
    513
    
    
    
    0.12Income from unconsolidated subsidiary
    
    
    192
    
    
    
    0.05
    
    
    
    80
    
    
    
    0.02Other fees
    
    
    774
    
    
    
    0.18
    
    
    
    681
    
    
    
    0.16Security gains (losses)
    
    
    (19
    )
    
    
    (0.00
    )
    
    
    181
    
    
    
    0.04Gains on sale of other assets
    
    
    1
    
    
    
    0.00
    
    
    
    10
    
    
    
    0.00Total noninterest income
    
    
    4,199
    
    
    
    0.99
    
    
    
    3,830
    
    
    
    0.93Employee expense
    
    
    (6,592
    )
    
    
    (1.55
    )
    
    
    (6,064
    )
    
    
    (1.46
    )Occupancy and equipment
    
    
    (1,580
    )
    
    
    (0.37
    )
    
    
    (1,424
    )
    
    
    (0.34
    )Data processing expense
    
    
    (1,332
    )
    
    
    (0.31
    )
    
    
    (1,204
    )
    
    
    (0.29
    )Director compensation
    
    
    (455
    )
    
    
    (0.11
    )
    
    
    (465
    )
    
    
    (0.11
    )Professional fees
    
    
    (437
    )
    
    
    (0.10
    )
    
    
    (378
    )
    
    
    (0.09
    )Taxes, other than income
    
    
    (546
    )
    
    
    (0.13
    )
    
    
    (505
    )
    
    
    (0.12
    )Intangible amortization
    
    
    (45
    )
    
    
    (0.01
    )
    
    
    (15
    )
    
    
    (0.00
    )Other noninterest expense
    
    
    (1,222
    )
    
    
    (0.29
    )
    
    
    (1,190
    )
    
    
    (0.29
    )Total noninterest expense
    
    
    (12,209
    )
    
    
    (2.87
    )
    
    
    (11,245
    )
    
    
    (2.72
    )Income tax expense
    
    
    (2,099
    )
    
    
    (0.49
    )
    
    
    (2,081
    )
    
    
    (0.50
    )Net income
    
    $
    5,434
    
    
    
    1.28
    %
    
    $
    5,002
    
    
    
    1.21
    %Average assets
    
    $
    424,847
    
    
    
    
    
    
    $
    414,048
 Net Interest Income




---



##### 



Table 1
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
 Years Ended December 31,2007
    
    
    
    2006
    
    
    
    2005Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    RateASSETSInterest earning assets:Taxable loans (5)
    
    
    $
    294,938
    
    
    $
    22,638
    
    
    
    7.68
    %
    
    
    $
    299,488
    
    
    $
    21,622
    
    
    
    7.22
    %
    
    
    $
    285,546
    
    
    $
    19,608
    
    
    
    6.87
    %Tax-exempt loans
    
    
    
    5,669
    
    
    
    213
    
    
    
    3.76
    
    
    
    
    4,500
    
    
    
    146
    
    
    
    3.24
    
    
    
    
    4,781
    
    
    
    159
    
    
    
    3.33Total loans
    
    
    
    300,607
    
    
    
    22,851
    
    
    
    7.60
    
    
    
    
    303,988
    
    
    
    21,768
    
    
    
    7.16
    
    
    
    
    290,327
    
    
    
    19,767
    
    
    
    6.81Taxable investment securities
    
    
    
    51,746
    
    
    
    2,438
    
    
    
    4.71
    
    
    
    
    54,198
    
    
    
    1,975
    
    
    
    3.64
    
    
    
    
    56,966
    
    
    
    1,872
    
    
    
    3.29Tax-exempt investment securities
    
    
    
    24,040
    
    
    
    857
    
    
    
    3.56
    
    
    
    
    19,027
    
    
    
    659
    
    
    
    3.46
    
    
    
    
    19,800
    
    
    
    654
    
    
    
    3.30Total investment securities
    
    
    
    75,786
    
    
    
    3,295
    
    
    
    4.35
    
    
    
    
    73,225
    
    
    
    2,634
    
    
    
    3.60
    
    
    
    
    76,766
    
    
    
    2,526
    
    
    
    3.29Interest bearing deposits
    
    
    
    5,876
    
    
    
    254
    
    
    
    4.32
    
    
    
    
    5,730
    
    
    
    244
    
    
    
    4.26
    
    
    
    
    6,420
    
    
    
    257
    
    
    
    4.00Federal funds sold
    
    
    
    6,358
    
    
    
    323
    
    
    
    5.08
    
    
    
    
    324
    
    
    
    17
    
    
    
    5.25
    
    
    
    
    4,679
    
    
    
    157
    
    
    
    3.36Total interest earning assets
    
    
    
    388,627
    
    
    
    26,723
    
    
    
    6.88
    
    
    
    
    383,267
    
    
    
    24,663
    
    
    
    6.43
    
    
    
    
    378,192
    
    
    
    22,707
    
    
    
    6.00Non-interest earning assets:Cash and due from banks
    
    
    
    9,384
    
    
    
    
    
    
    
    
    
    
    
    
    9,764
    
    
    
    
    
    
    
    
    
    
    
    
    9,449Allowance for loan losses
    
    
    
    (2,460
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,761
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,976
    )Premises and equipment
    
    
    
    6,366
    
    
    
    
    
    
    
    
    
    
    
    
    6,147
    
    
    
    
    
    
    
    
    
    
    
    
    6,606Other assets (7)
    
    
    
    22,930
    
    
    
    
    
    
    
    
    
    
    
    
    17,631
    
    
    
    
    
    
    
    
    
    
    
    
    15,435Total assets
    
    
    $
    424,847
    
    
    
    
    
    
    
    
    
    
    
    $
    414,048
    
    
    
    
    
    
    
    
    
    
    
    $
    406,706LIABILITIES AND STOCKHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits(2)
    
    
    $
    82,877
    
    
    
    1,751
    
    
    
    2.11
    
    
    
    $
    77,570
    
    
    
    1,675
    
    
    
    2.16
    
    
    
    $
    64,118
    
    
    
    952
    
    
    
    1.48Savings deposits
    
    
    
    35,247
    
    
    
    556
    
    
    
    1.58
    
    
    
    
    40,031
    
    
    
    629
    
    
    
    1.57
    
    
    
    
    44,638
    
    
    
    692
    
    
    
    1.55Time deposits
    
    
    
    199,239
    
    
    
    8,437
    
    
    
    4.23
    
    
    
    
    187,283
    
    
    
    7,168
    
    
    
    3.83
    
    
    
    
    185,615
    
    
    
    6,022
    
    
    
    3.24Other, including short-term
borrowings,
long-term debt and other
interest bearing liabilities
    
    
    
    7,804
    
    
    
    316
    
    
    
    4.05
    
    
    
    
    14,822
    
    
    
    639
    
    
    
    4.31
    
    
    
    
    11,765
    
    
    
    349
    
    
    
    2.97Total interest bearing liabilities
    
    
    
    325,167
    
    
    
    11,060
    
    
    
    3.40
    
    
    
    
    319,706
    
    
    
    10,111
    
    
    
    3.16
    
    
    
    
    306,136
    
    
    
    8,015
    
    
    
    2.62Non-interest bearing liabilities:Demand deposits
    
    
    
    45,433
    
    
    
    
    
    
    
    
    
    
    
    
    41,587
    
    
    
    
    
    
    
    
    
    
    
    
    47,208Other
    
    
    
    6,612
    
    
    
    
    
    
    
    
    
    
    
    
    5,252
    
    
    
    
    
    
    
    
    
    
    
    
    4,959Stockholders equity
    
    
    
    47,635
    
    
    
    
    
    
    
    
    
    
    
    
    47,503
    
    
    
    
    
    
    
    
    
    
    
    
    48,403Total liabilities
and stockholders equity
    
    
    $
    424,847
    
    
    
    
    
    
    
    
    
    
    
    $
    414,048
    
    
    
    
    
    
    
    
    
    
    
    $
    406,706Net interest income
    
    
    
    
    
    
    $
    15,663
    
    
    
    
    
    
    
    
    
    
    
    $
    14,552
    
    
    
    
    
    
    
    
    
    
    
    $
    14,692Net margin on interest earning assets(3)
    
    
    
    
    
    
    
    
    
    
    
    4.03
    %
    
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    
    3.88
    %Net interest income and margin -
Tax equivalent basis (4)
    
    
    
    
    
    
    $
    16,214
    
    
    
    4.17
    %
    
    
    
    
    
    
    $
    14,967
    
    
    
    3.91
    %
    
    
    
    
    
    
    $
    15,111
    
    
    
    4.00
    %
 
 Notes:(1)
    
    Average balances were calculated using a daily average.(2)
    
    Includes Super Now and money market accounts.(3)
    
    Net margin on interest earning assets is net interest income divided by average interest
earning assets.(4)
    
    Interest on obligations of states and municipalities is not subject to federal income tax. In
order to make the net yield comparable on a fully taxable basis, a tax equivalent adjustment
is applied against the tax-exempt income utilizing a federal tax rate of 34%.




---



##### 



Table 2
RATE-VOLUME ANALYSIS OF NET INTEREST INCOME


2007 Compared to 2006
    
    
    
    2006 Compared to 2005Increase (Decrease) Due To (6)
    
    
    
    Increase (Decrease) Due To (6)Volume
    
    
    Rate
    
    
    Total
    
    
    
    Volume
    
    
    Rate
    
    
    TotalASSETSInterest earning assets:Taxable loans (5)
    
    
    $
    (335
    )
    
    $
    1,351
    
    
    $
    1,016
    
    
    
    $
    986
    
    
    $
    1,028
    
    
    $
    2,014Tax-exempt loans
    
    
    
    42
    
    
    
    25
    
    
    
    67
    
    
    
    
    (9
    )
    
    
    (4
    )
    
    
    (13
    )Total loans
    
    
    
    (293
    )
    
    
    1,376
    
    
    
    1,083
    
    
    
    
    977
    
    
    
    1,024
    
    
    
    2,001Taxable investment securities
    
    
    
    (93
    )
    
    
    556
    
    
    
    463
    
    
    
    
    (93
    )
    
    
    196
    
    
    
    103Tax-exempt investment securities
    
    
    
    178
    
    
    
    20
    
    
    
    198
    
    
    
    
    (26
    )
    
    
    31
    
    
    
    5Total investment securities
    
    
    
    85
    
    
    
    576
    
    
    
    661
    
    
    
    
    (119
    )
    
    
    227
    
    
    
    108Interest bearing deposits
    
    
    
    7
    
    
    
    3
    
    
    
    10
    
    
    
    
    (29
    )
    
    
    16
    
    
    
    (13
    )Federal funds sold
    
    
    
    307
    
    
    
    (1
    )
    
    
    306
    
    
    
    
    (197
    )
    
    
    57
    
    
    
    (140
    )Total interest earning assets
    
    
    
    106
    
    
    
    1,954
    
    
    
    2,060
    
    
    
    
    632
    
    
    
    1,324
    
    
    
    1,956LIABILITIES
AND STOCKHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits (2)
    
    
    
    115
    
    
    
    (39
    )
    
    
    76
    
    
    
    
    227
    
    
    
    496
    
    
    
    723Savings deposits
    
    
    
    (77
    )
    
    
    4
    
    
    
    (73
    )
    
    
    
    (72
    )
    
    
    9
    
    
    
    (63
    )Time deposits
    
    
    
    482
    
    
    
    787
    
    
    
    1,269
    
    
    
    
    54
    
    
    
    1,092
    
    
    
    1,146Other, including short-term borrowings,
long-term debt and other
interest bearing liabilities
    
    
    
    (286
    )
    
    
    (37
    )
    
    
    (323
    )
    
    
    
    106
    
    
    
    184
    
    
    
    290Total interest bearing liabilities
    
    
    
    234
    
    
    
    715
    
    
    
    949
    
    
    
    
    315
    
    
    
    1,781
    
    
    
    2,096Net interest income
    
    
    $
    (128
    )
    
    $
    1,239
    
    
    $
    1,111
    
    
    
    $
    317
    
    
    $
    (457
    )
    
    $
    (140
    )





|    |  |                                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(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: $(127) in 2007,
$(495) in 2006 and $(137) in 2005.                                                      





---



##### 



Provision for Loan Losses
  Noninterest Income




---



##### 



Noninterest Expense




---



##### 



Income Taxes
  Net Income
  2007
    
    2006
    
    2005Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566Return on average assets
    
