##### 



Exhibit 13.1
Portions of Annual Report




---



##### 



Five-Year Financial Summary  Selected Financial Data
 2006

    2005

    2004

    2003

    2002(In thousands of dollars, except share and per share data)BALANCE SHEET INFORMATIONat December 31Assets
    
    $
    415,931
    
    
    $
    410,802
    
    
    $
    397,074
    
    
    $
    387,780
    
    
    $
    375,735Deposits
    
    
    355,169
    
    
    
    343,467
    
    
    
    332,642
    
    
    
    332,984
    
    
    
    322,619Loans, net of allowance for
loan losses
    
    
    303,246
    
    
    
    295,300
    
    
    
    276,759
    
    
    
    249,960
    
    
    
    235,497Investments
    
    
    65,619
    
    
    
    77,208
    
    
    
    84,157
    
    
    
    103,798
    
    
    
    106,431Intangible assets
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill
    
    
    2,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term borrowings
    
    
    6,112
    
    
    
    9,801
    
    
    
    4,716
    
    
    
    
    
    
    
    Long-term debt
    
    
    
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    
    
    
    
    Stockholders equity
    
    
    47,786
    
    
    
    47,119
    
    
    
    50,153
    
    
    
    50,483
    
    
    
    48,327Number of shares outstanding *
    
    
    4,457,934
    
    
    
    4,503,392
    
    
    
    4,561,258
    
    
    
    4,569,406
    
    
    
    4,626,970Average for the yearAssets
    
    
    414,048
    
    
    
    406,706
    
    
    
    393,554
    
    
    
    386,574
    
    
    
    366,853Stockholders equity
    
    
    47,503
    
    
    
    48,403
    
    
    
    48,776
    
    
    
    47,629
    
    
    
    46,210Weighted average shares
outstanding *
    
    
    4,480,245
    
    
    
    4,550,483
    
    
    
    4,559,168
    
    
    
    4,581,922
    
    
    
    4,660,780INCOME STATEMENT INFORMATIONYears Ended December 31Total interest income
    
    $
    24,663
    
    
    $
    22,707
    
    
    $
    21,717
    
    
    $
    22,500
    
    
    $
    23,470Total interest expense
    
    
    10,111
    
    
    
    8,015
    
    
    
    6,438
    
    
    
    7,472
    
    
    
    9,299Net interest income
    
    
    14,552
    
    
    
    14,692
    
    
    
    15,279
    
    
    
    15,028
    
    
    
    14,171Provision for loan losses
    
    
    54
    
    
    
    28
    
    
    
    326
    
    
    
    304
    
    
    
    300Other income
    
    
    3,830
    
    
    
    3,323
    
    
    
    3,445
    
    
    
    2,760
    
    
    
    2,014Other expenses
    
    
    11,245
    
    
    
    11,680
    
    
    
    10,600
    
    
    
    10,017
    
    
    
    9,124Income before income taxes
    
    
    7,083
    
    
    
    6,307
    
    
    
    7,798
    
    
    
    7,467
    
    
    
    6,761Federal income tax expense
    
    
    2,081
    
    
    
    1,741
    
    
    
    1,969
    
    
    
    1,820
    
    
    
    1,746Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647
    
    
    $
    5,015PER SHARE DATA *Earnings per share  basic
    
    $
    1.12
    
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24
    
    
    $
    1.08Earnings per share  diluted
    
    
    1.11
    
    
    
    1.00
    
    
    
    1.27
    
    
    
    1.23
    
    
    
    1.08Cash dividends
    
    
    0.66
    
    
    
    1.11
    
    
    
    1.07
    
    
    
    0.50
    
    
    
    0.44Book value
    
    
    10.72
    
    
    
    10.46
    
    
    
    11.00
    
    
    
    11.05
    
    
    
    10.45FINANCIAL RATIOSReturn on average assets
    
    
    1.21
    %
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %
    
    
    1.37
    %Return on average equity
    
    
    10.53
    
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86
    
    
    
    10.85Dividend payout
    
    
    59.12
    
    
    
    110.71
    
    
    
    83.70
    
    
    
    40.43
    
    
    
    40.72Average equity to average assets
    
    
    11.47
    
    
    
    11.90
    
    
    
    12.39
    
    
    
    12.32
    
    
    
    12.60Loans to deposits (year end)
    
    
    85.38
    
    
    
    85.98
    
    
    
    83.20
    
    
    
    75.07
    
    
    
    73.00
 
 *
    
    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
  Regulated Company
  APPLICATION OF CRITICAL ACCOUNTING POLICIES




---



##### 








---



##### 



Results of Operations
 2006
Financial Performance Overview
  2006
    
    2005
    
    2004
    
    2003
    
    2002Return on average assets
    
    
    1.21
    %
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %
    
    
    1.37
    %Return on average equity
    
    
    10.53
    
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86
    
    
    
    10.85Yield on earning assets
    
    
    6.43
    
    
    
    6.00
    
    
    
    5.98
    
    
    
    6.33
    
    
    
    6.91Cost to fund earning assets
    
    
    2.63
    
    
    
    2.12
    
    
    
    1.77
    
    
    
    2.10
    
    
    
    2.74Net interest margin (fully tax equivalent)
    
    
    3.91
    
    
    
    4.00
    
    
    
    4.34
    
    
    
    4.42
    
    
    
    4.40Noninterest income (excluding gains on
sales of securities) to average assets
    
    
    0.88
    
    
    
    0.77
    
    
    
    0.78
    
    
    
    0.71
    
    
    
    0.55Noninterest expense to average assets
    
    
    2.72
    
    
    
    2.87
    
    
    
    2.69
    
    
    
    2.59
    
    
    
    2.49Net noninterest expense to average assets
    
    
    1.84
    
    
    
    2.10
    
    
    
    1.91
    
    
    
    1.88
    
    
    
    1.94
  
    
    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 on sales of
annuities and mutual funds
    
    
    513
    
    
    
    0.12
    
    
    
    426
    
    
    
    0.10Income from unconsolidated
subsidiary
    
    
    80
    
    
    
    0.02
    
    
    
    
    
    
    
    Other fees
    
    
    628
    
    
    
    0.15
    
    
    
    574
    
    
    
    0.14Security gains
    
    
    181
    
    
    
    0.04
    
    
    
    175
    
    
    
    0.04Gains on sale of other assets
    
    
    63
    
    
    
    0.02
    
    
    
    20
    
    
    
    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
    )Other noninterest expense
    
    
    (1,205
    )
    
    
    (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




---



##### 



Table 5
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
 Years Ended December 31,2006
    
    
    
    2005
    
    
    
    2004Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    RateASSETSInterest earning assets:Taxable loans (5)
    
    $
    299,488
    
    
    $
    21,622
    
    
    
    7.22
    %
    
    
    $
    285,546
    
    
    $
    19,608
    
    
    
    6.87
    %
    
    
    $
    263,540
    
    
    $
    18,496
    
    
    
    7.02
    %Tax-exempt loans
    
    
    4,500
    
    
    
    146
    
    
    
    3.24
    
    
    
    
    4,781
    
    
    
    159
    
    
    
    3.33
    
    
    
    
    4,379
    
    
    
    146
    
    
    
    3.33Total loans
    
    
    303,988
    
    
    
    21,768
    
    
    
    7.16
    
    
    
    
    290,327
    
    
    
    19,767
    
    
    
    6.81
    
    
    
    
    267,919
    
    
    
    18,642
    
    
    
    6.96Taxable investment securities
    
    
    54,198
    
    
    
    1,975
    
    
    
    3.64
    
    
    
    
    56,966
    
    
    
    1,872
    
    
    
    3.29
    
    
    
    
    62,012
    
    
    
    2,052
    
    
    
    3.31Tax-exempt investment securities
    
    
    19,027
    
    
    
    659
    
    
    
    3.46
    
    
    
    
    19,800
    
    
    
    654
    
    
    
    3.30
    
    
    
    
    23,742
    
    
    
    807
    
    
    
    3.40Total investment securities
    
    
    73,225
    
    
    
    2,634
    
    
    
    3.60
    
    
    
    
    76,766
    
    
    
    2,526
    
    
    
    3.29
    
    
    
    
    85,754
    
    
    
    2,859
    
    
    
    3.33Interest bearing deposits
    
    
    5,730
    
    
    
    244
    
    
    
    4.26
    
    
    
    
    6,420
    
    
    
    257
    
    
    
    4.00
    
    
    
    
    5,569
    
    
    
    167
    
    
    
    3.00Federal funds sold
    
    
    324
    
    
    
    17
    
    
    
    5.25
    
    
    
    
    4,679
    
    
    
    157
    
    
    
    3.36
    
    
    
    
    3,933
    
    
    
    49
    
    
    
    1.25Total interest earning assets
    
    
    383,267
    
    
    
    24,663
    
    
    
    6.43
    
    
    
    
    378,192
    
    
    
    22,707
    
    
    
    6.00
    
    
    
    
    363,175
    
    
    
    21,717
    
    
    
    5.98Non-interest earning assets:Cash and due from banks
    
    
    9,764
    
    
    
    
    
    
    
    
    
    
    
    
    9,449
    
    
    
    
    
    
    
    
    
    
    
    
    10,201Allowance for loan losses
    
    
    (2,761
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,976
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,916
    )Premises and equipment
    
    
    6,147
    
    
    
    
    
    
    
    
    
    
    
    
    6,606
    
    
    
    
    
    
    
    
    
    
    
    
    6,736Other assets (7)
    
    
    17,631
    
    
    
    
    
    
    
    
    
    
    
    
    15,435
    
    
    
    
    
    
    
    
    
    
    
    
    16,358Total assets
    
    $
    414,048
    
    
    
    
    
    
    
    
    
    
    
    $
    406,706
    
    
    
    
    
    
    
    
    
    
    
    $
    393,554LIABILITIES
AND STOCKHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits (2)
    
    $
    77,570
    
    
    
    1,675
    
    
    
    2.16
    
    
    
    $
    64,118
    
    
    
    952
    
    
    
    1.48
    
    
    
    $
    62,494
    
    
    
    526
    
    
    
    0.84Savings deposits
    
    
    40,031
    
    
    
    629
    
    
    
    1.57
    
    
    
    
    44,638
    
    
    
    692
    
    
    
    1.55
    
    
    
    
    44,988
    
    
    
    427
    
    
    
    0.95Time deposits
    
    
    187,283
    
    
    
