##### 



Five-Year Financial Summary  Selected Financial Data
 2005
    
    2004
    
    2003
    
    2002
    
    2001(In thousands of dollars, except share and per share data)BALANCE SHEET INFORMATIONat December 31Assets
    
    $
    410,802
    
    
    $
    397,074
    
    
    $
    387,780
    
    
    $
    375,735
    
    
    $
    356,757Deposits
    
    
    343,466
    
    
    
    332,642
    
    
    
    332,984
    
    
    
    322,619
    
    
    
    305,468Loans, net of allowance for loan losses
    
    
    295,300
    
    
    
    276,759
    
    
    
    249,960
    
    
    
    235,497
    
    
    
    227,998Investments
    
    
    77,208
    
    
    
    84,157
    
    
    
    103,798
    
    
    
    106,431
    
    
    
    98,073Short-term borrowings
    
    
    9,801
    
    
    
    4,716
    
    
    
    
    
    
    
    
    
    
    
    1,275Long-term debt
    
    
    5,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity
    
    
    47,119
    
    
    
    50,153
    
    
    
    50,483
    
    
    
    48,327
    
    
    
    45,326Number of shares outstanding *
    
    
    4,503,392
    
    
    
    4,561,258
    
    
    
    4,569,406
    
    
    
    4,626,970
    
    
    
    4,702,000Average for the yearAssets
    
    
    406,706
    
    
    
    393,554
    
    
    
    386,574
    
    
    
    366,853
    
    
    
    348,331Stockholders equity
    
    
    48,403
    
    
    
    48,776
    
    
    
    47,629
    
    
    
    46,210
    
    
    
    44,348Weighted average shares outstanding *
    
    
    4,550,483
    
    
    
    4,559,168
    
    
    
    4,581,922
    
    
    
    4,660,780
    
    
    
    4,737,846INCOME STATEMENT INFORMATIONYears Ended December 31Total interest income
    
    $
    22,707
    
    
    $
    21,717
    
    
    $
    22,500
    
    
    $
    23,470
    
    
    $
    24,641Total interest expense
    
    
    8,015
    
    
    
    6,438
    
    
    
    7,472
    
    
    
    9,299
    
    
    
    11,929Net interest income
    
    
    14,692
    
    
    
    15,279
    
    
    
    15,028
    
    
    
    14,171
    
    
    
    12,712Provision for loan losses
    
    
    28
    
    
    
    326
    
    
    
    304
    
    
    
    300
    
    
    
    240Other income
    
    
    3,323
    
    
    
    3,445
    
    
    
    2,760
    
    
    
    2,014
    
    
    
    2,194Other expenses
    
    
    11,680
    
    
    
    10,600
    
    
    
    10,017
    
    
    
    9,124
    
    
    
    8,596Income before income taxes
    
    
    6,307
    
    
    
    7,798
    
    
    
    7,467
    
    
    
    6,761
    
    
    
    6,070Federal income tax expense
    
    
    1,741
    
    
    
    1,969
    
    
    
    1,820
    
    
    
    1,746
    
    
    
    1,428Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647
    
    
    $
    5,015
    
    
    $
    4,642PER SHARE DATA *Earnings per share  basic
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24
    
    
    $
    1.08
    
    
    $
    0.98Earnings per share  diluted
    
    
    1.00
    
    
    
    1.27
    
    
    
    1.23
    
    
    
    1.08
    
    
    
    0.98Cash dividends
    
    
    1.11
    
    
    
    1.07
    
    
    
    0.50
    
    
    
    0.44
    
    
    
    0.40Book value
    
    
    10.46
    
    
    
    11.00
    
    
    
    11.05
    
    
    
    10.45
    
    
    
    9.64FINANCIAL RATIOSReturn on average assets
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %
    
    
    1.37
    %
    
    
    1.33
    %Return on average equity
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86
    
    
    
    10.85
    
    
    
    10.47Dividend payout
    
    
    110.71
    
    
    