    
    1.28
    %
    
    
    1.21
    %
    
    
    1.12
    %Return on average equity
    
    
    11.41
    %
    
    
    10.53
    %
    
    
    9.43
    %
 Outlook for 2008




---



##### 



2006
Financial Performance Overview
   
    
    Interest rate environment  sustained flat/inverted yield curve
    
    Acquisition activity
    
    Sustained loan quality
    
    Noninterest income improvement
    
    Ongoing expense control




---



##### 



2006
    
    2005% of Average
    
    
    
    
    
    % of AverageAssets
    
    
    
    
    
    AssetsNet interest income
    
    $
    14,552
    
    
    
    3.51
    %
    
    $
    14,692
    
    
    
    3.61
    %Provision for loan losses
    
    
    (54
    )
    
    
    (0.01
    )
    
    
    (28
    )
    
    
    (0.01
    )Trust fees
    
    
    435
    
    
    
    0.11
    
    
    
    374
    
    
    
    0.09Deposit service fees
    
    
    1,497
    
    
    
    0.36
    
    
    
    1,390
    
    
    
    0.34BOLI
    
    
    433
    
    
    
    0.10
    
    
    
    364
    
    
    
    0.09Commissions
from sales of non-deposit products
    
    
    513
    
    
    
    0.12
    
    
    
    426
    
    
    
    0.10Income from unconsolidated subsidiary
    
    
    80
    
    
    
    0.02
    
    
    
    
    
    
    
    0.00Other fees
    
    
    681
    
    
    
    0.16
    
    
    
    592
    
    
    
    0.15Security gains (losses)
    
    
    181
    
    
    
    0.04
    
    
    
    175
    
    
    
    0.04Gains on sale of other assets
    
    
    10
    
    
    
    0.00
    
    
    
    2
    
    
    
    0.00Total noninterest income
    
    
    3,830
    
    
    
    0.93
    
    
    
    3,323
    
    
    
    0.82Employee expense
    
    
    (6,064
    )
    
    
    (1.46
    )
    
    
    (5,757
    )
    
    
    (1.42
    )Employee severance
    
    
    
    
    
    
    
    
    
    
    (284
    )
    
    
    (0.07
    )Occupancy and equipment
    
    
    (1,424
    )
    
    
    (0.34
    )
    
    
    (1,413
    )
    
    
    (0.35
    )Data processing expense
    
    
    (1,204
    )
    
    
    (0.29
    )
    
    
    (1,224
    )
    
    
    (0.30
    )Director compensation
    
    
    (465
    )
    
    
    (0.11
    )
    
    
    (476
    )
    
    
    (0.12
    )Professional fees
    
    
    (378
    )
    
    
    (0.09
    )
    
    
    (788
    )
    
    
    (0.19
    )Taxes, other than income
    
    
    (505
    )
    
    
    (0.12
    )
    
    
    (519
    )
    
    
    (0.13
    )Intangible amortization
    
    
    (15
    )
    
    
    (0.00
    )
    
    
    
    
    
    
    0.00Other noninterest expense
    
    
    (1,190
    )
    
    
    (0.29
    )
    
    
    (1,219
    )
    
    
    (0.30
    )Total noninterest expense
    
    
    (11,245
    )
    
    
    (2.72
    )
    
    
    (11,680
    )
    
    
    (2.87
    )Income tax expense
    
    
    (2,081
    )
    
    
    (0.50
    )
    
    
    (1,741
    )
    
    
    (0.43
    )Net income
    
    $
    5,002
    
    
    
    1.21
    %
    
    $
    4,566
    
    
    
    1.12
    %Average assets
    
    $
    414,048
    
    
    
    
    
    
    $
    406,706
 Net Interest Income




---



##### 



Provision for Loan Losses
  Noninterest Income
     Noninterest Expense




---



##### 



Income Taxes
  Net Income
  2006
    
    2005
    
    2004Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829Return on average assets
    
    
    1.21
    %
    
    
    1.12
    %
    
    
    1.48
    %Return on average equity
    
    
    10.53
    %
    
    
    9.43
    %
    
    
    11.95
    %




---



##### 



FINANCIAL CONDITION
 Balance Sheet Summary
  Table 3
 2007
    
    
    
    
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2005Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceFunding Uses:Loans:Commercial
    
    $
    83,539
    
    
    $
    (3,704
    )
    
    
    (4.2
    %)
    
    $
    87,243
    
    
    $
    1,956
    
    
    
    2.3
    %
    
    $
    85,287Tax-exempt loans
    
    
    5,669
    
    
    
    1,169
    
    
    
    26.0
    
    
    
    4,500
    
    
    
    (281
    )
    
    
    (5.9
    )
    
    
    4,781Mortgage
    
    
    135,974
    
    
    
    (2,449
    )
    
    
    (1.8
    )
    
    
    138,423
    
    
    
    3,566
    
    
    
    2.6
    
    
    
    134,857Consumer, including Home Equity
    
    
    75,425
    
    
    
    1,603
    
    
    
    2.2
    
    
    
    73,822
    
    
    
    8,420
    
    
    
    12.9
    
    
    
    65,402Securities
    
    
    51,746
    
    
    
    (2,452
    )
    
    
    (4.5
    )
    
    
    54,198
    
    
    
    (2,768
    )
    
    
    (4.9
    )
    
    
    56,966Tax-exempt securities
    
    
    24,040
    
    
    
    5,013
    
    
    
    26.3
    
    
    
    19,027
    
    
    
    (773
    )
    
    
    (3.9
    )
    
    
    19,800Interest bearing deposits
    
    
    5,876
    
    
    
    146
    
    
    
    2.5
    
    
    
    5,730
    
    
    
    (690
    )
    
    
    (10.7
    )
    
    
    6,420Federal funds sold
    
    
    6,358
    
    
    
    6,034
    
    
    
    1,862.3
    
    
    
    324
    
    
    
    (4,355
    )
    
    
    (93.1
    )
    
    
    4,679Total interest earning assets
    
    
    388,627
    
    
    
    5,360
    
    
    
    1.4
    
    
    
    383,267
    
    
    
    5,075
    
    
    
    1.3
    
    
    
    378,192Investment in unconsolidated subsidiary
    
    
    2,905
    
    
    
    2,025
    
    
    
    230.1
    
    
    
    880
    
    
    
    880
    
    
    
    
    
    
    
    Bank-owned life insurance and annuities
    
    
    11,444
    
    
    
    675
    
    
    
    6.3
    
    
    
    10,769
    
    
    
    147
    
    
    
    1.4
    
    
    
    10,622Goodwill and intangible assets
    
    
    2,459
    
    
    
    1,679
    
    
    
    215.3
    
    
    
    780
    
    
    
    780
    
    
    
    
    
    
    
    Other non-interest earning assets
    
    
    21,999
    
    
    
    391
    
    
    
    1.8
    
    
    
    21,608
    
    
    
    604
    
    
    
    2.9
    
    
    
    21,004Unrealized gains (losses) on securities
    
    
    (127
    )
    
    
    368
    
    
    
    (74.3
    )
    
    
    (495
    )
    
    
    (359
    )
    
    
    264.0
    
    
    
    (136
    )Less: Allowance for loan losses
    
    
    (2,460
    )
    
    
    301
    
    
    
    (10.9
    )
    
    
    (2,761
    )
    
    
    215
    
    
    
    (7.2
    )
    
    
    (2,976
    )Total uses
    
    $
    424,847
    
    
    $
    10,799
    
    
    
    2.6
    %
    
    $
    414,048
    
    
    $
    7,342
    
    
    
    1.8
    %
    
    $
    406,706Funding Sources:Interest bearing demand deposits
    
    $
    82,877
    
    
    $
    5,307
    
    
    
    6.8
    %
    
    $
    77,570
    
    
    $
    13,452
    
    
    
    21.0
    %
    
    $
    64,118Savings deposits
    
    
    35,247
    
    
    
    (4,784
    )
    
    
    (12.0
    )
    
    
    40,031
    
    
    
    (4,607
    )
    
    
    (10.3
    )
    
    
    44,638Time deposits under $100,000
    
    
    163,788
    
    
    
    9,481
    
    
    
    6.1
    
    
    
    154,307
    
    
    
    8,871
    
    
    
    6.1
    
    
    
    145,436Time deposits over $100,000
    
    
    35,451
    
    
    
    2,475
    
    
    
    7.5
    
    
    
    32,976
    
    
    
    (7,203
    )
    
    
    (17.9
    )
    
    
    40,179Repurchase agreements
    
    
    6,822
    
    
    
    1,294
    
    
    
    23.4
    
    
    
    5,528
    
    
    
    (88
    )
    
    
    (1.6
    )
    
    
    5,616Short-term borrowings
    
    
    15
    
    
    
    (5,389
    )
    
    
    (99.7
    )
    
    
    5,404
    
    
    
    5,025
    
    
    
    1,325.9
    
    
    
    379Long-term debt
    
    
    
    
    
    
    (3,014
    )
    
    
    (100.0
    )
    
    
    3,014
    
    
    
    (1,986
    )
    
    
    (39.7
    )
    
    
    5,000Other interest bearing liabilities
    
    
    967
    
    
    
    91
    
    
    
    10.4
    
    
    
    876
    
    
    
    106
    
    
    
    13.8
    
    
    
    770Total interest bearing liabilities
    
    
    325,167
    
    
    
    5,461
    
    
    
    1.7
    
    
    
    319,706
    
    
    
    13,570
    
    
    
    4.4
    
    
    
    306,136Demand deposits
    
    
    45,433
    
    
    
    3,846
    
    
    
    9.2
    
    
    
    41,587
    
    
    
    (5,621
    )
    
    
    (11.9
    )
    
    
    47,208Other liabilities
    
    
    6,612
    
    
    
    1,360
    
    
    
    25.9
    
    
    
    5,252
    
    
    
    293
    
    
    
    5.9
    
    
    
    4,959Shareholders equity
    
    
    47,635
    
    
    
    132
    
    
    
    0.3
    
    
    
    47,503
    
    
    
    (900
    )
    
    
    (1.9
    )
    
    
    48,403Total sources
    
    $
    424,847
    
    
    $
    10,799
    
    
    
    2.6
    %
    
    $
    414,048
    
    
    $
    7,342
    
    
    
    1.8
    %
    
    $
    406,706




---



##### 



Loans
  December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial, financial and agricultural
    
    $
    28,842
    
    
    $
    23,341
    
    
    $
    21,661
    
    
    $
    23,301
    
    
    $
    25,885Real estate - commercial
    
    
    29,021
    
    
    
    29,492
    
    
    
    27,588
    
    
    
    25,068
    
    
    
    20,614Real estate - construction
    
    
    27,223
    
    
    
    29,489
    
    
    
    28,323
    
    
    
    24,968
    
    
    
    14,324Real estate - mortgage
    
    
    127,324
    
    
    
    132,572
    
    
    
    135,992
    
    
    
    132,243
    
    
    
    119,678Home equity
    
    
    63,960
    
    
    
    67,842
    
    
    
    62,288
    
    
    
    54,249
    
    
    
    50,706Obligations of states and political subdivisions
    
    
    6,593
    
    
    
    5,129
    
    
    
    4,827
    
    
    
    4,294
    
    
    
    4,577Personal
    
    
    15,319
    
    
    
    18,545
    
    
    
    18,498
    
    
    
    17,735
    
    
    
    21,435Unearned interest
    
    
    (282
    )
    
    
    (592
    )
    
    
    (1,114
    )
    
    
    (2,110
    )
    
    
    (4,439
    )Total
    
    $
    298,000
    
    
    $
    305,818
    
    
    $
    298,063
    
    
    $
    279,748
    
    
    $
    252,780
  2007
    
    2006
    
    2005Beginning balance
    
    $
    305,818
    
    
    $
    298,063
    
    
    $
    279,748New loans, net of repayments
    
    
    (7,051
    )
    
    
    4,916
    
    
    
    18,569Loans acquired in branch purchase
    
    
    
    
    
    
    3,810
    
    
    
    Loans charged off
    
    
    (418
    )
    
    
    (307
    )
    
    
    (279
    )Loans transferred to other real estate owned and
other adjustments to carrying value
    
    
    (349
    )
    
    
    (664
    )
    
    
    25Net change
    
    
    (7,818
    )
    
    
    7,755
    
    
    
    18,315Ending balance
    
    $
    298,000
    
    
    $
    305,818
    
    
    $
    298,063




---



##### 



Table 4
Non-Performing Loans
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Nonaccrual loans
    