    7,168
    
    
    
    3.83
    
    
    
    
    185,615
    
    
    
    6,022
    
    
    
    3.24
    
    
    
    
    181,707
    
    
    
    5,393
    
    
    
    2.97Other, including short-term borrowings,
long-term debt and other
interest bearing liabilities
    
    
    14,822
    
    
    
    639
    
    
    
    4.31
    
    
    
    
    11,765
    
    
    
    349
    
    
    
    2.97
    
    
    
    
    4,203
    
    
    
    92
    
    
    
    2.19Total interest bearing liabilities
    
    
    319,706
    
    
    
    10,111
    
    
    
    3.16
    
    
    
    
    306,136
    
    
    
    8,015
    
    
    
    2.62
    
    
    
    
    293,392
    
    
    
    6,438
    
    
    
    2.19Non-interest bearing liabilities:Demand deposits
    
    
    41,587
    
    
    
    
    
    
    
    
    
    
    
    
    47,208
    
    
    
    
    
    
    
    
    
    
    
    
    45,402Other
    
    
    5,252
    
    
    
    
    
    
    
    
    
    
    
    
    4,959
    
    
    
    
    
    
    
    
    
    
    
    
    5,984Stockholders equity
    
    
    47,503
    
    
    
    
    
    
    
    
    
    
    
    
    48,403
    
    
    
    
    
    
    
    
    
    
    
    
    48,776Total liabilities
and stockholders equity
    
    $
    414,048
    
    
    
    
    
    
    
    
    
    
    
    $
    406,706
    
    
    
    
    
    
    
    
    
    
    
    $
    393,554Net interest income
    
    
    
    
    
    $
    14,552
    
    
    
    
    
    
    
    
    
    
    
    $
    14,692
    
    
    
    
    
    
    
    
    
    
    
    $
    15,279Net margin on interest earning assets (3)
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    
    3.88
    %
    
    
    
    
    
    
    
    
    
    
    
    4.21
    %Net interest income and margin -
Tax equivalent basis (4)
    
    
    
    
    
    $
    14,967
    
    
    
    3.91
    %
    
    
    
    
    
    
    $
    15,111
    
    
    
    4.00
    %
    
    
    
    
    
    
    $
    15,770
    
    
    
    4.34
    %
 
 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 6
 RATE  VOLUME ANALYSIS OF NET INTEREST INCOME
 2006 Compared to 2005
    
    
    
    2005 Compared to 2004Increase (Decrease) Due To (6)
    
    
    
    Increase (Decrease) Due To (6)Volume
    
    
    Rate
    
    
    Total
    
    
    
    Volume
    
    
    Rate
    
    
    TotalASSETSInterest earning assets:Taxable loans (5)
    
    $
    986
    
    
    $
    1,028
    
    
    $
    2,014
    
    
    
    $
    1,515
    
    
    $
    (403
    )
    
    $
    1,112Tax-exempt loans
    
    
    (9
    )
    
    
    (4
    )
    
    
    (13
    )
    
    
    
    13
    
    
    
    
    
    
    
    13Total loans
    
    
    977
    
    
    
    1,024
    
    
    
    2,001
    
    
    
    
    1,528
    
    
    
    (403
    )
    
    
    1,125Taxable investment securities
    
    
    (93
    )
    
    
    196
    
    
    
    103
    
    
    
    
    (168
    )
    
    
    (12
    )
    
    
    (180
    )Tax-exempt investment securities
    
    
    (26
    )
    
    
    31
    
    
    
    5
    
    
    
    
    (130
    )
    
    
    (23
    )
    
    
    (153
    )Total investment securities
    
    
    (119
    )
    
    
    227
    
    
    
    108
    
    
    
    
    (298
    )
    
    
    (35
    )
    
    
    (333
    )Interest bearing deposits
    
    
    (29
    )
    
    
    16
    
    
    
    (13
    )
    
    
    
    29
    
    
    
    61
    
    
    
    90Federal funds sold
    
    
    (197
    )
    
    
    57
    
    
    
    (140
    )
    
    
    
    11
    
    
    
    97
    
    
    
    108Total interest earning assets
    
    
    632
    
    
    
    1,324
    
    
    
    1,956
    
    
    
    
    1,270
    
    
    
    (280
    )
    
    
    990LIABILITIES
AND STOCKHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits (2)
    
    
    227
    
    
    
    496
    
    
    
    723
    
    
    
    
    14
    
    
    
    412
    
    
    
    426Savings deposits
    
    
    (72
    )
    
    
    9
    
    
    
    (63
    )
    
    
    
    (3
    )
    
    
    268
    
    
    
    265Time deposits
    
    
    54
    
    
    
    1,092
    
    
    
    1,146
    
    
    
    
    120
    
    
    
    509
    
    
    
    629Other, including short-term borrowings,
long-term debt and other
interest bearing liabilities
    
    
    106
    
    
    
    184
    
    
    
    290
    
    
    
    
    214
    
    
    
    43
    
    
    
    257Total interest bearing liabilities
    
    
    315
    
    
    
    1,781
    
    
    
    2,096
    
    
    
    
    345
    
    
    
    1,232
    
    
    
    1,577Net interest income
    
    $
    317
    
    
    $
    (457
    )
    
    $
    (140
    )
    
    
    $
    925
    
    
    $
    (1,512
    )
    
    $
    (587
    )
 
 (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: $(495) in 2006,
$(137) in 2005 and $1,396 in 2004.




---



##### 



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
    %
 Outlook for 2007
  2005
Financial Performance Overview
   Net Interest Income




---



##### 



Provision for Loan Losses
  Noninterest income
     Noninterest expense




---



##### 



Income taxes




---



##### 



Financial Condition
 Balance Sheet Summary
  Table 1
 2006
    
    
    
    
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    2004Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceFunding Uses:Loans:Commercial
    
    $
    87,243
    
    
    $
    1,956
    
    
    
    2.3
    %
    
    $
    85,287
    
    
    $
    4,847
    
    
    
    6.0
    %
    
    $
    80,440Tax-exempt loans
    
    
    4,500
    
    
    
    (281
    )
    
    
    (5.9
    )
    
    
    4,781
    
    
    
    402
    
    
    
    9.2
    
    
    
    4,379Mortgage
    
    
    138,423
    
    
    
    3,566
    
    
    
    2.6
    
    
    
    134,857
    
    
    
    11,244
    
    
    
    9.1
    
    
    
    123,613Consumer
    
    
    73,822
    
    
    
    8,420
    
    
    
    12.9
    
    
    
    65,402
    
    
    
    5,915
    
    
    
    9.9
    
    
    
    59,487Securities
    
    
    54,198
    
    
    
    (2,768
    )
    
    
    (4.9
    )
    
    
    56,966
    
    
    
    (5,046
    )
    
    
    (8.1
    )
    
    
    62,012Tax-exempt securities
    
    
    19,027
    
    
    
    (773
    )
    
    
    (3.9
    )
    
    
    19,800
    
    
    
    (3,942
    )
    
    
    (16.6
    )
    
    
    23,742Interest bearing deposits
    
    
    5,730
    
    
    
    (690
    )
    
    
    (10.7
    )
    
    
    6,420
    
    
    
    851
    
    
    
    15.3
    
    
    
    5,569Federal funds sold
    
    
    324
    
    
    
    (4,355
    )
    
    
    (93.1
    )
    
    
    4,679
    
    
    
    746
    
    
    
    19.0
    
    
    
    3,933Total interest earning assets
    
    
    383,267
    
    
    
    5,075
    
    
    
    1.3
    
    
    
    378,192
    
    
    
    15,017
    
    
    
    4.1
    
    
    
    363,175Investment in unconsolidated subsidiary
    
    
    880
    
    
    
    880
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill and intangible assets
    
    
    780
    
    
    
    780
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-interest earning assets
    
    
    32,377
    
    
    
    751
    
    
    
    2.4
    
    
    
    31,626
    
    
    
    (273
    )
    
    
    (0.9
    )
    
    
    31,899Unrealized gains (losses) on securities
    
    
    (495
    )
    
    
    (359
    )
    
    
    264.0
    
    
    
    (136
    )
    
    
    (1,532
    )
    
    
    (109.7
    )
    
    
    1,396Less: Allowance for loan losses
    
    
    (2,761
    )
    
    
    215
    
    
    
    (7.2
    )
    
    
    (2,976
    )
    
    
    (60
    )
    
    
    2.1
    
    
    
    (2,916
    )Total uses
    
    $
    414,048
    
    
    $
    7,342
    
    
    
    1.8
    %
    
    $
    406,706
    
    
    $
    13,152
    
    
    
    3.3
    %
    
    $
    393,554Funding Sources:Interest bearing demand deposits
    
    $
    77,570
    
    
    $
    13,452
    
    
    
    21.0
    %
    
    $
    64,118
    
    
    $
    1,624
    
    
    
    2.6
    %
    
    $
    62,494Savings deposits
    
    
    40,031
    
    
    
    (4,607
    )
    
    
    (10.3
    )
    
    
    44,638
    
    
    
    (350
    )
    
    
    (0.8
    )
    
    
    44,988Time deposits under $100,000
    
    
    154,307
    
    
    
    8,871
    
    
    
    6.1
    
    
    
    145,436
    
    
    
    160
    
    
    
    0.1
    
    
    
    145,276Time deposits over $100,000
    
    
    32,976
    
    
    
    (7,203
    )
    
    
    (17.9
    )
    
    
    40,179
    
    
    
    3,748
    
    
    
    10.3
    
    
    
    36,431Repurchase agreements
    
    
    5,528
    
    
    
    (88
    )
    
    
    (1.6
    )
    
    
    5,616
    
    
    
    4,243
    
    
    
    309.0
    
    
    
    1,373Short-term borrowings
    
    
    5,404
    
    
    
    5,025
    
    
    
    1,325.9
    
    
    
    379
    
    
    
    239
    
    
    
    170.7
    
    
    
    140Long-term debt
    
    
    3,014
    
    
    
    (1,986
    )
    
    
    (39.7
    )
    
    
    5,000
    
    
    
    2,987
    
    
    
    148.4
    
    
    
    2,013Other interest bearing liabilities
    
    
    876
    
    
    
    106
    
    
    
    13.8
    
    
    
    770
    
    
    
    93
    
    
    
    13.7
    
    
    
    677Total interest bearing liabilities
    
    
    319,706
    
    
    