    83.70
    
    
    
    40.43
    
    
    
    40.72
    
    
    
    40.78Average equity to average assets
    
    
    11.90
    
    
    
    12.39
    
    
    
    12.32
    
    
    
    12.60
    
    
    
    12.73Loans to deposits (year end)
    
    
    85.98
    
    
    
    83.20
    
    
    
    75.07
    
    
    
    73.00
    
    
    
    74.64
 
 *
    
    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
 COMPANY OVERVIEW
  FORWARD LOOKING STATEMENTS
  EXECUTIVE SUMMARY
 Nature of Operations




---



##### 



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




---



##### 



Juniatas Opportunities
   Juniatas Challenges
 Competition
  Regulated Company
  APPLICATION OF CRITICAL ACCOUNTING POLICIES




---



##### 



Financial Condition
 Balance Sheet Summary
  
 2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceFunding Uses:Loans:Commercial
    
    $
    85,287
    
    
    $
    4,847
    
    
    
    6.0
    %
    
    $
    80,440
    
    
    $
    8,218
    
    
    
    11.4
    %
    
    $
    72,222Tax-exempt loans
    
    
    4,781
    
    
    
    402
    
    
    
    9.2
    
    
    
    4,379
    
    
    
    1,058
    
    
    
    31.9
    
    
    
    3,321Mortgage
    
    
    134,857
    
    
    
    11,244
    
    
    
    9.1
    
    
    
    123,613
    
    
    
    10,233
    
    
    
    9.0
    
    
    
    113,380Consurmer
    
    
    65,402
    
    
    
    5,915
    
    
    
    9.9
    
    
    
    59,487
    
    
    
    5,422
    
    
    
    10.0
    
    
    
    54,065Securities
    
    
    56,966
    
    
    
    (5,046
    )
    
    
    (8.1
    )
    
    
    62,012
    
    
    
    (7,099
    )
    
    
    (10.3
    )
    
    
    69,111Tax-exempt securities
    
    
    19,800
    
    
    
    (3,942
    )
    
    
    (16.6
    )
    
    
    23,742
    
    
    
    (7,685
    )
    
    
    (24.5
    )
    
    
    31,427Interest bearing
deposits
    
    
    6,420
    
    
    
    851
    
    
    
    15.3
    
    
    
    5,569
    
    
    
    227
    
    
    
    4.2
    
    
    
    5,342Federal funds sold
    
    
    4,679
    
    
    
    746
    
    
    
    19.0
    
    
    
    3,933
    
    
    
    (2,632
    )
    
    
    (40.1
    )
    
    
    6,565Total interest
earning assets
    
    
    378,192
    
    
    
    15,017
    
    
    
    4.1
    
    
    
    363,175
    
    
    
    7,742
    
    
    
    2.2
    
    
    
    355,433Non-interest earning
assets
    
    
    31,626
    
    
    
    (273
    )
    
    
    (0.9
    )
    
    
    31,899
    
    
    
    468
    
    
    
    1.5
    
    
    
    31,431Unrealized gains
(losses) on
securities
    
    
    (136
    )
    
    
    (1,532
    )
    
    
    (109.7
    )
    
    
    1,396
    
    
    
    (1,094
    )
    
    
    (43.9
    )
    
    
    2,490Less: Allowance for
loan losses
    
    
    (2,976
    )
    
    
    (60
    )
    
    
    2.1
    
    
    
    (2,916
    )
    
    
    (136
    )
    
    
    4.9
    
    
    
    (2,780
    )Total uses
    
    $
    406,706
    
    
    $
    13,152
    
    
    
    3.3
    %
    
    $
    393,554
    
    
    $
    6,980
    
    
    
    1.8
    %
    
    $
    386,574Funding Sources:Interest bearing
demand deposits
    
    $
    64,118
    
    
    $
    1,624
    
    
    
    2.6
    %
    
    $
    62,494
    
    
    $
    113
    
    
    