    $
    
    
    
    $
    1,240
    
    
    $
    1,515
    
    
    $
    
    
    
    $
    Accruing loans past due 90 days or more
    
    
    837
    
    
    
    214
    
    
    
    724
    
    
    
    365
    
    
    
    584Restructured loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    $
    837
    
    
    $
    1,454
    
    
    $
    2,239
    
    
    $
    365
    
    
    $
    584




---



##### 



Allowance for Loan Losses
   
    
    Historical trends: Historical net charge-offs are computed as a percentage of average
loans, by loan type. This percentage is applied to the ending period balance of the loan
type to determine the amount to be included in the allowance to cover charge-off
probability;
    
    Individual loan performance: Management identifies a list of loans which are
individually assigned a risk rating grade because the loan has not performed according to
payment terms and there is reason to believe that repayment of the loan principal, in
whole or part, is unlikely. The specific portion of the allowance for these loans is the
total amount of potential losses for these individual loans which has not previously been
charged off;
    
    General economic environment: Current economic factors and business trends relative to
specific types of loans are assessed. Juniatas lending is concentrated within central
Pennsylvania and, accordingly, the loan portfolio quality is dependent upon localized
economic factors such as: unemployment rates, commercial real estate vacancy rates,
consumer delinquency trends and residential housing appreciation rates. Generally, the
local unemployment rate consistently slightly exceeds the national and state statistics.
Additionally, some of the larger employers in the local market area are experiencing some
financial stress that has resulted in loss of jobs in the last two years. Fuel cost
escalation has put profit pressure on trucking firms and increased cost of
employer-provided medical insurance has added to the profit pressures of employers in
general; and
    
    Other relevant factors: Certain specific risks inherent in the loan portfolio are
identified and examined to determine if an additional allowance is warranted and, if so,
management assigns a percentage to the loan category. Such factors consist of:
 o
    
    Credit concentration: Juniatas loans are classified in pre-defined
groups. Any groups total that exceeds 25% of the Banks total capital is
considered to be a credit concentration and as such, is determined to have an
additional level of associated risk;o
    
    Changes in loan volumes;o
    
    Changes in experience, ability and depth of management; ando
    
    External factors, such as legal and regulatory requirements.




---



##### 



Years ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Balance of allowance - beginning of period
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731Loans charged off:Commercial, financial and agricultural
    
    
    291
    
    
    
    159
    
    
    
    171
    
    
    
    43
    
    
    
    78Real estate - commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate - construction
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    Real estate - mortgage
    
    
    66
    
    
    
    19
    
    
    
    3
    
    
    
    10
    
    
    
    50Personal
    
    
    61
    
    
    
    129
    
    
    
    75
    
    
    
    122
    
    
    
    107Total charge-offs
    
    
    418
    
    
    
    307
    
    
    
    279
    
    
    
    175
    
    
    
    235Recoveries of loans previously charged off:Commercial, financial and agricultural
    
    
    8
    
    
    
    5
    
    
    
    6
    
    
    
    1
    
    
    
    2Real estate - commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate - construction
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    Real estate - mortgage
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    1Personal
    
    
    32
    
    
    
    25
    
    
    
    14
    
    
    
    15
    
    
    
    17Total recoveries
    
    
    48
    
    
    
    30
    
    
    
    25
    
    
    
    18
    
    
    
    20Net charge-offs
    
    
    370
    
    
    
    277
    
    
    
    254
    
    
    
    157
    
    
    
    215Provision for loan losses
    
    
    120
    
    
    
    54
    
    
    
    28
    
    
    
    326
    
    
    
    304Branch acquisition loan loss reserve
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    Balance of allowance - end of period
    
    $
    2,322
    
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.12
    %
    
    
    0.09
    %
    
    
    0.09
    %
    
    
    0.06
    %
    
    
    0.09
    %
  Allocation of the Allowance for Loan Losses (in thousands)2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial
    
    $
    660
    
    
    $
    864
    
    
    $
    956
    
    
    $
    1,087
    
    
    $
    1,055Real estate
    
    
    933
    
    
    
    1,011
    
    
    
    1,112
    
    
    
    602
    
    
    
    548Consumer
    
    
    729
    
    
    
    697
    
    
    
    695
    
    
    
    1,002
    
    
    
    963Unallocated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    254Total allowance for loan losses
    
    $
    2,322
    
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820




---



##### 



Percent of Loan Type to Total Loans2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial
    
    
    11.9
    %
    
    
    9.3
    %
    
    
    8.9
    %
    
    
    9.9
    %
    
    
    12.1
    %Real estate
    
    
    83.0
    %
    
    
    84.6
    %
    
    
    84.9
    %
    
    
    83.8
    %
    
    
    79.5
    %Consumer
    
    
    5.1
    %
    
    
    6.1
    %
    
    
    6.2
    %
    
    
    6.3
    %
    
    
    8.5
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Investments
  2007
    
    2006
    
    2005Beginning balance
    
    $
    66,921
    
    
    $
    77,274
    
    
    $
    88,224Purchases of investment securities
    
    
    63,295
    
    
    
    19,281
    
    
    
    17,073Sales and maturities of investment securities
    
    
    (55,357
    )
    
    
    (30,871
    )
    
    
    (21,696
    )Impairment charge
    
    
    (33
    )
    
    
    
    
    
    
    Adjustment in market value of AFS securities
    
    
    372
    
    
    
    414
    
    
    
    (1,044
    )Amortization/Accretion
    
    
    (104
    )
    
    
    (133
    )
    
    
    (209
    )Federal Home Loan Bank stock, net change
    
    
    19
    
    
    
    (280
    )
    
    
    27Federal funds sold, net change
    
    
    6,300
    
    
    
    1,200
    
    
    
    (3,900
    )Interest bearing deposits with others, net change
    
    
    533
    
    
    
    36
    
    
    
    (1,201
    )Net change
    
    
    15,025
    
    
    
    (10,353
    )
    
    
    (10,950
    )Ending balance
    
    $
    81,946
    
    
    $
    66,921
    
    
    $
    77,274




---



##### 



December 31, 2007WeightedSecurities
    
    Carrying
    
    
    AverageType and maturity
    
    Value
    
    
    YieldU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    3,680
    
    
    
    4.38
    %After one year but within five years
    
    
    17,115
    
    
    
    5.08
    %After five years but within ten years
    
    
    6,021
    
    
    
    5.27
    %After ten years
    
    
    26,816
    
    
    
    5.03
    %Obligations of state and political subdivisionsWithin one year
    
    
    11,616
    
    
    
    5.70
    %After one year but within five years
    
    
    17,903
    
    
    
    5.93
    %After five years but within ten years
    
    
    6,288
    
    
    
    5.73
    %After ten years
    
    
    35,807
    
    
    
    5.82
    %Mortgage-backed securitiesWithin one year
    
    
    360
    
    
    
    4.00
    %After one year but within five years
    
    
    288
    
    
    
    4.97
    %After five years but within ten years
    
    
    2,283
    
    
    
    5.35
    %After ten years
    
    
    2,931
    
    
    
    5.14
    %Equity securities
    
    
    1,502$
    67,056
 Bank Owned Life Insurance and Annuities
  2007
    
    2006
    
    2005Beginning balance
    
    $
    11,017
    
    
    $
    10,647
    
    
    $
    10,464Bank-owned life insurance
    
    
    1,365
    
    
    
    446
    
    
    
    263Annuities
    
    
    (38
    )
    
    
    (76
    )
    
    
    (80
    )Net change
    
    
    1,327
    
    
    
    370
    
    
    
    183Ending balance
    
    $
    12,344
    
    
    $
    11,017
    
    
    $
    10,647
 Investment in Unconsolidated Subsidiary




---



##### 



Goodwill and Intangible Assets
  Deferred Taxes
  Other Non-Interest Earning Assets
  2007
    
    2006
    
    2005Beginning balance
    
    $
    29,375
    
    
    $
    27,581
    
    
    $
    21,627Cash and due from banks
    
    
    (4,222
    )
    
    
    103
    
    
    
    5,640Premises and equipment, net
    
    
    730
    
    
    
    331
    
    
    
    (591
    )Other real estate owned
    
    
    154
    
    
    
    133
    
    
    
    (111
    )Other receivables and prepaid expenses
    
    
    (1,266
    )
    
    
    1,227
    
    
    
    1,016Net change
    
    
    (4,604
    )
    
    
    1,794
    
    
    
    5,954Ending balance
    
    $
    24,771
    
    
    $
    29,375
    
    
    $
    27,581




---



##### 



Deposits
  2007
    
    2006
    
    2005Beginning balance
    
    $
    355,169
    
    
    $
    343,467
    
    
    $
    332,642
 Acquired inOther
    
    branchchanges
    
    purchaseDemand deposits
    
    
    5,926
    
    
    
    (4,457
    )
    
    
    1,245
    
    
    
    (1,418
    )Interest bearing demand deposits
    
    
    (365
    )
    
    
    3,469
    
    
    
    3,195
    
    
    
    10,480Savings deposits
    
    
    (2,340
    )
    
    
    (8,855
    )
    
    
    1,369
    
    
    
    64Time deposits, $100,000 and greater
    
    
    (1,724
    )
    
    
    (3,975
    )
    
    
    2,376
    
    
    
    1,384Time deposits, other
    
    
    2,791
    
    
    
    5,430
    
    
    
    11,905
    
    
    
    315Net change
    
    
    4,288
    
    
    
    (8,388
    )
    
    
    20,090
    
    
    
    10,825Ending balance
    
    $
    359,457
    
    
    $
    355,169
    
    
    
    
    
    
    $
    343,467
  
 2007
    
    
    
    
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2005Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceInterest bearing demand deposits
    
    $
    82,877
    
    
    $
    5,307
    
    
    
    6.8
    %
    
    $
    77,570
    
    
    $
    13,452
    
    
    
    21.0
    %
    
    $
    64,118Savings deposits
    
    
    35,247
    
    
    
    (4,784
    )
    
    
    (12.0
    )
    
    
    40,031
    
    
    
    (4,607
    )
    
    
    (10.3
    )
    
    
    44,638Demand deposits
    
    
    45,433
    
    
    
    3,846
    
    
    
    9.2
    
    
    
    41,587
    
    
    
    (5,621
    )
    
    
    (11.9
    )
    
    
    47,208Total core (transaction) accounts
    
    
    163,557
    
    
    
    4,369
    
    
    
    2.7
    
    
    
    159,188
    
    
    
    3,224
    
    
    
    2.1
    
    
    
    155,964Time deposits, $100,000 and greater
    
    
    35,451
    
    
    
    2,475
    
    
    
    7.5
    
    
    
    32,976
    
    
    
    (7,203
    )
    
    
    (17.9
    )
    
    
    40,179Time deposits, other
    
    
    163,788
    
    
    
    9,481
    
    
    
    6.1
    
    
    
    154,307
    
    
    
    8,871
    
    
    
    6.1
    
    
    
    145,436Total time deposits
    
    
    199,239
    
    
    
    11,956
    
    
    
    6.4
    
    
    
    187,283
    
    
    
    1,668
    
    
    
    0.9
    
    
    
    185,615Total deposits
    
    $
    362,796
    
    
    $
    16,325
    
    
    
    4.7
    %
    
    $
    346,471
    
    
    $
    4,892
    
    
    
    1.4
    %
    
    $
    341,579




---



##### 



Other Interest Bearing Liabilities
  
 2007
    
    
    
    
    
    
    
    
    
    
    2006
    
    
    
    
    
    
    
    
    
    
    2005Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceRepurchase agreeements
    
    $
    6,822
    
    
    $
    1,294
    
    
    
    23.4
    %
    
    $
    5,528
    
    
    $
    (88
    )
    
    
    (1.6
    )%
    
    $
    5,616Short-term borrowings
    
    
    15
    
    
    
    (5,389
    )
    
    
    (99.7
    )
    
    
    5,404
    
    
    
    5,025
    
    
    
    1,325.9
    
    
    
    379Long-term debt
    
    
    
    
    
    
    (3,014
    )
    
    
    (100.0
    )
    
    
    3,014
    
    
    
    (1,986
    )
    
    
    (39.7
    )
    
    
    5,000Other interest bearing liabilities
    
    
    967
    
    
    
    91
    
    
    
    10.4
    
    
    
    876
    
    
    
    106
    
    
    
    13.8
    
    
    