    13,570
    
    
    
    4.4
    
    
    
    306,136
    
    
    
    12,744
    
    
    
    4.3
    
    
    
    293,392Demand deposits
    
    
    41,587
    
    
    
    (5,621
    )
    
    
    (11.9
    )
    
    
    47,208
    
    
    
    1,806
    
    
    
    4.0
    
    
    
    45,402Other liabilities
    
    
    5,252
    
    
    
    293
    
    
    
    5.9
    
    
    
    4,959
    
    
    
    (1,025
    )
    
    
    (17.1
    )
    
    
    5,984Shareholders equity
    
    
    47,503
    
    
    
    (900
    )
    
    
    (1.9
    )
    
    
    48,403
    
    
    
    (373
    )
    
    
    (0.8
    )
    
    
    48,776Total sources
    
    $
    414,048
    
    
    $
    7,342
    
    
    
    1.8
    %
    
    $
    406,706
    
    
    $
    13,152
    
    
    
    3.3
    %
    
    $
    393,554




---



##### 



Loans
  December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Commercial, financial and agricultural
    
    $
    23,341
    
    
    $
    21,661
    
    
    $
    23,301
    
    
    $
    25,885
    
    
    $
    26,815Real estate  commercial
    
    
    29,492
    
    
    
    27,588
    
    
    
    25,068
    
    
    
    20,614
    
    
    
    22,528Real estate  construction
    
    
    29,489
    
    
    
    28,323
    
    
    
    24,968
    
    
    
    14,324
    
    
    
    10,174Real estate  mortgage
    
    
    132,572
    
    
    
    135,992
    
    
    
    132,243
    
    
    
    119,678
    
    
    
    117,019Home equity
    
    
    9,596
    
    
    
    10,083
    
    
    
    8,766
    
    
    
    7,548
    
    
    
    7,962Obligations of states and political
subdivisions
    
    
    5,129
    
    
    
    4,827
    
    
    
    4,294
    
    
    
    4,577
    
    
    
    2,378Personal
    
    
    76,791
    
    
    
    70,703
    
    
    
    63,218
    
    
    
    64,593
    
    
    
    61,176Unearned interest
    
    
    (592
    )
    
    
    (1,114
    )
    
    
    (2,110
    )
    
    
    (4,439
    )
    
    
    (9,824
    )Total
    
    $
    305,818
    
    
    $
    298,063
    
    
    $
    279,748
    
    
    $
    252,780
    
    
    $
    238,228
  2006
    
    
    2005
    
    
    2004Beginning balance
    
    $
    298,063
    
    
    $
    279,748
    
    
    $
    252,780New loans, net of repayments
    
    
    4,916
    
    
    
    18,569
    
    
    
    27,125Loans acquired in branch purchase
    
    
    3,810
    
    
    
    
    
    
    
    Loans charged off
    
    
    (307
    )
    
    
    (279
    )
    
    
    (175
    )Loans transferred to other real estate owned and
other adjustments to carrying value
    
    
    (664
    )
    
    
    25
    
    
    
    18Net change
    
    
    7,755
    
    
    
    18,315
    
    
    
    26,968Ending balance
    
    $
    305,818
    
    
    $
    298,063
    
    
    $
    279,748




---



##### 



Table 2
Non-Performing Loans
 December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In thousands)Nonaccrual loans
    
    $
    1,240
    
    
    $
    1,515
    
    
    $
    
    
    
    $
    
    
    
    $
    219Accruing loans past due 90 days or more
    
    
    214
    
    
    
    724
    
    
    
    365
    
    
    
    584
    
    
    
    544Restructured loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    $
    1,454
    
    
    $
    2,239
    
    
    $
    365
    
    
    $
    584
    
    
    $
    763




---



##### 



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 high-risk 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 unconfirmed losses for these individual loans;
    
    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 competition and legal and regulatory requirements.




---



##### 



Years ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Balance of allowance  beginning of
period
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731
    
    
    $
    2,526Loans charged off:Commercial, financial and agricultural
    
    
    159
    
    
    
    171
    
    
    
    43
    
    
    
    78
    
    
    
    54Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    19
    
    
    
    3
    
    
    
    10
    
    
    
    50
    
    
    
    44Personal
    
    
    129
    
    
    
    75
    
    
    
    122
    
    
    
    107
    
    
    
    109Total charge-offs
    
    
    307
    
    
    
    279
    
    
    
    175
    
    
    
    235
    
    
    
    207Recoveries of loans previously charged off:Commercial, financial and agricultural
    
    
    5
    
    
    
    6
    
    
    
    1
    
    
    
    2
    
    
    
    5Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Real estate  construction
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    1Personal
    
    
    25
    
    
    
    14
    
    
    
    15
    
    
    
    17
    
    
    
    4Total recoveries
    
    
    30
    
    
    
    25
    
    
    
    18
    
    
    
    20
    
    
    
    112Net charge-offs
    
    
    277
    
    
    
    254
    
    
    
    157
    
    
    
    215
    
    
    
    95Provision for loan losses
    
    
    54
    
    
    
    28
    
    
    
    326
    
    
    
    304
    
    
    
    300Branch acquisition loan loss reserve
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance of allowance  end of period
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.09
    %
    
    
    0.09
    %
    
    
    0.06
    %
    
    
    0.09
    %
    
    
    0.04
    %
  Allocation of the Allowance for Loan Losses (in thousands)2006
    
    2005
    
    2004
    
    2003
    
    2002Commercial
    
    $
    864
    
    
    $
    956
    
    
    $
    1,087
    
    
    $
    1,055
    
    
    $
    1,057Real estate
    
    
    1,011
    
    
    
    1,112
    
    
    
    602
    
    
    
    548
    
    
    
    561Consumer
    
    
    697
    
    
    
    695
    
    
    
    1,002
    
    
    
    963
    
    
    
    853Unallocated
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    254
    
    
    
    260Total allowance for loan losses
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731




---



##### 



Percent of Loan Type to Total Loans2006
    
    2005
    
    2004
    
    2003
    
    2002Commercial
    
    
    9.3
    %
    
    
    8.9
    %
    
    
    9.9
    %
    
    
    12.1
    %
    
    
    12.3
    %Real estate
    
    
    65.8
    %
    
    
    67.8
    %
    
    
    68.3
    %
    
    
    64.1
    %
    
    
    66.1
    %Consumer
    
    
    24.9
    %
    
    
    23.3
    %
    
    
    21.8
    %
    
    
    23.8
    %
    
    
    21.6
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Investments
  2006
    
    2005
    
    2004Beginning balance
    
    $
    77,274
    
    
    $
    88,224
    
    
    $
    103,923Purchases of investment securities
    
    
    19,281
    
    
    
    17,073
    
    
    
    16,746Sales and maturities of investment securities
    
    
    (30,871
    )
    
    
    (21,696
    )
    
    
    (37,807
    )Adjustment in market value of AFS securities
    
    
    414
    
    
    
    (1,044
    )
    
    
    (1,244
    )Amortization/Accretion
    
    
    (133
    )
    
    
    (209
    )
    
    
    (228
    )Federal Home Loan Bank stock, net change
    
    
    (280
    )
    
    
    27
    
    
    
    222Federal funds sold, net change
    
    
    1,200
    
    
    
    (3,900
    )
    
    
    3,900Interest bearing deposits with others, net change
    
    
    36
    
    
    
    (1,201
    )
    
    
    2,712Net change
    
    
    (10,353
    )
    
    
    (10,950
    )
    
    
    (15,699
    )Ending balance
    
    $
    66,921
    
    
    $
    77,274
    
    
    $
    88,224




---



##### 



December 31, 2006WeightedCarrying
    
    
    AverageType and maturity
    
    Value
    
    
    YieldU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    22,713
    
    
    
    3.46
    %After one year but within five years
    
    
    13,211
    
    
    
    4.68
    %After five years but within ten years
    
    
    1,001
    
    
    
    5.35
    %After ten years
    
    
    36,925
    
    
    
    3.95
    %Obligations of state and political subdivisionsWithin one year
    
    
    7,199
    
    
    
    6.33
    %After one year but within five years
    
    
    4,526
    
    
    
    4.52
    %After five years but within ten years
    
    
    4,541
    
    
    
    4.68
    %After ten years
    
    
    16,266
    
    
    
    5.37
    %Mortgage-backed securitiesWithin one year
    
    
    After one year but within five years
    
    
    895
    
    
    
    4.40
    %After five years but within ten years
    
    
    3,014
    
    
    
    5.34
    %After ten years
    
    
    573
    
    
    
    5.52
    %4,482
    
    
    
    5.18
    %Equity securities
    
    
    1,210$
    58,883
 Deferred Taxes
  Goodwill and Intangible Assets




---



##### 



Investment in Unconsolidated Subsidiary
  Other Non-Interest Earning Assets
  2006
    
    2005
    
    2004Beginning balance
    
    $
    38,228
    
    
    $
    32,091
    
    
    $
    34,213Cash and due from banks
    
    
    103
    
    
    
    5,640
    
    
    
    (2,769
    )Premises and equipment, net
    
    
    331
    
    
    
    (591
    )
    
    
    47Other real estate owned
    
    
    133
    
    
    
    (111
    )
    
    
    (19
    )Bank-owned life insurance
    
    
    370
    
    
    
    183
    
    
    
    864Other receivables and prepaid expenses
    
    
    1,227
    
    
    
    1,016
    
    
    
    (245
    )Net change
    
    
    2,164
    
    
    
    6,137
    
    
    
    (2,122
    )Ending balance
    
    $
    40,392
    
    
    $
    38,228
    
    
    $
    32,091
 Deposits
  2006
    
    2005
    
    2004Beginning balance
    
    $343,467
    
    $
    332,642
    
    
    $
    332,984Acquired inOther
    
    branchchanges
    
    purchaseDemand deposits
    
    
    (4,457
    )
    
    
    1,245
    
    
    
    (1,418
    )
    
    
    5,259Interest bearing demand deposits
    
    
    3,469
    
    
    
    3,195
    
    
    
    10,480
    
    
    
    (6,795
    )Savings deposits
    
    
    (8,855
    )
    
    
    1,369
    
    
    
    64
    
    
    
    1,323Time deposits, $100,000 and greater
    
    
    (3,975
    )
    
    
    2,376
    
    
    
    1,384
    
    
    
    3,801Time deposits, other
    
    
    5,430
    
    
    