    0.2
    %
    
    $
    62,381Savings deposits
    
    
    44,638
    
    
    
    (350
    )
    
    
    (0.8
    )
    
    
    44,988
    
    
    
    4,945
    
    
    
    12.3
    
    
    
    40,043Time deposits
under $100,000
    
    
    145,436
    
    
    
    160
    
    
    
    0.1
    
    
    
    145,276
    
    
    
    (7,076
    )
    
    
    (4.6
    )
    
    
    152,352Time deposits
over $100,000
    
    
    40,179
    
    
    
    3,748
    
    
    
    10.3
    
    
    
    36,431
    
    
    
    2,535
    
    
    
    7.5
    
    
    
    33,896Repurchase agreements
    
    
    5,616
    
    
    
    4,243
    
    
    
    309.0
    
    
    
    1,373
    
    
    
    1,373
    
    
    
    
    
    
    
    Short-term borrowings
    
    
    379
    
    
    
    239
    
    
    
    170.7
    
    
    
    140
    
    
    
    (355
    )
    
    
    (71.7
    )
    
    
    495Long-term debt
    
    
    5,000
    
    
    
    2,987
    
    
    
    148.4
    
    
    
    2,013
    
    
    
    2,013
    
    
    
    
    
    
    
    Other interest
bearing liabilities
    
    
    770
    
    
    
    93
    
    
    
    13.7
    
    
    
    677
    
    
    
    82
    
    
    
    13.8
    
    
    
    595Total interest
bearing
liabilities
    
    
    306,136
    
    
    
    12,744
    
    
    
    4.3
    
    
    
    293,392
    
    
    
    3,630
    
    
    
    1.3
    
    
    
    289,762Demand deposits
    
    
    47,208
    
    
    
    1,806
    
    
    
    4.0
    
    
    
    45,402
    
    
    
    3,392
    
    
    
    8.1
    
    
    
    42,010Other liabilities
    
    
    4,959
    
    
    
    (1,025
    )
    
    
    (17.1
    )
    
    
    5,984
    
    
    
    (1,189
    )
    
    
    (16.6
    )
    
    
    7,173Shareholders equity
    
    
    48,403
    
    
    
    (373
    )
    
    
    (0.8
    )
    
    
    48,776
    
    
    
    1,147
    
    
    
    2.4
    
    
    
    47,629Total sources
    
    $
    406,706
    
    
    $
    13,152
    
    
    
    3.3
    %
    
    $
    393,554
    
    
    $
    6,980
    
    
    
    1.8
    %
    
    $
    386,574




---



##### 



Loans
  December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Commercial, financial and agricultural
    
    $
    21,661
    
    
    $
    23,301
    
    
    $
    25,885
    
    
    $
    26,815
    
    
    $
    24,548Real estate  commercial
    
    
    27,588
    
    
    
    25,068
    
    
    
    20,614
    
    
    
    22,528
    
    
    
    21,193Real estate  construction
    
    
    28,323
    
    
    
    24,968
    
    
    
    14,324
    
    
    
    10,174
    
    
    
    10,700Real estate  mortgage
    
    
    135,992
    
    
    
    132,243
    
    
    
    119,678
    
    
    
    117,019
    
    
    
    112,171Home equity
    
    
    10,083
    
    
    
    8,766
    
    
    
    7,548
    
    
    
    7,962
    
    
    
    7,330Obligations of states and political
subdivisions
    
    
    4,827
    
    
    
    4,294
    
    
    
    4,577
    
    
    
    2,378
    
    
    
    2,849Personal
    
    
    70,703
    
    
    
    63,218
    
    
    
    64,593
    
    
    
    61,176
    
    
    
    61,557Unearned interest
    
    
    (1,114
    )
    
    
    (2,110
    )
    
    
    (4,439
    )
    
    
    (9,824
    )
    