    770$
    7,804
    
    
    $
    (7,018
    )
    
    
    (47.3
    )%
    
    $
    14,822
    
    
    $
    3,057
    
    
    
    26.0
    %
    
    $
    11,765




---



##### 



Pension Plans
   Stockholders Equity
  2007
    
    2006
    
    2005Beginning balance
    
    $
    47,786
    
    
    $
    47,119
    
    
    $
    50,153Net income
    
    
    5,434
    
    
    
    5,002
    
    
    
    4,566Dividends
    
    
    (4,210
    )
    
    
    (2,957
    )
    
    
    (5,046
    )Stock-based compensation
    
    
    43
    
    
    
    39
    
    
    
    Repurchase of stock, net of re-issuance
    
    
    (1,022
    )
    
    
    (1,013
    )
    
    
    (1,446
    )Net change in unrealized security gains (losses)
    
    
    260
    
    
    
    274
    
    
    
    (804
    )Net change in minimum pension liability
    
    
    281
    
    
    
    (678
    )
    
    
    (304
    )Net change
    
    
    786
    
    
    
    667
    
    
    
    (3,034
    )Ending balance
    
    $
    48,572
    
    
    $
    47,786
    
    
    $
    47,119




---



##### 



Asset / Liability Management Objectives
  
    
    Liquidity Risk
    
    Capital Risk
    
    Market / Interest Rate Risk
    
    Investment Portfolio Risk
    
    Economic Risk
 Liquidity Risk




---



##### 



Payments Due by PeriodOne to
    
    Three to
    
    More thanNote
    
    
    
    
    
    One Year
    
    Three
    
    Five
    
    FiveReference
    
    Total
    
    or Less
    
    Years
    
    Years
    
    YearsCertificates of deposits
    
    
    11
    
    
    $
    202,004
    
    
    $
    135,166
    
    
    $
    55,229
    
    
    $
    11,609
    
    
    $
    Federal Funds borrowed and
security repurchase agreements
    
    
    12
    
    
    
    5,431
    
    
    
    5,431
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    13
    
    
    
    503
    
    
    
    101
    
    
    
    205
    
    
    
    155
    
    
    
    42Other long-term liabilitiesEmployee pension
    
    
    18
    
    
    
    3,553
    
    
    
    308
    
    
    
    641
    
    
    
    687
    
    
    
    1,9173rd party data processor contract
    
    
    22
    
    
    
    510
    
    
    
    204
    
    
    
    306
    
    
    
    
    
    
    
    Supplemental retirement and
deferred compensation
    
    
    18
    
    
    
    4,407
    
    
    
    457
    
    
    
    948
    
    
    
    738
    
    
    
    2,264$
    216,408
    
    
    $
    141,667
    
    
    $
    57,329
    
    
    $
    13,189
    
    
    $
    4,223




---



##### 



Capital Risk
  Market / Interest Rate Risk




---



##### 



Change in Net
    
    Change in NetInterest Income
    
    Interest IncomeChange in
    
    Due to Interest
    
    Due to
    
    Total Change inInterest Rates
    
    Rate Risk
    
    Imbedded
    
    Net Interest(Basis Points)
    
    (Static)
    
    Options
    
    Income200
    
    $
    29
    
    
    $
    105
    
    
    $
    134100
    
    
    15
    
    
    
    37
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    -100
    
    
    (15
    )
    
    
    277
    
    
    
    262-200
    
    
    (29
    )
    
    
    585
    
    
    
    556




---



##### 



Table 5
MATURITY DISTRIBUTION
AS OF DECEMBER 31, 2007   Remaining Maturity / Earliest Possible Repricing
 Over Three
    
    
    Over Six
    
    
    Over OneThree
    
    
    Months But
    
    
    Months But
    
    
    Year But
    
    
    OverMonths
    
    
    Within Six
    
    
    Within One
    
    
    Within Five
    
    
    Fiveor Less
    
    
    Months
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    TotalInterest Earning AssetsInterest bearing deposits
    
    $
    770
    
    
    $
    200
    
    
    $
    
    
    
    $
    5,325
    
    
    $
    
    
    
    $
    6,295Federal funds sold
    
    
    7,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,500Investment securities:U.S. Treasury securities and obligations of
U.S. Government agencies and corporations
    
    
    374
    
    
    
    2,641
    
    
    
    665
    
    
    
    17,115
    
    
    
    6,021
    
    
    
    26,816Obligations of state and political subdivisions
    
    
    9,070
    
    
    
    655
    
    
    
    531
    
    
    
    19,263
    
    
    
    6,288
    
    
    
    35,807Mortgage-backed securities
    
    
    360
    
    
    
    
    
    
    
    
    
    
    
    288
    
    
    
    2,283
    
    
    
    2,931Stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,502
    
    
    
    1,502Loans:Commercial, financial, and agricultural
    
    
    24,871
    
    
    
    8
    
    
    
    139
    
    
    
    3,498
    
    
    
    326
    
    
    
    28,842Real estate - commercial
    
    
    24,436
    
    
    
    
    
    
    
    
    
    
    
    4,585
    
    
    
    
    
    
    
    29,021Real estate - construction
    
    
    27,223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,223Real estate - mortgage
    
    
    12,131
    
    
    
    12,150
    
    
    
    24,274
    
    
    
    43,158
    
    
    
    35,611
    
    
    
    127,324Home equity (net of unearned discount)
    
    
    8,857
    
    
    
    89
    
    
    
    319
    
    
    
    8,792
    
    
    
    45,621
    
    
    
    63,678Personal
    
    
    678
    
    
    
    93
    
    
    
    371
    
    
    
    9,893
    
    
    
    4,284
    
    
    
    15,319Obligations of state and political subdivisions
    
    
    40
    
    
    
    2
    
    
    
    
    
    
    
    962
    
    
    
    5,589
    
    
    
    6,593Total Interest Earning Assets
    
    
    116,310
    
    
    
    15,838
    
    
    
    26,299
    
    
    
    112,879
    
    
    
    107,525
    
    
    
    378,851Interest Bearing LiabilitiesDemand deposits
    
    
    36,978
    
    
    
    748
    
    
    
    2,993
    
    
    
    10,475
    
    
    
    23,627
    
    
    
    74,821Savings deposits
    
    
    6,775
    
    
    
    339
    
    
    
    1,355
    
    
    
    4,743
    
    
    
    20,665
    
    
    
    33,877Certificates of deposit over $100,000
    
    
    7,225
    
    
    
    6,711
    
    
    
    8,650
    
    
    
    13,722
    
    
    
    
    
    
    
    36,308Time deposits
    
    
    34,711
    
    
    
    31,786
    
    
    
    46,083
    
    
    
    53,116
    
    
    
    
    
    
    
    165,696Securities sold under agreements to repurchase
    
    
    5,431
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,431Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other interest bearing liabilities
    
    
    1,037
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,037Total Interest Bearing Liabilities
    
    
    92,157
    
    
    
    39,584
    
    
    
    59,081
    
    
    
    82,056
    
    
    
    44,292
    
    
    
    317,170Gap
    
    $
    24,153
    
    
    $
    (23,746
    )
    
    $
    (32,782
    )
    
    $
    30,823
    
    
    $
    63,233
    
    
    $
    61,681Cumulative Gap
    
    $
    24,153
    
    
    $
    407
    
    
    $
    (32,375
    )
    
    $
    (1,552
    )
    
    $
    61,681Cumulative sensitivity ratio
    
    
    1.26
    
    
    
    1.00
    
    
    
    0.83
    
    
    
    0.99
    
    
    
    1.19Commercial, financial and agricultural
loans maturing after one year with:Fixed interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,498
    
    
    $
    326
    
    
    $
    3,824Variable interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,498
    
    
    $
    326
    
    
    $
    3,824
 Investment Portfolio Risk




---



##### 



Economic Risk
  Off-Balance Sheet Arrangements
       Effects of Inflation




---



##### 



Report on Managements Assessment of Internal Control over Financial Reporting




---



##### 



Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over
Financial Reporting




---



##### 








---



##### 



Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
  
      Internal Control-Integrated Framework




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 December 31,
    
    
    December 31,2007
    
    
    2006ASSETSCash and due from banks
    
    $
    12,254
    
    
    $
    16,476Interest bearing deposits with banks
    
    
    770
    
    
    
    102Federal funds sold
    
    
    7,500
    
    
    
    1,200Cash and cash equivalents
    
    
    20,524
    
    
    
    17,778Interest bearing time deposits with banks
    
    
    5,525
    
    
    
    5,660Securities available for sale
    
    
    67,056
    
    
    
    56,383Securities held to maturity, fair value of $0 and $2,480, respectively
    
    
    
    
    
    
    2,500Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    1,095
    
    
    
    1,076Investment in unconsolidated subsidiary
    
    
    2,972
    
    
    
    2,892Total loans, net of unearned interest
    
    
    298,000
    
    
    
    305,818Less: Allowance for loan losses
    
    
    (2,322
    )
    
    
    (2,572
    )Total loans, net of allowance for loan losses
    
    
    295,678
    
    
    
    303,246Premises and equipment, net
    
    
    7,272
    
    
    
    6,542Bank owned life insurance and annuities
    
    
    12,344
    
    
    
    11,017Core deposit intangible
    
    
    389
    
    
    
    434Goodwill
    
    
    2,046
    
    
    
    2,046Accrued interest receivable and other assets
    
    
    5,245
    
    
    
    6,357Total assets
    
    $
    420,146
    
    
    $
    415,931LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    48,755
    
    
    $
    42,829Interest bearing
    
    
    310,702
    
    
    
    312,340Total deposits
    
    
    359,457
    
    
    
    355,169Securities sold under agreements to repurchase
    
    
    5,431
    
    
    
    6,112Other interest bearing liabilities
    
    
    1,037
    
    
    
    927Accrued interest payable and other liabilities
    
    
    5,649
    
    
    
    5,937Total liabilities
    
    
    371,574
    
    
    
    368,145Stockholders Equity:Preferred stock, no par value:Authorized - 500,000 shares, none issuedCommon stock, par value $1.00 per share:Authorized - 20,000,000 sharesIssued - 4,745,826 sharesOutstanding -4,409,445 shares at December 31, 2007;4,457,934 shares at December 31, 2006
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,297
    
    
    
    18,259Retained earnings
    
    
    32,755
    
    
    
    31,531Accumulated other comprehensive loss
    
    
    (557
    )
    
    
    (1,098
    )Cost of common stock in Treasury:336,381 shares at December 31, 2007;287,892 shares at December 31, 2006
    
    
    (6,669
    )
    
    
    (5,652
    )Total stockholders equity
    
    
    48,572
    
    
    
    47,786Total liabilities and stockholders equity
    
    $
    420,146
    
    
    $
    415,931




---



##### 





Juniata Valley Financial Corp. and Subsidiary


Years Ended December 31,2007
    
    
    2006
    
    
    2005Interest income:Loans, including fees
    
    $
    22,851
    
    
    $
    21,768
    
    
    $
    19,767Taxable securities
    
    
    2,438
    
    
    
    1,975
    
    
    
    1,872Tax-exempt securities
    
    
    857
    
    
    
    659
    
    
    
    654Other interest income
    
    
    577
    
    
    
    261
    
    
    
    414Total interest income
    
    
    26,723
    
    
    
    24,663
    
    
    
    22,707Interest expense:Deposits
    
    
    10,744
    
    
    
    9,472
    
    
    
    7,666Securities sold under agreements to repurchase
    
    
    276
    
    
    
    246
    
    
    
    167Short-term borrowings
    
    
    1
    
    
    
    275
    
    
    
    14Long-term debt
    
    
    
    
    
    
    88
    
    
    
    148Other interest bearing liabilities
    
    
    39
    
    
    
    30
    
    
    
    20Total interest expense
    
    
    11,060
    
    
    
    10,111
    
    
    
    8,015Net interest income
    
    
    15,663
    
    
    
    14,552
    
    
    
    14,692Provision for loan losses
    
    
    120
    
    
    
    54
    
    
    
    28Net interest income after provision for loan losses
    
    
    15,543
    
    
    
    14,498
    
    
    
    14,664Noninterest income:Trust fees
    
    
    444
    
    
    
    435
    
    
    
    374Customer service fees
    
    
    1,656
    
    
    
    1,497
    
    
    
    1,390Earnings on bank owned life insurance and annuities
    
    
    440
    
    
    
    433
    
    
    
    364Commissions from sales of non-deposit products
    
    
    711
    
    
    