    11,905
    
    
    
    315
    
    
    
    (3,930
    )Net change
    
    
    (8,388
    )
    
    
    20,090
    
    
    
    10,825
    
    
    
    (342
    )Ending balance
    
    $355,169
    
    $
    343,467
    
    
    $
    332,642




---



##### 



2006
    
    
    
    
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    2004Average
    
    

Increase (Decrease)
    
    
    Average
    
    

Increase (Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceInterest bearing demand deposits
    
    $
    77,570
    
    
    $
    13,452
    
    
    
    21.0
    %
    
    $
    64,118
    
    
    $
    1,624
    
    
    
    2.6
    %
    
    $
    62,494Savings deposits
    
    
    40,031
    
    
    
    (4,607
    )
    
    
    (10.3
    )
    
    
    44,638
    
    
    
    (350
    )
    
    
    (0.8
    )
    
    
    44,988Demand deposits
    
    
    41,587
    
    
    
    (5,621
    )
    
    
    (11.9
    )
    
    
    47,208
    
    
    
    1,806
    
    
    
    4.0
    
    
    
    45,402Total core (transaction) accounts
    
    
    159,188
    
    
    
    3,224
    
    
    
    2.1
    
    
    
    155,964
    
    
    
    3,080
    
    
    
    2.0
    
    
    
    152,884Time deposits, $100,000 and greater
    
    
    32,976
    
    
    
    (7,203
    )
    
    
    (17.9
    )
    
    
    40,179
    
    
    
    3,748
    
    
    
    10.3
    
    
    
    36,431Time deposits, other
    
    
    154,307
    
    
    
    8,871
    
    
    
    6.1
    
    
    
    145,436
    
    
    
    160
    
    
    
    0.1
    
    
    
    145,276Total time deposits
    
    
    187,283
    
    
    
    1,668
    
    
    
    0.9
    
    
    
    185,615
    
    
    
    3,908
    
    
    
    2.2
    
    
    
    181,707Total deposits
    
    $
    346,471
    
    
    $
    4,892
    
    
    
    1.4
    %
    
    $
    341,579
    
    
    $
    6,988
    
    
    
    2.1
    %
    
    $
    334,591




---



##### 



Other Interest Bearing Liabilities
  
 2006
    
    
    
    
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    2004Average
    
    

Increase (Decrease)
    
    
    Average
    
    

Increase (Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceRepurchase agreements
    
    $
    5,528
    
    
    $
    (88
    )
    
    
    (1.6
    )%
    
    $
    5,616
    
    
    $
    4,243
    
    
    
    309.0
    %
    
    $
    1,373Short-term borrowings
    
    
    5,404
    
    
    
    5,025
    
    
    
    1,325.9
    
    
    
    379
    
    
    
    239
    
    
    
    170.7
    
    
    
    140Long-term debt
    
    
    3,014
    
    
    
    (1,986
    )
    
    
    (39.7
    )
    
    
    5,000
    
    
    
    2,987
    
    
    
    148.4
    
    
    
    2,013Other interest bearing liabilities
    
    
    876
    
    
    
    106
    
    
    
    13.8
    
    
    
    770
    
    
    
    93
    
    
    
    13.7
    
    
    
    677$
    14,822
    
    
    $
    3,057
    
    
    
    26.0
    %
    
    $
    11,765
    
    
    $
    7,562
    
    
    
    179.9
    %
    
    $
    4,203
 Pension Plans
  Stockholders Equity




---



##### 



2006
    
    2005
    
    2004Beginning balance
    
    $
    47,119
    
    
    $
    50,153
    
    
    $
    50,483Net income
    
    
    5,002
    
    
    
    4,566
    
    
    
    5,829Dividends
    
    
    (2,957
    )
    
    
    (5,046
    )
    
    
    (4,879
    )Stock-based compensation
    
    
    39
    
    
    
    
    
    
    
    Repurchase of stock, net of re-issuance
    
    
    (1,013
    )
    
    
    (1,446
    )
    
    
    (222
    )Net change in unrealized security gains (losses)
    
    
    274
    
    
    
    (804
    )
    
    
    (1,058
    )Net change in minimum pension liability
    
    
    (678
    )
    
    
    (304
    )
    
    
    Net change
    
    
    667
    
    
    
    (3,034
    )
    
    
    (330
    )Ending balance
    
    $
    47,786
    
    
    $
    47,119
    
    
    $
    50,153
     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
    
    
    $
    200,937
    
    
    $
    121,903
    
    
    $
    51,850
    
    
    $
    27,184
    
    
    $
    Federal Funds borrowed and
security repurchase agreements
    
    
    12
    
    
    
    6,112
    
    
    
    6,112
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    13
    
    
    
    422
    
    
    
    99
    
    
    
    134
    
    
    
    127
    
    
    
    62Other long-term liabilitiesEmployee pension
    
    
    18
    
    
    
    3,487
    
    
    
    271
    
    
    
    616
    
    
    
    675
    
    
    
    1,9253rd party data processor contract
    
    
    22
    
    
    
    714
    
    
    
    204
    
    
    
    408
    
    
    
    102
    
    
    
    Supplemental retirement and
deferred compensation
    
    
    18
    
    
    
    4,671
    
    
    
    466
    
    
    
    936
    
    
    
    821
    
    
    
    2,448$
    216,343
    
    
    $
    129,055
    
    
    $
    53,944
    
    
    $
    28,909
    
    
    $
    4,435




---



##### 



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
    
    Customer
    
    Net Interest(Basis Points)
    
    (Static)
    
    Options
    
    Income200
    
    
    $
    (93
    )
    
    $
    (3
    )
    
    $
    (96
    )100
    
    
    
    (46
    )
    
    
    (1
    )
    
    
    (47
    )0
    
    
    
    
    
    
    
    
    
    
    
    -100
    
    
    
    46
    
    
    
    (236
    )
    
    
    (190
    )-200
    
    
    
    93
    
    
    
    (473
    )
    
    
    (380
    )




---



##### 



Table 4
MATURITY DISTRIBUTION
AS OF DECEMBER 31, 2006   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
    
    $
    102
    
    
    $
    
    
    
    $
    
    
    
    $
    5,660
    
    
    $
    
    
    
    $
    5,762Federal funds sold
    
    
    1,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200Investment securities:U.S. Treasury securities and obligations of
U.S. Government agencies and corporations
    
    
    6,473
    
    
    
    5,887
    
    
    
    10,353
    
    
    
    13,211
    
    
    
    1,001
    
    
    
    36,925Obligations of state and political subdivisions
    
    
    2,790
    
    
    
    2,448
    
    
    
    1,961
    
    
    
    4,526
    
    
    
    4,541
    
    
    
    16,266Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895
    
    
    
    3,587
    
    
    
    4,482Stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,210
    
    
    
    1,210Loans:Commercial, financial, and agricultural
    
    
    23,341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,341Real estate  commercial
    
    
    29,492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,492Real estate  construction
    
    
    29,489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,489Real estate  mortgage
    
    
    11,002
    
    
    
    9,186
    
    
    
    33,241
    
    
    
    47,700
    
    
    
    31,443
    
    
    
    132,572Home equity
    
    
    9,596
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,596Personal (net of unearned discount)
    
    
    9,218
    
    
    
    2,785
    
    
    
    12,290
    
    
    
    19,944
    
    
    
    31,962
    
    
    
    76,199Obligations of state and political subdivisions
    
    
    669
    
    
    
    672
    
    
    
    1,339
    
    
    
    2,449
    
    
    
    
    
    
    
    5,129Total Interest Earning Assets
    
    
    123,372
    
    
    
    20,978
    
    
    
    59,184
    
    
    
    94,385
    
    
    
    73,744
    
    
    
    371,663Interest Bearing LiabilitiesDemand deposits
    
    
    49,623
    
    
    
    752
    
    
    
    3,007
    
    
    
    10,526
    
    
    
    11,278
    
    
    
    75,186Savings deposits
    
    
    23,903
    
    
    
    362
    
    
    
    1,449
    
    
    
    5,070
    
    
    
    5,433
    
    
    
    36,217Certificates of deposit over $100,000
    
    
    6,639
    
    
    
    6,809
    
    
    
    7,751
    
    
    
    16,833
    
    
    
    
    
    
    
    38,032Time deposits
    
    
    19,634
    
    
    
    36,951
    
    
    
    44,119
    
    
    
    62,201
    
    
    
    
    
    
    
    162,905Securities sold under agreements to repurchase
    
    
    6,112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,112Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other interest bearing liabilities
    
    
    927
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    927Total Interest Bearing Liabilities
    
    
    106,838
    
    
    
    44,874
    
    
    
    56,326
    
    
    
    94,630
    
    
    
    16,711
    
    
    
    319,379Gap
    
    $
    16,534
    
    
    $
    (23,896
    )
    
    $
    2,858
    
    
    $
    (245
    )
    
    $
    57,033
    
    
    $
    52,284Cumulative Gap
    
    $
    16,534
    
    
    $
    (7,362
    )
    
    $
    (4,504
    )
    
    $
    (4,749
    )
    
    $
    52,284Cumulative sensitivity ratio
    
    
    1.15
    
    
    
    0.95
    
    
    
    0.98
    
    
    
    0.98
    
    
    
    1.16Commercial,
financial and agricultural loans maturing after one year with:Fixed interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Variable interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Investment Portfolio Risk




---



##### 



Economic Risk
  Off-Balance Sheet Arrangements
       Effects of Inflation




---



##### 



Report on Managements Assessment of Internal Control over Financial Reporting
   control deficiency
 significant deficiency
 material weakness
 Internal Control  Integrated Framework




---



##### 



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




---



##### 



Internal Control-Integrated Framework Internal Control-Integrated
Framework




---



##### 



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




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 December 31,2006
    
    
    2005ASSETSCash and due from banks
    
    $
    16,476
    
    
    $
    16,373Interest bearing deposits with banks
    
    
    102
    
    
    
    66Federal funds sold
    
    
    1,200
    
    
    
    Cash and cash equivalents
    
    
    17,778
    
    
    
    16,439Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,660Securities available for sale
    
    
    56,383
    
    
    
    66,699Securities held to maturity, fair value of $2,480 and $3,436, respectively
    
    
    2,500
    
    
    
    3,493Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    1,076
    
    
    
    1,356Investment in unconsolidated subsidiary
    
    
    2,892
    
    
    