    
    (9,824
    )Total
    
    $
    298,063
    
    
    $
    279,748
    
    
    $
    252,780
    
    
    $
    238,228
    
    
    $
    230,524
  2005
    
    2004
    
    2003New loans, net of repayments
    
    $
    18,569
    
    
    $
    27,125
    
    
    $
    14,767Loans charged off
    
    
    (279
    )
    
    
    (175
    )
    
    
    (235
    )Loans transferred to other real estate owned and
other adjustments to carrying value
    
    
    25
    
    
    
    18
    
    
    
    20$
    18,315
    
    
    $
    26,968
    
    
    $
    14,552




---



##### 



Table 2
Non-Performing Loans
 December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands)Nonaccrual loans
    
    $
    1,515
    
    
    $
    
    
    
    $
    
    
    
    $
    219
    
    
    $
    934Accruing loans past due 90 days or more
    
    
    724
    
    
    
    365
    
    
    
    584
    
    
    
    544
    
    
    
    811Restructured loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    $
    2,239
    
    
    $
    365
    
    
    $
    584
    
    
    $
    763
    
    
    $
    1,745
  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 areas 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.
    
    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 which 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 volumeso
    
    Changes in experience, ability and depth of managemento
    
    External factors such as competition, legal and regulatory




---



##### 



Years ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Balance of allowance  beginning of
period
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731
    
    
    $
    2,526
    
    
    $
    2,497Loans charged off:Commercial, financial and agricultural
    
    
    171
    
    
    
    43
    
    
    
    78
    
    
    
    54
    
    
    
    58Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Real estate  construction
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    3
    
    
    
    10
    
    
    
    50
    
    
    
    44
    
    
    
    32Personal
    
    
    75
    
    
    
    122
    
    
    
    107
    
    
    
    109
    
    
    
    128Total charge-offs
    
    
    279
    
    
    
    175
    
    
    
    235
    
    
    
    207
    
    
    
    237Recoveries of loans previously charged
off:Commercial, financial and agricultural
    
    
    6
    
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    2Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    19Real estate  construction
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    Personal
    
    
    14
    
    
    
    15
    
    
    
    17
    
    
    
    4
    
    
    
    5Total recoveries
    
    
    25
    
    
    
    18
    
    
    
    20
    
    
    
    112
    
    
    
    26Net charge-offs
    
    
    254
    
    
    
    157
    
    
    
    215
    
    
    
    95
    
    
    
    211Provision for loan losses
    
    
    28
    
    
    
    326
    
    
    
    304
    
    
    
    300
    
    
    
    240Balance of allowance  end of period
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731
    
    
    $
    2,526Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.09
    %
    
    
    0.06
    %
    
    
    0.09
    %
    
    
    0.04
    %
    
    
    0.09
    %
  Allocation of the Allowance for Loan Losses (in thousands)2005
    
    2004
    
    2003
    
    2002
    
    2001Commercial
    
    $
    956
    
    
    $
    1,087
    
    
    $
    1,055
    
    
    $
    1,057
    
    
    $
    970Real estate
    
    
    1,112
    
    
    
    602
    
    
    
    548
    
    
    
    561
    
    
    
    747Consumer
    
    
    695
    
    
    
    1,002
    
    
    
    963
    
    
    
    853
    
    
    
    656Unallocated
    
    
    
    
    
    
    298
    
    
    
    254
    
    
    
    260
    
    
    
    153Total allowance for loan losses
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731
    
    
    $
    2,526
 Percent of Loan Type to Total Loans2005
    
    2004
    
    2003
    
    2002
    
    2001Commercial
    
    
    8.9
    %
    
    
    9.9
    %
    
    
    12.1
    %
    
    
    12.3
    %
    
    
    11.9
    %Real estate
    
    
    67.8
    %
    
    
    68.3
    %
    
    
    64.1
    %
    
    
    66.1
    %
    
    
    65.7
    %Consumer
    
    
    23.3
    %
    
    
    21.8
    %
    
    
    23.8
    %
    
    
    21.6
    %
    
    
    22.4
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %




---



##### 



Investments
  2005
    
    2004
    
    2003Purchases of investment securities
    
    $
    17,073
    
    
    $
    16,746
    
    
    $
    51,628Sales and maturities of investment securities
    
    
    (21,696
    )
    