    513
    
    
    
    426Income from unconsolidated subsidiary
    
    
    192
    
    
    
    80
    
    
    
    Securities impairment charge
    
    
    (33
    )
    
    
    
    
    
    
    Gain on sales of securities
    
    
    14
    
    
    
    181
    
    
    
    175Gain on sales of other assets
    
    
    1
    
    
    
    10
    
    
    
    2Other noninterest income
    
    
    774
    
    
    
    681
    
    
    
    592Total noninterest income
    
    
    4,199
    
    
    
    3,830
    
    
    
    3,323Noninterest expense:Employee compensation expense
    
    
    5,137
    
    
    
    4,593
    
    
    
    4,285Employee benefits
    
    
    1,455
    
    
    
    1,471
    
    
    
    1,472Employee severance expense
    
    
    
    
    
    
    
    
    
    
    284Occupancy
    
    
    892
    
    
    
    804
    
    
    
    821Equipment
    
    
    688
    
    
    
    620
    
    
    
    592Data processing expense
    
    
    1,332
    
    
    
    1,204
    
    
    
    1,224Director compensation
    
    
    455
    
    
    
    465
    
    
    
    476Professional fees
    
    
    437
    
    
    
    378
    
    
    
    788Taxes, other than income
    
    
    546
    
    
    
    505
    
    
    
    519Intangible amortization
    
    
    45
    
    
    
    15
    
    
    
    Other noninterest expense
    
    
    1,222
    
    
    
    1,190
    
    
    
    1,219Total noninterest expense
    
    
    12,209
    
    
    
    11,245
    
    
    
    11,680Income before income taxes
    
    
    7,533
    
    
    
    7,083
    
    
    
    6,307Provision for income taxes
    
    
    2,099
    
    
    
    2,081
    
    
    
    1,741Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566Earnings per shareBasic
    
    $
    1.23
    
    
    $
    1.12
    
    
    $
    1.00Diluted
    
    $
    1.22
    
    
    $
    1.11
    
    
    $
    1.00Cash dividends declared per share
    
    $
    0.95
    
    
    $
    0.66
    
    
    $
    1.11Weighted average basic shares outstanding
    
    
    4,434,859
    
    
    
    4,480,245
    
    
    
    4,550,483Weighted average diluted shares outstanding
    
    
    4,444,466
    
    
    
    4,492,552
    
    
    
    4,568,098







---



##### 





Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Stockholders Equity


Years Ended December 31, 2007, 2006 and 2005Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    (Loss) Income
    
    
    Stock
    
    
    EquityBalance at December 31, 2004
    
    
    2,280,629
    
    
    $
    2,373
    
    
    $
    20,386
    
    
    $
    29,966
    
    
    $
    414
    
    
    $
    (2,986
    )
    
    $
    50,153Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,566
    
    
    
    
    
    
    
    
    
    
    
    4,566Change in unrealized gains (losses) on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (804
    )
    
    
    
    
    
    
    (804
    )Minimum pension liability, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )
    
    
    
    
    
    
    (304
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,458Cash dividends at $1.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,046
    )
    
    
    
    
    
    
    
    
    
    
    (5,046
    )Purchase of treasury stock, at cost
    
    
    (62,907
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,242
    )
    
    
    (2,242
    )Treasury stock issued for dividend
reinvestment plan
    
    
    20,434
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    651Treasury stock issued for stock option
and stock purchase plans
    
    
    5,464
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    145Stock issued pursuant to 2 for 1 stock
split effective October 31, 2005
    
    
    2,259,772
    
    
    
    2,373
    
    
    
    (2,373
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2005
    
    
    4,503,392
    
    
    
    4,746
    
    
    
    18,177
    
    
    
    29,486
    
    
    
    (694
    )
    
    
    (4,596
    )
    
    
    47,119Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,002
    
    
    
    
    
    
    
    
    
    
    
    5,002Change in unrealized losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    274
    
    
    
    
    
    
    
    274Minimum pension liability, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    85Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,361Cumulative effect of change in accounting for
pension and other post-retirement
benefits, net of tax of $393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (763
    )
    
    
    
    
    
    
    (763
    )Cash dividends at $0.66 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,957
    )
    
    
    
    
    
    
    
    
    
    
    (2,957
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39Purchase of treasury stock, at cost
    
    
    (58,082
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,302
    )
    
    
    (1,302
    )Treasury stock issued for dividend
reinvestment plan
    
    
    8,147
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    159
    
    
    
    196Treasury stock issued for stock option
and stock purchase plans
    
    
    4,477
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    93Balance at December 31, 2006
    
    
    4,457,934
    
    
    
    4,746
    
    
    
    18,259
    
    
    
    31,531
    
    
    
    (1,098
    )
    
    
    (5,652
    )
    
    
    47,786Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,434
    
    
    
    
    
    
    
    
    
    
    
    5,434Change in unrealized losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260
    
    
    
    
    
    
    
    260Defined benefit retirement plan adjustments,
net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    281Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,975Cash dividends at $0.95 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,210
    )
    
    
    
    
    
    
    
    
    
    
    (4,210
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43Purchase of treasury stock, at cost
    
    
    (51,175
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,069
    )
    
    
    (1,069
    )Treasury stock issued for stock option
and stock purchase plans
    
    
    2,686
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    47Balance at December 31, 2007
    
    
    4,409,445
    
    
    $
    4,746
    
    
    $
    18,297
    
    
    $
    32,755
    
    
    $
    (557
    )
    
    $
    (6,669
    )
    
    $
    48,572








---



##### 



Juniata Valley Financial Corp. and Subsidiary
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Operating activities :Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    120
    
    
    
    54
    
    
    
    28Provision for depreciation
    
    
    653
    
    
    
    594
    
    
    
    590Net amortization of securities premiums
    
    
    104
    
    
    
    133
    
    
    
    209Amortization of core deposit intangible
    
    
    45
    
    
    
    15
    
    
    
    Security impairment charge
    
    
    33
    
    
    
    
    
    
    
    Net realized gains on sales of securities
    
    
    (14
    )
    
    
    (181
    )
    
    
    (175
    )Earnings on bank owned life insurance and annuities
    
    
    (440
    )
    
    
    (433
    )
    
    
    (364
    )Deferred income tax expense (credit)
    
    
    94
    
    
    
    40
    
    
    
    (134
    )Equity in earnings of unconsolidated subsidiary,
net of dividends of $126 and $0
    
    
    (66
    )
    
    
    (80
    )
    
    
    Stock-based compensation expense
    
    
    43
    
    
    
    39
    
    
    
    Decrease (increase) in accrued interest receivable and other assets
    
    
    901
    
    
    
    (80
    )
    
    
    372Increase in accrued interest payable and other liabilities
    
    
    248
    
    
    
    258
    
    
    
    76Net cash provided by operating activities
    
    
    7,155
    
    
    
    5,361
    
    
    
    5,168Investing activities:Purchases of:Securities available for sale
    
    
    (59,340
    )
    
    
    (14,181
    )
    
    
    (12,673
    )Securities held to maturity
    
    
    (3,955
    )
    
    
    (5,100
    )
    
    
    (4,400
    )FHLB stock
    
    
    (197
    )
    
    
    (827
    )
    
    
    (896
    )Premises and equipment
    
    
    (1,383
    )
    
    
    (786
    )
    
    
    (255
    )Bank owned life insurance and annuities
    
    
    (963
    )
    
    
    (106
    )
    
    
    (63
    )Investment in unconsolidated subsidiary
    
    
    
    
    
    
    (2,812
    )
    
    
    Proceeds from:Sales of securities available for sale
    
    
    585
    
    
    
    364
    
    
    
    414Maturities of and principal repayments on:Securities available for sale
    
    
    48,331
    
    
    
    24,588
    
    
    
    15,882Securities held to maturity
    
    
    6,455
    
    
    
    5,100
    
    
    
    5,400Redemption of FHLB stock
    
    
    178
    
    
    
    1,107
    
    
    
    869Bank owned life insurance and annuities
    
    
    76
    
    
    
    169
    
    
    
    244Sale of other real estate owned
    
    
    243
    
    
    
    624
    
    
    
    Net decrease in interest bearing time deposits
    
    
    135
    
    
    
    
    
    
    
    1,100Net cash received from branch acquisition
    
    
    
    
    
    
    13,801
    
    
    
    Net (increase) decrease in loans receivable
    
    
    7,051
    
    
    
    (4,916
    )
    
    
    (18,569
    )Net cash (used in) provided by investing activities
    
    
    (2,784
    )
    
    
    17,025
    
    
    
    (12,947
    )Financing activities:Net increase (decrease) in deposits
    
    
    4,288
    
    
    
    (8,388
    )
    
    
    10,825Net (decrease) increase in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (681
    )
    
    
    (3,689
    )
    
    
    5,085Long-term debt repayment
    
    
    
    
    
    
    (5,000
    )
    
    
    Cash dividends
    
    
    (4,210
    )
    
    
    (2,957
    )
    
    
    (5,046
    )Purchase of treasury stock
    
    
    (1,069
    )
    
    
    (1,302
    )
    
    
    (2,242
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plans
    
    
    47
    
    
    
    289
    
    
    
    796Net cash (used in) provided by financing activities
    
    
    (1,625
    )
    
    
    (21,047
    )
    
    
    9,418Net increase in cash and cash equivalents
    
    
    2,746
    
    
    
    1,339
    
    
    
    1,639Cash and cash equivalents at beginning of year
    
    
    17,778
    
    
    
    16,439
    
    
    
    14,800Cash and cash equivalents at end of year
    
    $
    20,524
    
    
    $
    17,778
    
    
    $
    16,439Supplemental information:Interest paid
    
    $
    11,060
    
    
    $
    9,858
    
    
    $
    7,861Income taxes paid
    
    
    1,885
    
    
    
    1,930
    
    
    
    1,851Supplemental schedule of noncash investing and financing activities:Transfer of loans to other real estate owned
    
    $
    397
    
    
    $
    757
    
    
    $
    Transfer of fixed asset to other assets
    
    
    
    
    
    
    
    
    
    
    256




---



##### 



JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
 Nature Of Operations
  1. Summary of Significant Accounting Policies
  Principles of consolidation
  Use of estimates
  Basis of presentation




---



##### 



Significant group concentrations of credit risk
   Cash and cash equivalents
  Interest bearing time deposits with banks
  Securities
    Restricted Investment in Federal Home Loan Bank Stock




---



##### 



Loans
    Allowance for loan losses
    (1)
    
    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,(2)
    
    all collateral securing the loan has been liquidated and a deficiency balance
remains,(3)
    
    a bankruptcy notice is received for an unsecured loan, or(4)
    
    the loan is deemed to be uncollectible for any other reason.