    Total loans, net of unearned interest
    
    
    305,818
    
    
    
    298,063Less: Allowance for loan losses
    
    
    (2,572
    )
    
    
    (2,763
    )Total loans, net of allowance for loan losses
    
    
    303,246
    
    
    
    295,300Premises and equipment, net
    
    
    6,542
    
    
    
    6,211Bank owned life insurance and annuities
    
    
    11,017
    
    
    
    10,647Core deposit intangible
    
    
    434
    
    
    
    Goodwill
    
    
    2,046
    
    
    
    Accrued interest receivable and other assets
    
    
    6,357
    
    
    
    4,997Total assets
    
    $
    415,931
    
    
    $
    410,802LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    42,829
    
    
    $
    46,041Interest bearing
    
    
    312,340
    
    
    
    297,426Total deposits
    
    
    355,169
    
    
    
    343,467Securities sold under agreements to repurchase
    
    
    6,112
    
    
    
    4,201Short-term borrowings
    
    
    
    
    
    
    5,600Long-term debt
    
    
    
    
    
    
    5,000Other interest bearing liabilities
    
    
    927
    
    
    
    819Accrued interest payable and other liabilities
    
    
    5,937
    
    
    
    4,596Total liabilities
    
    
    368,145
    
    
    
    363,683Stockholders 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4,457,934 shares at December 31,2006;4,503,392 shares at December 31,2005
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,259
    
    
    
    18,177Retained earnings
    
    
    31,531
    
    
    
    29,486Accumulated other comprehensive loss
    
    
    (1,098
    )
    
    
    (694
    )Cost of common stock in Treasury:287,892
shares at December 31,2006;242,434 shares at December 31,2005
    
    
    (5,652
    )
    
    
    (4,596
    )Total
 stockholders equity
    
    
    47,786
    
    
    
    47,119Total
liabilities and stockholders equity
    
    $
    415,931
    
    
    $
    410,802




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Interest income:Loans, including fees
    
    $
    21,768
    
    
    $
    19,767
    
    
    $
    18,642Taxable securities
    
    
    1,975
    
    
    
    1,872
    
    
    
    2,048Tax-exempt securities
    
    
    659
    
    
    
    654
    
    
    
    811Other interest income
    
    
    261
    
    
    
    414
    
    
    
    216Total
interest income
    
    
    24,663
    
    
    
    22,707
    
    
    
    21,717Interest expense:Deposits
    
    
    9,472
    
    
    
    7,666
    
    
    
    6,346Securities sold under agreements to repurchase
    
    
    246
    
    
    
    167
    
    
    
    24Short-term borrowings
    
    
    275
    
    
    
    14
    
    
    
    3Long-term debt
    
    
    88
    
    
    
    148
    
    
    
    54Other interest bearing liabilities
    
    
    30
    
    
    
    20
    
    
    
    11Total
interest expense
    
    
    10,111
    
    
    
    8,015
    
    
    
    6,438Net interest income
    
    
    14,552
    
    
    
    14,692
    
    
    
    15,279Provision for loan losses
    
    
    54
    
    
    
    28
    
    
    
    326Net interest income after provision for loan losses
    
    
    14,498
    
    
    
    14,664
    
    
    
    14,953Noninterest income:Trust fees
    
    
    435
    
    
    
    374
    
    
    
    452Customer service fees
    
    
    1,497
    
    
    
    1,390
    
    
    
    1,311Earnings on bank owned life insurance and annuities
    
    
    433
    
    
    
    364
    
    
    
    467Commissions from sales of annuities and mutual funds
    
    
    513
    
    
    
    426
    
    
    
    355Income from unconsolidated subsidiary
    
    
    80
    
    
    
    
    
    
    
    Gain on sales of loans and other assets
    
    
    63
    
    
    
    20
    
    
    
    11Gain on sales of securities
    
    
    181
    
    
    
    175
    
    
    
    358Other noninterest income
    
    
    628
    
    
    
    574
    
    
    
    491Total
noninterest income
    
    
    3,830
    
    
    
    3,323
    
    
    
    3,445Noninterest expense:Employee compensation expense
    
    
    4,593
    
    
    
    4,285
    
    
    
    4,194Employee benefits
    
    
    1,471
    
    
    
    1,472
    
    
    
    1,381Employee severance expense
    
    
    
    
    
    
    284
    
    
    
    Occupancy
    
    
    804
    
    
    
    821
    
    
    
    805Equipment
    
    
    620
    
    
    
    592
    
    
    
    573Data processing expense
    
    
    1,204
    
    
    
    1,224
    
    
    
    1,147Director compensation
    
    
    465
    
    
    
    476
    
    
    
    485Professional fees
    
    
    378
    
    
    
    788
    
    
    
    343Taxes, other than income
    
    
    505
    
    
    
    519
    
    
    
    514Intangible amortization
    
    
    15
    
    
    
    
    
    
    
    Other noninterest expense
    
    
    1,190
    
    
    
    1,219
    
    
    
    1,158Total
noninterest expense
    
    
    11,245
    
    
    
    11,680
    
    
    
    10,600Income before income taxes
    
    
    7,083
    
    
    
    6,307
    
    
    
    7,798Provision for income taxes
    
    
    2,081
    
    
    
    1,741
    
    
    
    1,969Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829Earnings per shareBasic
    
    $
    1.12
    
    
    $
    1.00
    
    
    $
    1.28Diluted
    
    $
    1.11
    
    
    $
    1.00
    
    
    $
    1.27Cash dividends declared per share
    
    $
    0.66
    
    
    $
    1.11
    
    
    $
    1.07Weighted average basic shares outstanding
    
    
    4,480,245
    
    
    
    4,550,483
    
    
    
    4,559,168Weighted average diluted shares outstanding
    
    
    4,492,552
    
    
    
    4,568,098
    
    
    
    4,571,510




---



##### 



Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Stockholders Equity
 Years Ended December 31, 2006, 2005 and 2004Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    (Loss) Income
    
    
    Stock
    
    
    EquityBalance at December 31, 2003
    
    
    2,284,703
    
    
    $
    2,373
    
    
    $
    20,231
    
    
    $
    29,016
    
    
    $
    1,472
    
    
    $
    (2,609
    )
    
    $
    50,483Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,829
    
    
    
    
    
    
    
    
    
    
    
    5,829Change in unrealized gains on securities
available for sale, net of reclassification adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,058
    )
    
    
    
    
    
    
    (1,058
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,771Cash dividends at $1.07 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,879
    )
    
    
    
    
    
    
    
    
    
    
    (4,879
    )Purchase of treasury stock, at cost
    
    
    (24,445
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (960
    )
    
    
    (960
    )Treasury stock issued for dividend
reinvestment plan
    
    
    14,697
    
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    421
    
    
    
    581Treasury stock issued for stock option
and stock purchase plans
    
    
    5,674
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    157Balance 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
reclassification 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
    )
    
    $
    47,786




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Operating activities:Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    54
    
    
    
    28
    
    
    
    326Provision for depreciation
    
    
    594
    
    
    
    590
    
    
    
    560Net amortization of securities premiums
    
    
    133
    
    
    
    209
    
    
    
    228Amortization of core deposit intangible
    
    
    15
    
    
    
    
    
    
    
    Net realized gains on sales of securities
    
    
    (181
    )
    
    
    (175
    )
    
    
    (358
    )Earnings on bank owned life insurance and annuities
    
    
    (433
    )
    
    
    (364
    )
    
    
    (467
    )Deferred income tax expense (credit)
    
    
    40
    
    
    
    (134
    )
    
    
    93Income from equity investment in unconsolidated subsidiary
    
    
    (80
    )
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    39
    
    
    
    
    
    
    
    (Increase) decrease in accrued interest receivable and other assets
    
    
    (80
    )
    
    
    372
    
    
    
    170Increase (decrease) in accrued interest payable and other liabilities
    
    
    258
    
    
    
    76
    
    
    
    (66
    )Net cash provided by operating activities
    
    
    5,361
    
    
    
    5,168
    
    
    
    6,315Investing activities:Purchases of:Securities available for sale
    
    
    (14,181
    )
    
    
    (12,673
    )
    
    
    (15,451
    )Securities held to maturity
    
    
    (5,100
    )
    
    
    (4,400
    )
    
    
    (1,295
    )FHLB stock
    
    
    (827
    )
    
    
    (896
    )
    
    
    (863
    )Premises and equipment
    
    
    (786
    )
    
    
    (255
    )
    
    
    (607
    )Bank owned life insurance and annuities
    
    
    (106
    )
    
    
    (63
    )
    
    
    Investment in unconsolidated subsidiary
    
    
    (2,812
    )
    
    
    
    
    
    
    Proceeds from:Sales of securities available for sale
    
    
    364
    
    
    
    414
    
    
    
    3,405Maturities of and principal repayments on:Securities available for sale
    
    
    24,588
    
    
    
    15,882
    
    
    
    22,583Securities
held to maturity
    
    
    5,100
    
    
    
    5,400
    
    
    
    11,819Redemption of FHLB stock
    
    
    1,107
    
    
    
    869
    
    
    
    641Bank owned life insurance and annuities
    
    
    169
    
    
    
    244
    
    
    
    148Sale of other real estate owned
    
    
    624
    
    
    
    
    
    
    
    Net decrease (increase) in interest bearing time deposits
    
    
    
    
    
    
    1,100
    
    
    
    (2,670
    )Net cash received from branch acquisition
    
    
    13,801
    
    
    
    
    
    
    
    Net increase in loans receivable
    
    
    (4,916
    )
    
    
    (18,569
    )
    
    
    (27,125
    )Net cash provided by (used in) investing activities
    
    
    17,025
    
    
    
    (12,947
    )
    
    
    (9,415
    )Financing activities:Net (decrease) increase in deposits
    
    
    (8,388
    )
    
    
    10,825
    
    
    
    (342
    )Net (decrease) increase in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (3,689
    )
    
    
    5,085
    
    
    
    4,716Long-term debt (repayment) advances
    
    
    (5,000
    )
    
    
    
    
    
    
    5,000Cash dividends
    
    
    (2,957
    )
    
    
    (5,046
    )
    
    
    (4,879
    )Purchase of treasury stock
    
    
    (1,302
    )
    
    
    (2,242
    )
    
    
    (960
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plans
    
    
    289
    
    
    
    796
    
    
    
    738Net cash (used in) provided by financing activities
    
    
    (21,047
    )
    