    
    (37,807
    )
    
    
    (52,660
    )Adjustment in market value of AFS securities
    
    
    (1,044
    )
    
    
    (1,244
    )
    
    
    (489
    )Amortization/Accretion
    
    
    (209
    )
    
    
    (228
    )
    
    
    (280
    )Federal Home Loan Bank stock, net change
    
    
    27
    
    
    
    222
    
    
    
    468Federal funds sold, net change
    
    
    (3,900
    )
    
    
    3,900
    
    
    
    (3,700
    )Interest bearing deposits with others, net change
    
    
    (1,201
    )
    
    
    2,712
    
    
    
    (1,265
    )$
    (10,950
    )
    
    $
    (15,699
    )
    
    $
    (6,298
    )




---



##### 



December 31, 2005Securities
    
    
    
    
    
    WeightedCarrying
    
    
    AverageType and maturity
    
    Value
    
    
    YieldU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    20,819
    
    
    
    3.43
    %After one year but within five years
    
    
    29,708
    
    
    
    3.70
    %After five years but within ten years
    
    
    After ten years
    
    
    50,527Obligations of state and political subdivisionsWithin one year
    
    
    3,542
    
    
    
    6.21
    %After one year but within five years
    
    
    11,132
    
    
    
    5.68
    %After five years but within ten years
    
    
    100
    
    
    
    6.52
    %After ten years
    
    
    14,774Mortgage-backed securitiesWithin one year
    
    
    After one year but within five years
    
    
    1,157
    
    
    
    4.41
    %After five years but within ten years
    
    
    2,446
    
    
    
    4.83
    %After ten years
    
    
    3,603Equity securities
    
    
    1,288$
    70,192
 Deferred Taxes




---



##### 



Non-Interest Earning Assets
  2005
    
    2004
    
    2003Cash and due from banks
    
    $
    5,640
    
    
    $
    (2,769
    )
    
    $
    2,391Premises and equipment, net
    
    
    (591
    )
    
    
    47
    
    
    
    988Other real estate owned
    
    
    (111
    )
    
    
    (19
    )
    
    
    154Bank-owned life insurance
    
    
    183
    
    
    
    864
    
    
    
    287Other receivables and prepaid expenses
    
    
    1,016
    
    
    
    (245
    )
    
    
    60$
    6,137
    
    
    $
    (2,122
    )
    
    $
    3,880
 Deposits
  2005
    
    2004
    
    2003Demand deposits
    
    $
    (1,418
    )
    
    $
    5,259
    
    
    $
    3,308Interest bearing demand deposits
    
    
    10,480
    
    
    
    (6,795
    )
    
    
    6,678Savings deposits
    
    
    64
    
    
    
    1,323
    
    
    
    6,123Time deposits, $100,000 and greater
    
    
    1,384
    
    
    
    3,801
    
    
    
    (844
    )Time deposits, other
    
    
    315
    
    
    
    (3,930
    )
    
    
    (4,900
    )$
    10,825
    
    
    $
    (342
    )
    
    $
    10,365




---



##### 



2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceInterest bearing demand deposits
    
    $
    64,118
    
    
    $
    1,624
    
    
    
    2.6
    %
    
    $
    62,494
    
    
    $
    113
    
    
    
    0.2
    %
    
    $
    62,381Savings deposits
    
    
    44,638
    
    
    
    (350
    )
    
    
    (0.8
    )
    
    
    44,988
    
    
    
    4,945
    
    
    
    12.3
    
    
    
    40,043Demand deposits
    
    
    47,208
    
    
    
    1,806
    
    
    
    4.0
    
    
    
    45,402
    
    
    
    3,392
    
    
    