---



##### 



Other real estate owned
  Business combinations
  Goodwill and other intangible assets




---



##### 



Premises and equipment and depreciation
  Trust assets and revenues
  Bank owned life insurance and annuities
  Income taxes
    Advertising
  Off-balance sheet financial instruments
  Transfer of financial assets




---



##### 



Stock-based compensation
     2005Net income, as reported
    
    $
    4,566Total stock-based employee compensation expense (net of tax)
determined under fair value based method for all awards
    
    
    (21
    )Pro forma net income
    
    $
    4,545Basic earnings per shareAs reported
    
    $
    1.00Pro forma
    
    
    1.00Diluted earnings per shareAs reported
    
    $
    1.00Pro forma
    
    
    1.00




---



##### 



2007
    
    2006
    
    2005Expected life of options
    
    7 years
    
    7 years
    
    7 yearsRisk-free interest rate
    
    
    4.47
    %
    
    
    4.74
    %
    
    
    4.40
    %Expected volatility
    
    
    19.98
    %
    
    
    20.50
    %
    
    
    21.13
    %Expected dividend yield
    
    
    3.20
    %
    
    
    2.99
    %
    
    
    3.20
    %
  Segment reporting
   2. Recent Accounting Pronouncements




---



##### 



Fair Value Measurements
 Accounting for Post Retirement Benefit
Obligations




---



##### 



3. Restrictions on Cash and Due From Banks




---



##### 



4. Securities
  December 31, 2007Securities Available for Sale
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    3,676
    
    
    $
    3,680
    
    
    $
    9
    
    
    $
    (5
    )After one year but within five years
    
    
    16,960
    
    
    
    17,115
    
    
    
    158
    
    
    
    (3
    )After five years but within ten years
    
    
    6,000
    
    
    
    6,021
    
    
    
    22
    
    
    
    (1
    )26,636
    
    
    
    26,816
    
    
    
    189
    
    
    
    (9
    )Obligations of state and political subdivisionsWithin one year
    
    
    11,620
    
    
    
    11,616
    
    
    
    1
    
    
    
    (5
    )After one year but within five years
    
    
    17,730
    
    
    
    17,903
    
    
    
    176
    
    
    
    (3
    )After five years but within ten years
    
    
    6,217
    
    
    
    6,288
    
    
    
    7135,567
    
    
    
    35,807
    
    
    
    248
    
    
    
    (8
    )Mortgage-backed securities
    
    
    2,918
    
    
    
    2,931
    
    
    
    33
    
    
    
    (20
    )Equity securities
    
    
    1,739
    
    
    
    1,502
    
    
    
    108
    
    
    
    (345
    )Total
    
    $
    66,860
    
    
    $
    67,056
    
    
    $
    578
    
    
    $
    (382
    )
 December 31, 2006Securities Available for Sale
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    20,403
    
    
    $
    20,213
    
    
    $
    
    
    
    $
    (190
    )After one year but within five years
    
    
    13,305
    
    
    
    13,211
    
    
    
    36
    
    
    
    (130
    )After five years but within ten years
    
    
    1,000
    
    
    
    1,001
    
    
    
    1
    
    
    
    34,708
    
    
    
    34,425
    
    
    
    37
    
    
    
    (320
    )Obligations of state and political subdivisionsWithin one year
    
    
    7,192
    
    
    
    7,199
    
    
    
    10
    
    
    
    (3
    )After one year but within five years
    
    
    4,590
    
    
    
    4,526
    
    
    
    
    
    
    
    (64
    )After five years but within ten years
    
    
    4,552
    
    
    
    4,541
    
    
    
    1
    
    
    
    (12
    )16,334
    
    
    
    16,266
    
    
    
    11
    
    
    
    (79
    )Mortgage-backed securities
    
    
    4,531
    
    
    
    4,482
    
    
    
    8
    
    
    
    (57
    )Equity securities
    
    
    987
    
    
    
    1,210
    
    
    
    223
    
    
    
    Total
    
    $
    56,560
    
    
    $
    56,383
    
    
    $
    279
    
    
    $
    (456
    )
 Securities Held to Maturity
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    2,500
    
    
    $
    2,480
    
    
    $
    
    
    
    $
    (20
    )




---



##### 



Years Ended December 31,2007
    
    
    2006
    
    
    2005Gross proceeds from sales of securities
    
    $
    585
    
    
    $
    364
    
    
    $
    414Securities available for sale:Gross realized gains
    
    $
    
    
    
    $
    172
    
    
    $
    175Gross realized losses
    
    
    (9
    )
    
    
    
    
    
    
    Gross gains from business combinations
    
    
    23
    
    
    
    9
    
    
    
    
  Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S. Government
agencies and corporations
    
    $
    1,998
    
    
    $
    (2
    )
    
    $
    1,568
    
    
    $
    (7
    )
    
    $
    3,566
    
    
    $
    (9
    )Obligations of state and political
subdivisions
    
    
    1,114
    
    
    
    (1
    )
    
    
    2,298
    
    
    
    (7
    )
    
    
    3,412
    
    
    
    (8
    )Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    1,144
    
    
    
    (20
    )
    
    
    1,144
    
    
    
    (20
    )Debt securities
    
    
    3,112
    
    
    
    (3
    )
    
    
    5,010
    
    
    
    (34
    )
    
    
    8,122
    
    
    
    (37
    )Equity securities
    
    
    948
    
    
    
    (345
    )
    
    
    
    
    
    
    
    
    
    
    948
    
    
    
    (345
    )Total temporarily impaired securities
    
    $
    4,060
    
    
    $
    (348
    )
    
    $
    5,010
    
    
    $
    (34
    )
    
    $
    9,070
    
    
    $
    (382
    )




---



##### 



Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S. Government
agencies and corporations
    
    $
    2,498
    
    
    $
    (2
    )
    
    $
    27,988
    
    
    $
    (318
    )
    
    $
    30,486
    
    
    $
    (320
    )Obligations of state and political
subdivisions
    
    
    7,910
    
    
    
    (18
    )
    
    
    4,243
    
    
    
    (61
    )
    
    
    12,153
    
    
    
    (79
    )Mortgage-backed securities
    
    
    37
    
    
    
    (1
    )
    
    
    1,955
    
    
    
    (56
    )
    
    
    1,992
    
    
    
    (57
    )Debt securities
    
    
    10,445
    
    
    
    (21
    )
    
    
    34,186
    
    
    
    (435
    )
    
    
    44,631
    
    
    
    (456
    )Total temporarily impaired securities
    
    $
    10,445
    
    
    $
    (21
    )
    
    $
    34,186
    
    
    $
    (435
    )
    
    $
    44,631
    
    
    $
    (456
    )




---



##### 



5. LOANS
  December 31,2007
    
    
    2006Commercial, financial and agricultural
    
    $
    28,842
    
    
    $
    23,341Real estate - commercial
    
    
    29,021
    
    
    
    29,492Real estate - construction
    
    
    27,223
    
    
    
    29,489Real estate - mortgage
    
    
    127,324
    
    
    
    132,572Home equity
    
    
    63,960
    
    
    
    67,842Obligations of states and political subdivisions
    
    
    6,593
    
    
    
    5,129Personal
    
    
    15,319
    
    
    
    18,545Unearned interest
    
    
    (282
    )
    
    
    (592
    )Total
    
    $
    298,000
    
    
    $
    305,818
  December 31,2007
    
    
    2006Nonaccrual loans
    
    $
    
    
    
    $
    1,240Accruing loans past due 90 days or more
    
    
    837
    
    
    
    214Restructured loans
    
    
    
    
    
    
    Total non-performing loans
    
    $
    837
    
    
    $
    1,454
   Pledged Loans




---



##### 



6. Allowance For Loan Losses
   Years Ended December 31,2007
    
    
    2006
    
    
    2005Balance of allowance - beginning of period
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989Loans charged off:Commercial, financial and agricultural
    
    
    291
    
    
    
    159
    
    
    
    171Real estate - commercial
    
    
    
    
    
    
    
    
    
    
    Real estate - construction
    
    
    
    
    
    
    
    
    
    
    30Real estate - mortgage
    
    
    66
    
    
    
    19
    
    
    
    3Personal
    
    
    61
    
    
    
    129
    
    
    
    75Total charge-offs
    
    
    418
    
    
    
    307
    
    
    
    279Recoveries of loans previously charged off:Commercial, financial and agricultural
    
    
    8
    
    
    
    5
    
    
    
    6Real estate - commercial
    
    
    
    
    
    
    
    
    
    
    Real estate - construction
    
    
    
    
    
    
    
    
    
    
    5Real estate - mortgage
    
    
    8
    
    
    
    
    
    
    
    Personal
    
    
    32
    
    
    
    25
    
    
    
    14Total recoveries
    
    
    48
    
    
    
    30
    
    
    
    25Net charge-offs
    
    
    370
    
    
    
    277
    
    
    
    254Provision for loan losses
    
    
    120
    
    
    
    54
    
    
    
    28Branch acquisition loan loss reserve
    
    
    
    
    
    
    32
    
    
    
    Balance of allowance - end of period
    
    $
    2,322
    
    
    $
    2,572
    
    
    $
    2,763Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.12
    %
    
    
    0.09
    %
    
    
    0.09
    %




---



##### 



December 31,2007
    
    
    2006Impaired loans:Recorded investment at period end
    
    $
    88
    
    
    $
    1,331Impaired loan balance for which:There is a related allowance
    
    
    
    
    
    
    568There is no related allowance
    
    
    88
    
    
    
    763Related allowance on impaired loans
    
    
    
    
    
    
    120
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Average recorded investment in impaired loans
    
    $
    846
    
    
    $
    1,628
    
    
    $
    2,041Interest income recognized (on a cash basis)
    
    
    19
    
    
    
    45
    
    
    
    58
 7. Bank Owned Life Insurance and Annuities
  December 31,2007
    
    
    2006Life insurance
    
    $
    11,879
    
    
    $
    10,515Deferred annuities
    
    
    230
    
    
    
    204Payout Annuities
    
    
    235
    
    
    
    298$
    12,344
    
    
    $
    11,017
 8. Premises And Equipment
  December 31,2007
    
    
    2006Land
    
    $
    864
    
    
    $
    864Buildings and improvements
    
    
    8,234
    
    
    
    7,099Furniture, computer software
and equipment
    
    
    4,684
    
    
    
    4,46313,782
    
    
    
    12,426Less: accumulated depreciation
    
    
    (6,510
    )
    
    
    (5,884
    )$
    7,272
    
    
    $
    6,542




---



##### 



9. Acquisition
    Assets:Cash
    
    $
    261Premises and equipment
    
    
    139Loans
    
    
    3,810Core deposit intangible
    
    
    449Goodwill
    
    
    2,046Other assets
    
    
    9Total assets
    
    
    6,714Liabilities:Deposits
    
    
    20,090Other liabilities
    
    
    164Total liabilities
    
    
    20,254Net liabilities assumed
    
    $
    13,540
 10. Investment in Unconsolidated Subsidiary




---



##### 



11. Deposits
  December 31,2007
    
    
    2006Demand, non-interest bearing
    
    $
    48,755
    
    
    $
    42,829NOW and Money Market
    
    
    74,821
    
    
    
    75,186Savings
    
    
    33,877
    
    
    
    36,217Time deposits, $100,000 or more
    
    
    36,308
    
    
    
    38,032Other time deposits
    
    
    165,696
    
    
    
    162,905$
    359,457
    
    
    $
    355,169
  Time DepositsMaturing in:
    
    $100,000 or more
    
    
    Other2008
    
    $
    22,586
    
    
    $
    112,5802009
    
    
    5,469
    
    
    
    25,0502010
    
    
    6,250
    
    
    
    18,4602011
    
    
    468
    
    
    
    4,8052012
    
    
    1,535
    
    
    
    4,801$
    36,308
    
    
    $
    165,696




---



##### 



12. Borrowings
  December 31, 2007
    
    
    December 31, 2006
    

    December 31, 2005

    
    
    For the year 2007AverageOutstanding
    
    
    
    
    
    
    Outstanding
    
    
    
    
    
    
    Outstanding
    
    
    
    
    
    
    Average
    
    
    WeightedBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateSecurities sold under agreements to repurchase
    
    $
    5,431
    
    
    
    3.01
    %
    
    $
    6,112
    
    
    
    4.54
    %
    
    $
    4,201
    
    
    
    3.60
    %
    
    $
    6,822
    
    
    
    4.05
    %Short-term
borrowings - Federal Home Loan
Bank overnight advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    4.25
    %
    
    
    15
    
    
    
    4.93
    %Long-term
debt - Note payable to Federal Home
Loan Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    2.86
    %
    
    
    $
    5,431
    
    
    
    3.01
    %
    
    $
    6,112
    
    
    
    4.54
    %
    
    $
    14,801
    
    
    
    3.60
    %
    
    $
    6,837
    
    
    
    4.05
    %




---



##### 



13. Operating Lease Obligations
   Years ending December 31,2008
    
    $
    1012009
    
    
    1022010
    
    
    1032011
    
    
    972012
    
    
    582013 and beyond
    
    
    42Total minimum payments required
    
    $
    503




---



##### 



14. Income Taxes
  2007
    
    
    2006
    
    
    2005Current tax expense
    
    $
    2,005
    
    
    $
    2,041
    
    
    $
    1,875Deferred tax (credit) expense
    
    
    94
    
    
    
    40
    
    
    
    (134
    )Total tax expense
    
    $
    2,099
    
    
    $
    2,081
    
    
    $
    1,741
   Years Ended December 31,2007
    
    
    2006
    
    
    2005Income before income taxes
    
    $
    7,533
    
    
    $
    7,083
    
    
    $
    6,307Effective tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Federal tax at statutory rate
    
    
    2,561
    
    
    
    2,408
    
    
    
    2,144Tax-exempt interest
    
    
    (298
    )
    
    
    (233
    )
    
    
    (242
    )Net earnings on BOLI
    
    
    (141
    )
    
    
    (123
    )
    
    
    (124
    )Life insurance proceeds
    
    
    
    
    
    
    
    
    
    
    (21
    )Dividend from unconsolidated subsidiary
    
    
    (34
    )
    