    
    9,418
    
    
    
    4,273Net increase in cash and cash equivalents
    
    
    1,339
    
    
    
    1,639
    
    
    
    1,173Cash and cash equivalents at beginning of period
    
    
    16,439
    
    
    
    14,800
    
    
    
    13,627Cash and cash equivalents at end of period
    
    $
    17,778
    
    
    $
    16,439
    
    
    $
    14,800Supplemental information:Interest paid
    
    $
    9,858
    
    
    $
    7,861
    
    
    $
    6,441Income taxes paid
    
    
    1,930
    
    
    
    1,851
    
    
    
    1,956Supplemental schedule of noncash investing and financing activities:Transfer of loans to other real estate owned
    
    $
    757
    
    
    $
    
    
    
    $
    Transfer of fixed asset to other assets
    
    
    
    
    
    
    256
    
    
    
    




---



##### 



JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
 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




---



##### 



2005
    
    
    2004Net income, as reported
    
    $
    4,566
    
    
    $
    5,829Total stock-based employee
compensation expense (net of tax)
determined under fair value based
method for all awards
    
    
    (21
    )
    
    
    (23
    )Pro forma net income
    
    $
    4,545
    
    
    $
    5,806Basic earnings per shareAs reported
    
    $
    1.00
    
    
    $
    1.28Pro forma
    
    
    1.00
    
    
    
    1.27Diluted earnings per shareAs reported
    
    $
    1.00
    
    
    $
    1.27Pro forma
    
    
    1.00
    
    
    
    1.26
  2006
    
    2005
    
    2004Expected life of options
    
    7
    years
    
    7
    years
    
    7
    yearsRisk-free interest rate
    
    
    4.74
    %
    
    
    4.40
    %
    
    
    4.19
    %Expected volatility
    
    
    20.50
    %
    
    
    21.13
    %
    
    
    20.02
    %Expected dividend yield
    
    
    2.99
    %
    
    
    3.20
    %
    
    
    5.10
    %




---



##### 



Segment reporting




---



##### 



2. Recent Accounting Pronouncements
 Accounting for Certain Hybrid Instruments
 Accounting for Servicing of Financial Assets
 Accounting for Uncertainty in
Income Taxes Accounting for Income Taxes
 Fair Value Measurements
 Accounting for Post Retirement Benefit
Obligations




---



##### 



Accounting for Purchases of Life InsuranceDetermining the
Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for
Purchases of Life Insurance
  3. Restrictions on Cash and Due From Banks




---



##### 



4. Securities
   December 31, 2006Gross
    
    
    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
    )
  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
    )




---



##### 



December 31, 2005Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    20,049
    
    
    $
    19,827
    
    
    $
    1
    
    
    $
    (223
    )After one year but within five years
    
    
    27,735
    
    
    
    27,207
    
    
    
    6
    
    
    
    (534
    )47,784
    
    
    
    47,034
    
    
    
    7
    
    
    
    (757
    )Obligations of state and political subdivisionsWithin one year
    
    
    3,532
    
    
    
    3,542
    
    
    
    10
    
    
    
    After one year but within five years
    
    
    11,152
    
    
    
    11,132
    
    
    
    41
    
    
    
    (61
    )After five years but within ten years
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    14,784
    
    
    
    14,774
    
    
    
    51
    
    
    
    (61
    )Mortgage-backed securities
    
    
    3,687
    
    
    
    3,603
    
    
    
    9
    
    
    
    (93
    )Equity securities
    
    
    1,036
    
    
    
    1,288
    
    
    
    257
    
    
    
    (5
    )Total
    
    $
    67,291
    
    
    $
    66,699
    
    
    $
    324
    
    
    $
    (916
    )
  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
    
    $
    992
    
    
    $
    992
    
    
    $
    
    
    
    $
    After one year but within five years
    
    
    2,501
    
    
    
    2,444
    
    
    
    
    
    
    
    (57
    )Total
    
    $
    3,493
    
    
    $
    3,436
    
    
    $
    
    
    
    $
    (57
    )
   Years Ended December 31,2006
    
    2005
    
    2004Gross proceeds from sales of securities
    
    $
    364
    
    
    $
    414
    
    
    $
    3,405Securities available for sale:Gross realized gains
    
    $
    172
    
    
    $
    175
    
    
    $
    358Gross realized losses
    
    
    
    
    
    
    
    
    
    
    Gross gains from business combinations
    
    
    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
    
    $
    2,498
    
    
    $
    (2
    )
    
    $
    27,988
    
    
    $
    (338
    )
    
    $
    30,486
    
    
    $
    (340
    )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
    
    
    
    (455
    )
    
    
    44,631
    
    
    
    (476
    )Total temporarily impaired securities
    
    $
    10,445
    
    
    $
    (21
    )
    
    $
    34,186
    
    
    $
    (455
    )
    
    $
    44,631
    
    
    $
    (476
    )
    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
    
    $
    17,034
    
    
    $
    (109
    )
    
    $
    31,019
    
    
    $
    (705
    )
    
    $
    48,053
    
    
    $
    (814
    )Obligations of state and political
subdivisions
    
    
    4,279
    
    
    
    (61
    )
    
    
    
    
    
    
    
    
    
    
    4,279
    
    
    
    (61
    )Mortgage-backed securities
    
    
    491
    
    
    
    (8
    )
    
    
    2,308
    
    
    
    (85
    )
    
    
    2,799
    
    
    
    (93
    )Debt securities
    
    
    21,804
    
    
    
    (178
    )
    
    
    33,327
    
    
    
    (790
    )
    
    
    55,131
    
    
    
    (968
    )Equity securities
    
    
    91
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    (5
    )Total temporarily impaired securities
    
    $
    21,895
    
    
    $
    (183
    )
    
    $
    33,327
    
    
    $
    (790
    )
    
    $
    55,222
    
    
    $
    (973
    )




---



##### 



5. LOANS
  December 31,2006
    
    
    2005Commercial, financial and agricultural
    
    $
    23,341
    
    
    $
    21,661Real estate  commercial
    
    
    29,492
    
    
    
    27,588Real estate  construction
    
    
    29,489
    
    
    
    28,323Real estate  mortgage
    
    
    132,572
    
    
    
    135,992Home equity
    
    
    9,596
    
    
    
    10,083Obligations of states and political subdivisions
    
    
    5,129
    
    
    
    4,827Personal
    
    
    76,791
    
    
    
    70,703Unearned interest
    
    
    (592
    )
    
    
    (1,114
    )Total
    
    $
    305,818
    
    
    $
    298,063
  December 31,2006
    
    
    2005Nonaccrual loans
    
    $
    1,240
    
    
    $
    1,515Accruing loans past due 90 days or more
    
    
    214
    
    
    
    724Restructured loans
    
    
    
    
    
    
    Total non-performing loans
    
    $
    1,454
    
    
    $
    2,239
   Pledged Loans




---



##### 



6. Allowance For Loan Losses
   Years ended December 31,2006
    
    
    2005
    
    
    2004Balance of allowance  beginning of period
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820Loans charged off:Commercial, financial and agricultural
    
    
    159
    
    
    
    171
    
    
    
    43Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    
    
    
    
    30
    
    
    
    Real estate  mortgage
    
    
    19
    
    
    
    3
    
    
    
    10Personal
    
    
    129
    
    
    
    75
    
    
    
    122Total charge-offs
    
    
    307
    
    
    
    279
    
    
    
    175Recoveries of loans previously charged off:Commercial, financial and agricultural
    
    
    5
    
    
    
    6
    
    
    
    1Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    
    
    
    
    5
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    2Personal
    
    
    25
    
    
    
    14
    
    
    
    15Total recoveries
    
    
    30
    
    
    
    25
    
    
    
    18Net charge-offs
    
    
    277
    
    
    
    254
    
    
    
    157Provision for loan losses
    
    
    54
    
    
    
    28
    
    
    
    326Branch acquisition loan loss reserve
    
    
    32
    
    
    
    
    
    
    
    Balance of allowance  end of period
    
    $
    2,572
    
    
    $
    2,763
    
    
    $
    2,989Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.09
    %
    
    
    0.09
    %
    
    
    0.06
    %
  December 31,2006
    
    2005Impaired loans:Recorded investment at period end
    
    $
    1,331
    
    
    $
    1,419Impaired loan balance for which:There is a related allowance
    
    
    568
    
    
    
    1,419There is no related allowance
    
    
    763
    
    
    
    Related allowance on impaired loans
    
    
    120
    
    
    
    250
 Years ended December 31,2006
    
    2005
    
    2004Average recorded investment in impaired loans
    
    $
    1,628
    
    
    $
    2,041
    
    
    $
    2,026Interest income recognized (on a cash basis)
    
    
    45
    
    
    
    58
    
    
    
    121




---



##### 



7. Bank Owned Life Insurance and Annuities
  December 31,2006
    
    
    2005Life insurance
    
    $
    10,515
    
    
    $
    10,150Deferred annuities
    
    
    204
    
    
    
    184Payout Annuities
    
    
    298
    
    
    
    313$
    11,017
    
    
    $
    10,647
 8. Premises And Equipment
  December 31,2006
    
    
    2005Land
    
    $
    864
    
    
    $
    640Buildings and improvements
    
    
    7,099
    
    
    
    6,679Furniture, computer software
and equipment
    
    
    4,463
    
    
    
    4,21512,426
    
    
    
    11,534Less: accumulated depreciation
    
    
    (5,884
    )
    
    
    (5,323
    )$
    6,542
    
    
    $
    6,211




---



##### 



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 31,2006
    
    
    2005Demand, non-interest bearing
    
    $
    42,829
    
    
    $
    46,041NOW and Money Market
    
    
    75,186
    
    
    
    68,522Savings
    
    
    36,217
    
    
    
    43,703Time deposits, $100,000 or more
    
    
    38,032
    
    
    
    39,631Other time deposits
    
    
    162,905
    
    
    
    145,570$
    355,169
    
    
    $
    343,467
  Time DepositsMaturing in:
    
    $100,000 or more
    
    
    Other2007
    
    $
    21,199
    
    
    $
    100,7042008
    
    
    6,714
    
    
    
    28,9732009
    
    
    3,615
    
    
    
    12,5482010
    
    
    6,051
    
    
    
    16,0782011
    
    
    453
    
    
    
    4,602$
    38,032
    
    
    $
    162,905




---



##### 



12. Borrowings
  December 31, 2006
    
    December 31, 2005
    
    For the year 2006AverageOutstanding
    
    
    