    
    
    
    
    
    Stock-based compensation
    
    
    15
    
    
    
    13
    
    
    
    Other permanent differences
    
    
    (4
    )
    
    
    16
    
    
    
    (16
    )Total tax expense
    
    $
    2,099
    
    
    $
    2,081
    
    
    $
    1,741Effective tax rate
    
    
    27.9
    %
    
    
    29.4
    %
    
    
    27.6
    %
  December 31,2007
    
    
    2006Deferred Tax AssetsAllowance for loan losses
    
    $
    652
    
    
    $
    748Deferred directors compensation
    
    
    705
    
    
    
    711Employee and director benefits
    
    
    720
    
    
    
    697Qualified pension liability
    
    
    319
    
    
    
    455Accrued employee severance
    
    
    
    
    
    
    32Unrealized losses on securities available for sale
    
    
    
    
    
    
    60Other
    
    
    63
    
    
    
    73Total deferred tax assets
    
    
    2,459
    
    
    
    2,776Deferred Tax LiabilitiesDepreciation
    
    
    (209
    )
    
    
    (231
    )Equity income from unconsolidated subsidiary
    
    
    (50
    )
    
    
    (27
    )Prepaid expense
    
    
    (91
    )
    
    
    (105
    )Unrealized gains on securities available for sale
    
    
    (66
    )
    
    
    Annuity earnings
    
    
    (46
    )
    
    
    (20
    )Goodwill
    
    
    (62
    )
    
    
    (15
    )Total deferred tax liabilities
    
    
    (524
    )
    
    
    (398
    )Net deferred
tax asset included in other assets
    
    $
    1,935
    
    
    $
    2,378




---



##### 








---



##### 



15. Stockholders Equity and Regulatory Matters




---



##### 



Juniata Valley Financial Corp. (Consolidated)
 Minimum RequirementFor CapitalActual
    
    
    Adequacy
    
    
    PurposesAmount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2007:Total Capital
    
    $
    49,080
    
    
    
    18.41
    %
    
    $
    21,328
    
    
    
    8.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    46,721
    
    
    
    17.53
    %
    
    
    10,664
    
    
    
    4.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    46,721
    
    
    
    11.06
    %
    
    
    16,896
    
    
    
    4.00
    %(to Average Assets)As of December 31, 2006:Total Capital
    
    $
    49,076
    
    
    
    17.18
    %
    
    $
    22,853
    
    
    
    8.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    46,404
    
    
    
    16.24
    %
    
    
    11,427
    
    
    
    4.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    46,404
    
    
    
    11.27
    %
    
    
    16,463
    
    
    
    4.00
    %(to Average Assets)
 The Juniata Valley Bank
 Minimum RegulatoryRequirements to beMinimum Requirement
    
    
    Well CapitalizedFor Capital
    
    
    under PromptActual
    
    
    Adequacy
    
    
    Purposes
    
    
    Corrective Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2007:Total Capital
    
    $
    41,032
    
    
    
    15.62
    %
    
    $
    21,015
    
    
    
    8.00
    %
    
    $
    26,269
    
    
    
    10.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    38,673
    
    
    
    14.72
    %
    
    
    10,508
    
    
    
    4.00
    %
    
    
    15,761
    
    
    
    6.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    38,673
    
    
    
    9.25
    %
    
    
    16,730
    
    
    
    4.00
    %
    
    
    20,913
    
    
    
    5.00
    %(to Average Assets)As of December 31, 2006:Total Capital
    
    $
    40,929
    
    
    
    14.51
    %
    
    $
    22,563
    
    
    
    8.00
    %
    
    $
    28,204
    
    
    
    10.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    38,285
    
    
    
    13.57
    %
    
    
    11,282
    
    
    
    4.00
    %
    
    
    16,922
    
    
    
    6.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    38,285
    
    
    
    9.35
    %
    
    
    16,381
    
    
    
    4.00
    %
    
    
    20,477
    
    
    
    5.00
    %(to Average Assets)




---



##### 



16. Calculation Of Earnings Per Share
  Years Ended December 31,2007
    
    
    2006
    
    
    2005(Amounts, except earnings per share, in thousands)Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566Weighted-average common shares outstanding
    
    
    4,435
    
    
    
    4,480
    
    
    
    4,550Basic earnings per share
    
    $
    1.23
    
    
    $
    1.12
    
    
    $
    1.00Weighted-average common shares outstanding
    
    
    4,435
    
    
    
    4,480
    
    
    
    4,550Common stock equivalents due to effect of stock options
    
    
    9
    
    
    
    12
    
    
    
    18Total weighted-average common shares and equivalents
    
    
    4,444
    
    
    
    4,492
    
    
    
    4,568Diluted earnings per share
    
    $
    1.22
    
    
    $
    1.11
    
    
    $
    1.00
  17. Comprehensive Income




---



##### 



Year ended December 31, 2007Before
    
    
    Tax (Expense)Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountNet income
    
    $
    7,533
    
    
    $
    (2,099
    )
    
    $
    5,434Other comprehensive income (loss):Unrealized gains on available for sale securities :Unrealized holding gains arising during the period
    
    
    353
    
    
    
    (120
    )
    
    
    233Unrealized holding gains from unconsolidated subsidiary
    
    
    14
    
    
    
    
    
    
    
    14Less
reclassification adjustment for:gains included in net income
    
    
    (14
    )
    
    
    5
    
    
    
    (9
    )securities impairment charge
    
    
    33
    
    
    
    (11
    )
    
    
    22Unrecognized pension net gain
    
    
    374
    
    
    
    (127
    )
    
    
    247Amortization of pension prior service cost
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Amortization of pension net actuarial loss
    
    
    54
    
    
    
    (18
    )
    
    
    36Other comprehensive income
    
    
    812
    
    
    
    (271
    )
    
    
    541Total comprehensive income
    
    $
    8,345
    
    
    $
    (2,370
    )
    
    $
    5,975
 Year ended December 31, 2006Before
    
    
    Tax (Expense)Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountNet income
    
    $
    7,083
    
    
    $
    (2,081
    )
    
    $
    5,002Other comprehensive income (loss):Unrealized gains on available for sale securities :Unrealized holding gains arising during the period
    
    
    595
    
    
    
    (202
    )
    
    
    393Less
reclassification adjustment for gains included in net income
    
    
    (181
    )
    
    
    62
    
    
    
    (119
    )Minimum pension liability
    
    
    129
    
    
    
    (44
    )
    
    
    85Other comprehensive income
    
    
    543
    
    
    
    (184
    )
    
    
    359Total comprehensive income
    
    $
    7,626
    
    
    $
    (2,265
    )
    
    $
    5,361
 Year ended December 31, 2005Before
    
    
    Tax (Expense)Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountNet income
    
    $
    6,307
    
    
    $
    (1,741
    )
    
    $
    4,566Other comprehensive income (loss):Unrealized losses on available for sale securities :Unrealized holding losses arising during the period
    
    
    (1,045
    )
    
    
    357
    
    
    
    (688
    )Less reclassification adjustment for
gains included in net income
    
    
    (175
    )
    
    
    59
    
    
    
    (116
    )Minimum pension liability
    
    
    (461
    )
    
    
    157
    
    
    
    (304
    )Other comprehensive loss
    
    
    (1,681
    )
    
    
    573
    
    
    
    (1,108
    )Total comprehensive income
    
    $
    4,626
    
    
    $
    (1,168
    )
    
    $
    3,458




---



##### 



18. Employee Benefit Plans
 Stock Compensation Plan
      2007
    
    
    2006
    
    
    2005Weighted Average
    
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    
    Weighted AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at beginning of year
    
    
    65,746
    
    
    $
    17.83
    
    
    
    57,983
    
    
    $
    17.25
    
    
    
    55,362
    
    
    $
    15.49Granted
    
    
    15,513
    
    
    
    20.05
    
    
    
    10,880
    
    
    
    21.00
    
    
    
    10,953
    
    
    
    24.00Exercised
    
    
    (1,747
    )
    
    
    15.77
    
    
    
    (750
    )
    
    
    14.18
    
    
    
    (4,528
    )
    
    
    14.24Forfeited
    
    
    
    
    
    
    
    
    
    
    (2,367
    )
    
    
    19.40
    
    
    
    (3,804
    )
    
    
    14.60Outstanding at end of year
    
    
    79,512
    
    
    $
    18.31
    
    
    
    65,746
    
    
    $
    17.83
    
    
    
    57,983
    
    
    $
    17.25Options exercisable at year-end
    
    
    49,035
    
    
    $
    16.79
    
    
    
    40,735
    
    
    $
    15.90
    
    
    
    30,726
    
    
    $
    14.94Weighted-average fair value of
of options granted
during the year
    
    $
    3.92
    
    
    
    
    
    
    $
    4.50
    
    
    
    
    
    
    $
    4.74Intrinsic value of options
exercised during the year
    
    $
    9,058
    
    
    
    
    
    
    $
    5,159
    
    
    
    
    
    
    $
    41,647




---



##### 



Outstanding
    
    
    
    
    
    ExercisableContractual
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Average Life
    
    Exercise
    
    
    
    
    
    ExerciseGrant Date
    
    Price
    
    Shares
    
    (Years)
    
    Price
    
    Shares
    
    Price11/20/2001
    
    $
    14.10
    
    
    
    10,813
    
    
    
    3.51
    
    
    $
    14.10
    
    
    
    10,813
    
    
    $
    14.1011/19/2002
    
    
    14.25
    
    
    
    11,570
    
    
    
    4.67
    
    
    
    14.25
    
    
    
    11,570
    
    
    
    14.2511/18/2003
    
    
    15.13
    
    
    
    12,094
    
    
    
    5.89
    
    
    
    15.13
    
    
    
    11,029
    
    
    
    15.1311/15/2004
    
    
    20.25
    
    
    
    8,380
    
    
    
    6.88
    
    
    
    20.25
    
    
    
    7,138
    
    
    
    20.2510/18/2005
    
    
    24.00
    
    
    
    10,262
    
    
    
    7.54
    
    
    
    24.00
    
    
    
    5,549
    
    
    
    24.0010/17/2006
    
    
    21.00
    
    
    
    10,880
    
    
    
    8.80
    
    
    
    21.00
    
    
    
    2,936
    
    
    
    21.0010/16/2007
    
    
    20.05
    
    
    
    15,513
    
    
    
    9.80
    
    
    
    20.05
    
    
    
    
    
    
    
    20.05
 Defined Benefit Retirement Plan
   Increase(Decrease)Accrued pension liability
    
    $
    1,156Deferred tax asset
    
    
    393Accumulated other comprehensive loss
    
    
    763




---



##### 



Years ended December 31,2007
    
    
    2006Change in projected benefit obligation (PBO)PBO at beginning of year
    
    $
    6,881
    
    
    $
    6,503Service cost
    
    
    281
    
    
    
    296Interest cost
    
    
    387
    
    
    
    366Actuarial gain
    
    
    (248
    )
    
    
    (23
    )Benefits paid
    
    
    (260
    )
    
    
    (261
    )PBO at end of year
    
    $
    7,041
    
    
    $
    6,881Change in plan assetsFair value of plan assets at beginning of year
    
    $
    5,543
    
    
    $
    5,076Actual return on plan assets, net of expenses
    
    
    519
    
    
    
    428Employer contribution
    
    
    300
    
    
    
    300Benefits paid
    
    
    (260
    )
    
    
    (261
    )Fair value of plan assets at end of year
    
    $
    6,102
    
    
    $
    5,543Reconciliation of funded status to net amount recognizedFunded status
    
    
    (939
    )
    
    
    (1,338
    )Unrecognized net actuarial loss
    
    
    1,071
    
    
    
    1,500Unrecognized transition asset
    
    
    (10
    )
    
    
    (12
    )Minimum pension liability
    
    
    (1,061
    )
    
    
    (332
    )Adjustment to accumulated other comprehensive income as a result of adoption of FAS No. 158
    
    
    
    
    
    
    (1,156
    )Accrued benefit cost
    
    $
    (939
    )
    
    $
    (1,338
    )Accumulated benefit obligation
    
    $
    5,793
    
    
    $
    5,725
  2007
    
    
    2006
    
    
    2005Service cost during the year
    
    $
    281
    
    
    $
    296
    
    
    $
    287Interest cost on projected benefit obligation
    
    
    387
    
    
    
    366
    
    
    
    346Expected return on plan assets
    
    
    (392
    )
    
    
    (359
    )
    