    
    
    Outstanding
    
    
    
    
    
    Average
    
    WeightedBalance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    RateSecurities sold
under agreements to
repurchase
    
    $
    6,112
    
    
    
    4.54
    %
    
    $
    4,201
    
    
    
    3.60
    %
    
    $
    5,528
    
    
    
    4.45
    %Short-term
borrowings -
Federal Home Loan
Bank overnight
advances
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    4.25
    %
    
    
    5,404
    
    
    
    5.09
    %Long-term debt -
Note payable to
Federal Home Loan
Bank
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    2.86
    %
    
    
    3,014
    
    
    
    2.86
    %$
    6,112
    
    
    
    4.54
    %
    
    $
    14,801
    
    
    
    3.60
    %
    
    $
    13,946
    
    
    
    4.35
    %




---



##### 



13. Operating Lease Obligations
   Years ending December 31,2007
    
    $
    992008
    
    
    672009
    
    
    672010
    
    
    672011
    
    
    602012 and beyond
    
    
    62Total minimum payments required
    
    $
    422




---



##### 



14. Income Taxes
 2006
    
    
    2005
    
    
    2004Current tax expense
    
    $
    2,041
    
    
    $
    1,875
    
    
    $
    1,876Deferred tax (credit) expense
    
    
    40
    
    
    
    (134
    )
    
    
    93Total tax expense
    
    $
    2,081
    
    
    $
    1,741
    
    
    $
    1,969
   Years Ended December 31,2006
    
    
    2005
    
    
    2004Income before income taxes
    
    $
    7,083
    
    
    $
    6,307
    
    
    $
    7,798Effective tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Federal tax at statutory rate
    
    
    2,408
    
    
    
    2,144
    
    
    
    2,651Tax-exempt interest
    
    
    (233
    )
    
    
    (242
    )
    
    
    (293
    )Net earnings on BOLI
    
    
    (123
    )
    
    
    (124
    )
    
    
    (168
    )Life insurance proceeds
    
    
    
    
    
    
    (21
    )
    
    
    Stock-based compensation
    
    
    13
    
    
    
    
    
    
    
    Other permanent differences
    
    
    16
    
    
    
    (16
    )
    
    
    (221
    )Total tax expense
    
    $
    2,081
    
    
    $
    1,741
    
    
    $
    1,969Effective tax rate
    
    
    29.4
    %
    
    
    27.6
    %
    
    
    25.3
    %
  December 31,2006
    
    
    2005Deferred Tax AssetsAllowance for loan losses
    
    $
    748
    
    
    $
    813Deferred directors compensation
    
    
    711
    
    
    
    713Employee and director benefits
    
    
    697
    
    
    
    663Qualified pension liability
    
    
    455
    
    
    
    80Accrued employee severance
    
    
    32
    
    
    
    64Unrealized losses on securities available for sale
    
    
    60
    
    
    
    201Other
    
    
    38
    
    
    
    30Total deferred tax assets
    
    
    2,741
    
    
    
    2,564Deferred Tax LiabilitiesDepreciation
    
    
    (231
    )
    
    
    (252
    )Equity income from unconsolidated subsidiary
    
    
    (27
    )
    
    
    Prepaid expense
    
    
    (105
    )
    
    
    (61
    )Total deferred tax liabilities
    
    
    (363
    )
    
    
    (313
    )Net deferred tax asset
included in other assets
    
    $
    2,378
    
    
    $
    2,251




---



##### 



15. Stockholders Equity and Regulatory Matters




---



##### 



Juniata Valley Financial Corp. (Consolidated)
 Minimum RequirementFor CapitalActual
    
    
    Adequacy PurposesAmount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs 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)As of December 31, 2005:Total Capital
    
    $
    50,658
    
    
    
    18.59
    %
    
    $
    21,800
    
    
    
    8.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    47,816
    
    
    
    17.55
    %
    
    
    10,898
    
    
    
    4.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    47,816
    
    
    
    11.62
    %
    
    
    16,460
    
    
    
    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, 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)As of December 31, 2005:Total Capital
    
    $
    45,747
    
    
    
    16.84
    %
    
    $
    21,733
    
    
    
    8.00
    %
    
    $
    27,166
    
    
    
    10.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    42,905
    
    
    
    15.79
    %
    
    
    10,869
    
    
    
    4.00
    %
    
    
    16,303
    
    
    
    6.00
    %(to Risk Weighted Assets)Tier 1 Capital
    
    
    42,905
    
    
    
    10.54
    %
    
    
    16,283
    
    
    
    4.00
    %
    
    
    20,353
    
    
    
    5.00
    %(to Average Assets)




---



##### 



16. Calculation Of Earnings Per Share
  Years Ended December 31,2006
    
    
    2005
    
    
    2004(Amounts, except earnings per share, in thousands)Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829Weighted-average common shares outstanding
    
    
    4,480
    
    
    
    4,550
    
    
    
    4,559Basic earnings per share
    
    $
    1.12
    
    
    $
    1.00
    
    
    $
    1.28Weighted-average common shares outstanding
    
    
    4,480
    
    
    
    4,550
    
    
    
    4,559Common stock equivalents due to effect of stock options
    
    
    12
    
    
    
    18
    
    
    
    12Total weighted-average common shares and equivalents
    
    
    4,492
    
    
    
    4,568
    
    
    
    4,571Diluted earnings per share
    
    $
    1.11
    
    
    $
    1.00
    
    
    $
    1.27




---



##### 



17. Comprehensive Income
  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 loss 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
 Year ended December 31, 2004Before
    
    
    Tax (Expense)Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountNet income
    
    $
    7,798
    
    
    $
    (1,969
    )
    
    $
    5,829Other comprehensive income (loss):Unrealized loss on available for sale securities :Unrealized holding losses arising during the period
    
    
    (1,244
    )
    
    
    422
    
    
    
    (822
    )Less reclassification adjustment for
gains included in net income
    
    
    (358
    )
    
    
    122
    
    
    
    (236
    )Other comprehensive loss
    
    
    (1,602
    )
    
    
    544
    
    
    
    (1,058
    )Total comprehensive income
    
    $
    6,196
    
    
    $
    (1,425
    )
    
    $
    4,771




---



##### 



18. Employee Benefit Plans
 Stock Compensation Plan
    2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    57,983
    
    
    $
    17.25
    
    
    
    55,362
    
    
    $
    15.49
    
    
    
    47,600
    
    
    $
    14.49Granted
    
    
    10,880
    
    
    
    21.00
    
    
    
    10,953
    
    
    
    24.00
    
    
    
    9,550
    
    
    
    20.25Exercised
    
    
    (750
    )
    
    
    14.18
    
    
    
    (4,528
    )
    
    
    14.24
    
    
    
    (200
    )
    
    
    15.13Forfeited
    
    
    (2,367
    )
    
    
    19.40
    
    
    
    (3,804
    )
    
    
    14.60
    
    
    
    (1,588
    )
    
    
    14.20Outstanding at end of year
    
    
    65,746
    
    
    $
    17.83
    
    
    
    57,983
    
    
    $
    17.25
    
    
    
    55,362
    
    
    $
    15.49Options exercisable at year-end
    
    
    40,735
    
    
    $
    15.90
    
    
    
    30,726
    
    
    $
    14.94
    
    
    
    24,266
    
    
    $
    14.31Weighted-average fair value of
of options granted
during the year
    
    $
    4.50
    
    
    
    
    
    
    $
    4.74
    
    
    
    
    
    
    $
    2.62
  Outstanding
    
    ExercisableContractual
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Average Life
    
    Exercise
    
    
    
    
    
    ExerciseGrant Date
    
    Price
    
    Shares
    
    (Years)
    
    Price
    
    Shares
    
    Price11/20/2001
    
    $
    14.10
    
    
    
    11,038
    
    
    
    4.89
    
    
    $
    14.10
    
    
    
    11,038
    
    
    $
    14.1011/19/2002
    
    
    14.25
    
    
    
    12,306
    
    
    
    5.89
    
    
    
    14.25
    
    
    
    11,239
    
    
    
    14.2511/18/2003
    
    
    15.13
    
    
    
    12,490
    
    
    
    6.89
    
    
    
    15.13
    
    
    
    10,361
    
    
    
    15.1311/15/2004
    
    
    20.25
    
    
    
    8,770
    
    
    
    7.88
    
    
    
    20.25
    
    
    
    5,149
    
    
    
    20.2510/18/2005
    
    
    24.00
    
    
    
    10,262
    
    
    
    8.80
    
    
    
    24.00
    
    
    
    2,948
    
    
    
    24.0010/17/2006
    
    
    21.00
    
    
    
    10,880
    
    
    
    9.80
    
    
    
    21.00
    
    
    
    
    
    
    
    21.00




---



##### 



Defined Benefit Retirement Plan
   Increase(Decrease)Accrued pension liability
    
    $
    1,156Deferred tax asset
    
    
    393Other comprehensive loss
    
    
    763
  Years ended December 31,2006
    
    
    2005Change in projected benefit obligation (PBO)PBO at beginning of year
    
    $
    6,503
    
    
    $
    6,130Service cost
    
    
    296
    
    
    
    287Interest cost
    
    
    366
    
    
    
    346Actuarial gain
    
    
    (23
    )
    
    
    (8
    )Benefits paid
    
    
    (261
    )
    
    
    (252
    )PBO at end of year
    
    $
    6,881
    
    
    $
    6,503Change in plan assetsFair value of plan assets at beginning of year
    
    $
    5,076
    
    
    $
    4,757Actual return on plan assets, net of expenses
    
    
    428
    
    
    
    271Employer contribution
    
    
    300
    
    
    
    300Benefits paid
    
    
    (261
    )
    
    
    (252
    )Fair value of plan assets at end of year
    
    $
    5,543
    
    
    $
    5,076Reconciliation of funded status to net amount recognizedFunded status
    
    
    (1,338
    )
    
    
    (1,427
    )Unrecognized net actuarial loss
    
    
    1,500
    
    
    
    1,667Unrecognized transition asset
    
    
    (12
    )
    
    
    (14
    )Minimum pension liability
    
    
    (332
    )
    
    
    (461
    )Adjustment to accumulated other comprehensive
income as a result of adoption of FAS No. 158
    
    
    (1,156
    )
    
    
    Accrued benefit cost
    
    $
    (1,338
    )
    