    
    (335
    )Net amortization
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Recognized net actuarial loss
    
    
    54
    
    
    
    75
    
    
    
    94Net periodic benefit cost
    
    $
    328
    
    
    $
    376
    
    
    $
    390
  2007
    
    2006
    
    2005Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    5.75
    %Rate of compensation increase
    
    
    4.25
    
    
    
    3.75
    
    
    
    3.75




---



##### 



2007
    
    2006
    
    2005Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %Expected long-term return on plan assets
    
    
    7.00
    
    
    
    7.00
    
    
    
    7.00Rate of compensation increase
    
    
    3.75
    
    
    
    3.75
    
    
    
    3.75
   2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013-2017$308
    
    $308
    
    $333
    
    $338
    
    $349
    
    $1,917
 Employee Stock Purchase Plan
  Supplemental Retirement Plans
  Deferred Compensation Plans
  Salary Continuation Plans




---



##### 



19. Fair Value of Financial Instruments




---



##### 



Financial Instruments
 December 31, 2007
    
    December 31, 2006Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and due from banks
    
    $
    12,254
    
    
    $
    12,254
    
    
    $
    16,476
    
    
    $
    16,476Interest bearing deposits with banks
    
    
    770
    
    
    
    770
    
    
    
    102
    
    
    
    102Federal funds sold
    
    
    7,500
    
    
    
    7,500
    
    
    
    1,200
    
    
    
    1,200Interest bearing time deposits with banks
    
    
    5,525
    
    
    
    5,515
    
    
    
    5,660
    
    
    
    5,598Securities
    
    
    67,056
    
    
    
    67,056
    
    
    
    58,883
    
    
    
    58,863Restricted investment in FHLB stock
    
    
    1,095
    
    
    
    1,095
    
    
    
    1,076
    
    
    
    1,076Total loans, net of unearned interest
    
    
    298,000
    
    
    
    302,157
    
    
    
    305,818
    
    
    
    305,233Allowance for loan losses
    
    
    (2,322
    )
    
    
    (2,322
    )
    
    
    (2,572
    )
    
    
    (2,572
    )Accrued interest receivable
    
    
    2,247
    
    
    
    2,247
    
    
    
    2,040
    
    
    
    2,040Financial liabilities:Non-interest bearing deposits
    
    
    48,755
    
    
    
    48,755
    
    
    
    42,829
    
    
    
    42,829Interest bearing deposits
    
    
    310,702
    
    
    
    307,960
    
    
    
    312,340
    
    
    
    310,297Securities sold under agreements to
repurchase
    
    
    5,431
    
    
    
    5,431
    
    
    
    6,112
    
    
    
    6,112Other interest bearing liabilities
    
    
    1,037
    
    
    
    1,037
    
    
    
    927
    
    
    
    927Accrued interest payable
    
    
    999
    
    
    
    999
    
    
    
    999
    
    
    
    999Off-balance sheet financial instruments:Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    




---



##### 



20. Financial Instruments With Off-Balance Sheet Risk
    December 31,2007
    
    2006Commitments to grant loans
    
    $
    35,827
    
    
    $
    37,627Unfunded commitments under lines of credit
    
    
    15,544
    
    
    
    10,975Outstanding letters of credit
    
    
    718
    
    
    
    859




---



##### 



21. Related-Party Transactions
  22. Commitments And Contingent Liabilities
   23 . Subsequent Events




---



##### 



24. Juniata Valley Financial Corp. (Parent Company Only)
 CONDENSED BALANCE SHEETS
 December 31,2007
    
    
    2006ASSETS:Cash
    
    $
    235
    
    
    $
    337Interest bearing deposits with banks
    
    
    355
    
    
    
    490Cash and cash equivalents
    
    
    590
    
    
    
    827Investment in bank subsidiary
    
    
    40,725
    
    
    
    39,673Investment in unconsolidated subsidiary
    
    
    2,972
    
    
    
    2,892Investment securities available for sale
    
    
    4,053
    
    
    
    3,947Other assets
    
    
    275
    
    
    
    522TOTAL ASSETS
    
    $
    48,615
    
    
    $
    47,861LIABILITIES:Income tax payable
    
    $
    9
    
    
    $
    73Accounts payable and other liabilities
    
    
    34
    
    
    
    2STOCKHOLDERS EQUITY
    
    
    48,572
    
    
    
    47,786TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    48,615
    
    
    $
    47,861
 CONDENSED STATEMENTS OF INCOME
 Years ended December 31,2007
    
    
    2006
    
    
    2005INCOME:Interest on deposits with banks
    
    $
    17
    
    
    $
    18
    
    
    $
    18Interest and dividends on investment securities available for sale
    
    
    168
    
    
    
    152
    
    
    
    134Dividends from bank subsidiary
    
    
    4,968
    
    
    
    7,031
    
    
    
    7,380Income from unconsolidated subsidiary
    
    
    192
    
    
    
    80
    
    
    
    Gain on the sale of investment securities
    
    
    
    
    
    
    77
    
    
    
    45TOTAL INCOME
    
    
    5,345
    
    
    
    7,358
    
    
    
    7,577EXPENSE:Non-interest expense
    
    
    153
    
    
    
    109
    
    
    
    169TOTAL EXPENSE
    
    
    153
    
    
    
    109
    
    
    
    169INCOME BEFORE INCOME TAXES AND EQUITY
IN UNDISTRIBUTED NET INCOME OF SUBSIDIARY
    
    
    5,192
    
    
    
    7,249
    
    
    
    7,408Income tax
    
    
    32
    
    
    
    68
    
    
    
    85,160
    
    
    
    7,181
    
    
    
    7,400(Excess) deficient distributed net income of subsidiary
    
    
    274
    
    
    
    (2,179
    )
    
    
    (2,834
    )NET INCOME
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566




---



##### 



CONDENSED
STATEMENTS OF CASH FLOWS
 Years ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    5,434
    
    
    $
    5,002
    
    
    $
    4,566Adjustments to reconcile net income to net cash
provided by operating activities:Distributions in excess of (below) (undistributed) net income of subsidiary
    
    
    (274
    )
    
    
    2,179
    
    
    
    2,834Realized gains on sales of investment securities
    
    
    
    
    
    
    (77
    )
    
    
    (45
    )Income from unconsolidated subsidiary, net of dividends of $126 and $0
    
    
    (66
    )
    
    
    (80
    )
    
    
    Decrease (increase) in interest and other assets
    
    
    355
    
    
    
    (180
    )
    
    
    (267
    )(Decrease) increase in taxes payable
    
    
    (64
    )
    
    
    68
    
    
    
    44Increase (decrease) in accounts payable and other liabilities
    
    
    32
    
    
    
    2
    
    
    
    (35
    )Net cash provided by operating activities
    
    
    5,417
    
    
    
    6,914
    
    
    
    7,097Cash flows from investing activities:Purchases of available for sale securities
    
    
    (762
    )
    
    
    (134
    )
    
    
    (489
    )Proceeds from the sale of available for sale securities
    
    
    
    
    
    
    137
    
    
    
    79Proceeds from the maturity of available for sale investment securities
    
    
    340
    
    
    
    
    
    
    
    Investment in unconsolidated subsidiary
    
    
    
    
    
    
    (2,812
    )
    
    
    Net cash used in investing activities
    
    
    (422
    )
    
    
    (2,809
    )
    
    
    (410
    )Cash flows from financing activities:Cash dividends
    
    
    (4,210
    )
    
    
    (2,957
    )
    
    
    (5,046
    )Purchase of treasury stock
    
    
    (1,069
    )
    
    
    (1,302
    )
    
    
    (2,242
    )Treasury stock issued for dividend reinvestment and
employee stock purchase plan
    
    
    47
    
    
    
    289
    
    
    
    796Net cash used in financing activities
    
    
    (5,232
    )
    
    
    (3,970
    )
    
    
    (6,492
    )Net (decrease) increase in cash and cash equivalents
    
    
    (237
    )
    
    
    135
    
    
    
    195Cash and cash equivalents at beginning of year
    
    
    827
    
    
    
    692
    
    
    
    497Cash and cash equivalents at end of year
    
    $
    590
    
    
    $
    827
    
    
    $
    692




---



##### 



25. Quarterly Results Of Operations (Unaudited)
  2007 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total interest income
    
    $
    6,447
    
    
    $
    6,704
    
    
    $
    6,798
    
    
    $
    6,774Total interest expense
    
    
    2,668
    
    
    
    2,776
    
    
    
    2,860
    
    
    
    2,756Net interest income
    
    
    3,779
    
    
    
    3,928
    
    
    
    3,938
    
    
    
    4,018Provision for loan losses
    
    
    67
    
    
    
    23
    
    
    
    
    
    
    
    30Gains from the sale of assets
    
    
    12
    
    
    
    9
    
    
    
    45
    
    
    
    9Other income
    
    
    1,026
    
    
    
    972
    
    
    
    1,065
    
    
    
    1,061Other expense
    
    
    2,968
    
    
    
    3,072
    
    
    
    3,091
    
    
    
    3,078Income before income taxes
    
    
    1,782
    
    
    
    1,814
    
    
    
    1,957
    
    
    
    1,980Income tax expense
    
    
    503
    
    
    
    500
    
    
    
    538
    
    
    
    558Net income
    
    $
    1,279
    
    
    $
    1,314
    
    
    $
    1,419
    
    
    $
    1,422Per-share data:Basic earnings
    
    $
    .29
    
    
    $
    .30
    
    
    $
    .32
    
    
    $
    .32Diluted earnings
    
    
    .29
    
    
    
    .30
    
    
    
    .32
    
    
    
    .32Cash dividends
    
    
    .17
    
    
    
    .42
    
    
    
    .18
    
    
    
    .18
 2006 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total interest income
    
    $
    5,924
    
    
    $
    6,086
    
    
    $
    6,232
    
    
    $
    6,421Total interest expense
    
    
    2,333
    
    
    
    2,483
    
    
    
    2,606
    
    
    
    2,689Net interest income
    
    
    3,591
    
    
    
    3,603
    
    
    
    3,626
    
    
    
    3,732Provision for loan losses
    
    
    30
    
    
    
    30
    
    
    
    29
    
    
    
    (35
    )Gains from the sale of assets
    
    
    80
    
    
    
    10
    
    
    
    28
    
    
    
    126Other income
    
    
    790
    
    
    
    891
    
    
    
    939
    
    
    
    966Other expense
    
    
    2,744
    
    
    
    2,767
    
    
    
    2,839
    
    
    
    2,895Income before income taxes
    
    
    1,687
    
    
    
    1,707
    
    
    
    1,725
    
    
    
    1,964Income tax expense
    
    
    483
    
    
    
    487
    
    
    
    494
    
    
    
    617Net income
    
    $
    1,204
    
    
    $
    1,220
    
    
    $
    1,231
    
    
    $
    1,347Per-share data:Basic earnings
    
    $
    .27
    
    
    $
    .27
    
    
    $
    .27
    
    
    $
    .30Diluted earnings
    
    
    .27
    
    
    
    .27
    
    
    
    .27
    
    
    
    .30Cash dividends
    
    
    .16
    
    
    
    .16
    
    
    
    .17
    
    
    
    .17




---



##### 



Common Stock Market Prices and Dividends
   2007Quarter Ended
    
    High
    
    Low
    
    Dividends DeclaredMarch 31
    
    $
    21.50
    
    
    $
    20.85
    
    
    $
    0.17June 30
    
    
    23.00
    
    
    
    20.00
    
    
    
    0.42September 30
    
    
    23.75
    
    
    
    20.05
    
    
    
    0.18December 31
    
    
    21.25
    
    
    
    20.00
    
    
    
    0.18
 2006Quarter Ended
    
    High
    
    Low
    
    Dividends DeclaredMarch 31
    
    $
    24.50
    
    
    $
    23.50
    
    
    $
    0.16June 30
    
    
    24.00
    
    
    
    22.60
    
    
    
    0.16September 30
    
    
    23.50
    
    
    
    21.00
    
    
    
    0.17December 31
    
    
    21.35
    
    
    
    21.00
    
    
    
    0.17
   Corporate Information
 
 Corporate Headquarters
       Investor Information      JoAnn.McMinn@JVBonline.com




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##### 



Information Availability
 www.JVBonline.com
 www.SEC.gov
   
 Investment Considerations
  Registrar and Transfer Agent
 www.RTCo.com  info@RTCo.com
 www.RTCo.com
   Annual Meeting of Shareholders