    $
    (235
    )Accumulated benefit obligation
    
    $
    5,725
    
    
    $
    5,311




---



##### 



2006
    
    
    2005
    
    
    2004Service cost during the year
    
    $
    296
    
    
    $
    287
    
    
    $
    253Interest cost on projected benefit obligation
    
    
    366
    
    
    
    346
    
    
    
    321Expected return on plan assets
    
    
    (359
    )
    
    
    (335
    )
    
    
    (307
    )Net amortization
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Recognized net actuarial loss
    
    
    75
    
    
    
    94
    
    
    
    Net periodic benefit cost
    
    $
    376
    
    
    $
    390
    
    
    $
    265
  2006
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    7.00
    %Rate of compensation increase
    
    
    3.75
    
    
    
    3.75
    
    
    
    4.00
  2006
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    7.00
    %Expected long-term return on plan assets
    
    
    7.00
    
    
    
    7.00
    
    
    
    7.00Rate of compensation increase
    
    
    3.75
    
    
    
    3.75
    
    
    
    4.00
   2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012-2016$271
    
    $
    308
    
    
    $
    308
    
    
    $
    334
    
    
    $
    341
    
    
    $
    1,925
 Employee Stock Purchase Plan
  Supplemental retirement plans
  Deferred compensation plans




---



##### 



Salary continuation plans
  19. Fair Value of Financial Instruments




---



##### 



Financial Instruments
 December 31, 2006
    
    December 31, 2005Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and due from banks
    
    $
    16,476
    
    
    $
    16,476
    
    
    $
    16,373
    
    
    $
    16,373Interest bearing deposits with banks
    
    
    102
    
    
    
    102
    
    
    
    66
    
    
    
    66Federal funds sold
    
    
    1,200
    
    
    
    1,200
    
    
    
    
    
    
    
    Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,598
    
    
    
    5,660
    
    
    
    5,649Securities
    
    
    58,883
    
    
    
    58,863
    
    
    
    70,192
    
    
    
    70,135Restricted investment in FHLB stock
    
    
    1,076
    
    
    
    1,076
    
    
    
    1,356
    
    
    
    1,356Total loans, net of unearned interest
    
    
    305,818
    
    
    
    305,233
    
    
    
    298,063
    
    
    
    299,145Allowance for loan losses
    
    
    (2,572
    )
    
    
    (2,572
    )
    
    
    (2,763
    )
    
    
    (2,763
    )Accrued interest receivable
    
    
    2,040
    
    
    
    2,040
    
    
    
    1,959
    
    
    
    1,959Financial liabilities:Non-interest bearing deposits
    
    
    42,829
    
    
    
    42,829
    
    
    
    46,041
    
    
    
    46,041Interest bearing deposits
    
    
    312,340
    
    
    
    310,297
    
    
    
    297,426
    
    
    
    294,278Securities sold under agreements to
repurchase
    
    
    6,112
    
    
    
    6,112
    
    
    
    4,201
    
    
    
    4,201Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    5,600Long-term debt
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    4,926Other interest bearing liabilities
    
    
    927
    
    
    
    927
    
    
    
    819
    
    
    
    819Accrued interest payable
    
    
    999
    
    
    
    999
    
    
    
    747
    
    
    
    747Off-balance sheet financial instruments:Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    




---



##### 



20. Financial Instruments With Off-Balance Sheet Risk
    December 31,2006
    
    2005Commitments to grant loans
    
    $
    37,627
    
    
    $
    21,413Unfunded commitments under lines of credit
    
    
    10,975
    
    
    
    29,043Outstanding letters of credit
    
    
    859
    
    
    
    755




---



##### 



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




---



##### 



24. Juniata Valley Financial Corp. (Parent Company Only)
  CONDENSED BALANCE SHEETS
 December 31,2006
    
    
    2005ASSETS:Cash
    
    $
    337
    
    
    $
    202Interest bearing deposits with banks
    
    
    490
    
    
    
    490Cash and cash equivalents
    
    
    827
    
    
    
    692Investment in bank subsidiary
    
    
    39,673
    
    
    
    42,215Investment in unconsolidated subsidiary
    
    
    2,892
    
    
    
    Investment securities available for sale
    
    
    3,947
    
    
    
    3,876Other assets
    
    
    522
    
    
    
    342TOTAL ASSETS
    
    $
    47,861
    
    
    $
    47,125LIABILITIES:Income tax payable
    
    $
    73
    
    
    $
    6Accounts payable and other liabilities
    
    
    2
    
    
    
    STOCKHOLDERS EQUITY
    
    
    47,786
    
    
    
    47,119TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    47,861
    
    
    $
    47,125
 CONDENSED STATEMENTS OF INCOME
 Years ended December 31,2006
    
    
    2005
    
    
    2004INCOME:Interest on deposits with banks
    
    $
    18
    
    
    $
    18
    
    
    $
    14Interest and dividends on investment securities available for sale
    
    
    152
    
    
    
    134
    
    
    
    110Dividends from bank subsidiary
    
    
    7,031
    
    
    
    7,380
    
    
    
    5,840Income from unconsolidated subsidiary
    
    
    80
    
    
    
    
    
    
    
    Gain on the sale of investment securities
    
    
    77
    
    
    
    45
    
    
    
    TOTAL INCOME
    
    
    7,358
    
    
    
    7,577
    
    
    
    5,964EXPENSE:Non-interest expense
    
    
    109
    
    
    
    169
    
    
    
    96TOTAL EXPENSE
    
    
    109
    
    
    
    169
    
    
    
    96INCOME BEFORE INCOME TAXES AND EQUITY
IN UNDISTRIBUTED NET INCOME OF SUBSIDIARY
    
    
    7,249
    
    
    
    7,408
    
    
    
    5,868Income tax
    
    
    68
    
    
    
    8
    
    
    
    7,181
    
    
    
    7,400
    
    
    
    5,868Excess distributed net income of subsidiary
    
    
    (2,179
    )
    
    
    (2,834
    )
    
    
    (39
    )NET INCOME
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829




---



##### 



CONDENSED
STATEMENTS OF CASH FLOWS
 Years ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    5,002
    
    
    $
    4,566
    
    
    $
    5,829Adjustments to reconcile net income to net cash
provided by operating activities:Distribution in excess of (undistributed) net income of subsidiary
    
    
    2,179
    
    
    
    2,834
    
    
    
    39Realized gains on sales of investment securities
    
    
    (77
    )
    
    
    (45
    )
    
    
    Income from unconsolidated subsidiary
    
    
    (80
    )
    
    
    
    
    
    
    Increase in interest and other receivable
    
    
    (180
    )
    
    
    (267
    )
    
    
    (22
    )Increase in taxes payable
    
    
    68
    
    
    
    44
    
    
    
    Increase (decrease) in accounts payable and accrued expenses
    
    
    2
    
    
    
    (35
    )
    
    
    (6
    )Net cash provided by operating activities
    
    
    6,914
    
    
    
    7,097
    
    
    
    5,840Cash flows from investing activities:Purchases of available for sale securities
    
    
    (134
    )
    
    
    (489
    )
    
    
    (1,635
    )Proceeds from the sale of available for sale securities
    
    
    137
    
    
    
    79
    
    
    
    Proceeds from the maturity of available for sale investment securities
    
    
    
    
    
    
    
    
    
    
    900Investment in unconsolidated subsidiary
    
    
    (2,812
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (2,809
    )
    
    
    (410
    )
    
    
    (735
    )Cash flows from financing activities:Cash dividends
    
    
    (2,957
    )
    
    
    (5,046
    )
    
    
    (4,879
    )Purchase of treasury stock
    
    
    (1,302
    )
    
    
    (2,242
    )
    
    
    (960
    )Treasury stock issued for dividend reinvestment and
employee stock purchase plan
    
    
    289
    
    
    
    796
    
    
    
    738Net cash used in financing activities
    
    
    (3,970
    )
    
    
    (6,492
    )
    
    
    (5,101
    )Net increase in cash and cash equivalents
    
    
    135
    
    
    
    195
    
    
    
    4Cash and cash equivalents at beginning of period
    
    
    692
    
    
    
    497
    
    
    
    493Cash and cash equivalents at end of period
    
    $
    827
    
    
    $
    692
    
    
    $
    497




---



##### 



25. Quarterly Results Of Operations (Unaudited)
  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
 2005 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total interest income
    
    $
    5,492
    
    
    $
    5,684
    
    
    $
    5,729
    
    
    $
    5,802Total interest expense
    
    
    1,757
    
    
    
    1,929
    
    
    
    2,104
    
    
    
    2,225Net interest income
    
    
    3,735
    
    
    
    3,755
    
    
    
    3,625
    
    
    
    3,577Provision for loan losses
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    Gains from the sale of assets
    
    
    99
    
    
    
    
    
    
    
    52
    
    
    
    24Other income
    
    
    761
    
    
    
    771
    
    
    
    766
    
    
    
    850Other expense
    
    
    2,671
    
    
    
    3,223
    
    
    
    2,938
    
    
    
    2,848Income before income taxes
    
    
    1,896
    
    
    
    1,303
    
    
    
    1,505
    
    
    
    1,603Income tax expense
    
    
    533
    
    
    
    358
    
    
    
    416
    
    
    
    434Net income
    
    $
    1,363
    
    
    $
    945
    
    
    $
    1,089
    
    
    $
    1,169Per-share data:Basic earnings
    
    $
    .30
    
    
    $
    .21
    
    
    $
    .23
    
    
    $
    .26Diluted earnings
    
    
    .30
    
    
    
    .21
    
    
    
    .23
    
    
    
    .26Cash dividends
    
    
    .50
    
    
    
    .30
    
    
    
    
    
    
    
    .31




---



##### 



Common Stock Market Prices and Dividends
   2006DividendsQuarter Ended
    
    High
    
    Low
    
    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
 2005DividendsQuarter Ended
    
    High
    
    Low
    
    DeclaredMarch 31
    
    $
    23.00
    
    
    $
    21.00
    
    
    $
    0.50June 30
    
    
    25.50
    
    
    
    21.50
    
    
    
    0.30September 30
    
    
    24.50
    
    
    
    22.00
    
    
    
    December 31
    
    
    25.60
    
    
    
    23.65
    
    
    
    0.31
   Corporate Information
  Corporate Headquarters
 Investor Information      JoAnn.McMinn@JVBonline.com




---



##### 



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