    8.1
    
    
    
    42,010Total core(transaction) accounts
    
    
    155,964
    
    
    
    3,080
    
    
    
    2.0
    
    
    
    152,884
    
    
    
    8,450
    
    
    
    5.9
    
    
    
    144,434Time deposits, $100,000 and greater
    
    
    40,179
    
    
    
    3,748
    
    
    
    10.3
    
    
    
    36,431
    
    
    
    2,535
    
    
    
    7.5
    
    
    
    33,896Time deposits, other
    
    
    145,436
    
    
    
    160
    
    
    
    0.1
    
    
    
    145,276
    
    
    
    (7,076
    )
    
    
    (4.6
    )
    
    
    152,352Total time deposits
    
    
    185,615
    
    
    
    3,908
    
    
    
    2.2
    
    
    
    181,707
    
    
    
    (4,541
    )
    
    
    (2.4
    )
    
    
    186,248Total deposits
    
    $
    341,579
    
    
    $
    6,988
    
    
    
    2.1
    %
    
    $
    334,591
    
    
    $
    3,909
    
    
    
    1.2
    %
    
    $
    330,682
 Other Interest Bearing Liabilities
  
 2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Average
    
    
    Increase(Decrease)
    
    
    Average
    
    
    Increase(Decrease)
    
    
    AverageBalance
    
    
    Amount
    
    
    %
    
    
    Balance
    
    
    Amount
    
    
    %
    
    
    BalanceRepurchase agreements
    
    $
    5,616
    
    
    $
    4,243
    
    
    
    309.0
    %
    
    $
    1,373
    
    
    $
    1,373
    
    
    
    
    
    
    $
    Short-term borrowings
    
    
    379
    
    
    
    239
    
    
    
    170.7
    
    
    
    140
    
    
    
    (355
    )
    
    
    (71.7
    )
    
    
    495Long-term debt
    
    
    5,000
    
    
    
    2,987
    
    
    
    148.4
    
    
    
    2,013
    
    
    
    2,013
    
    
    
    
    
    
    
    Other interest bearing liabilities
    
    
    770
    
    
    
    93
    
    
    
    13.7
    
    
    
    677
    
    
    
    82
    
    
    
    13.8
    
    
    
    595$
    11,765
    
    
    $
    7,562
    
    
    
    179.9
    %
    
    $
    4,203
    
    
    $
    3,113
    
    
    
    285.6
    %
    
    $
    1,090




---



##### 



Pension Plans
  Stockholders Equity
  2005
    
    2004
    
    2003Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Dividends
    
    
    (5,046
    )
    
    
    (4,879
    )
    
    
    (2,283
    )Stock options exercised
    
    
    145
    
    
    
    157
    
    
    
    58Repurchase of stock, net of re-issuance
    
    
    (1,591
    )
    
    
    (379
    )
    
    
    (943
    )Net change in unrealized security gains
    
    
    (804
    )
    
    
    (1,058
    )
    
    
    (323
    )Net change in minimum pension liability
    
    
    (304
    )
    
    
    
    
    
    
    $
    (3,034
    )
    
    $
    (330
    )
    
    $
    2,156




---



##### 



Asset / Liability Management Objectives
  
    
    Liquidity Risk
    
    Capital Risk
    
    Market / Interest Rate Risk
    
    Securities Value 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
    
    9
    
    $
    185,201
    
    
    $
    81,566
    
    
    $
    67,984
    
    
    $
    35,631
    
    
    $
    20Federal Funds borrowed and
security repurchase agreements
    
    10
    
    
    9,801
    
    
    
    9,801
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    10
    
    
    5,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    Other interest-bearing liabilities
    
    
    
    
    819
    
    
    
    5
    
    
    
    10
    
    
    
    10
    
    
    
    794Operating lease obligations
    
    11
    
    
    204
    
    
    
    95
    
    
    
    71
    
    
    
    38
    
    
    
    Other long-term liabilitiesEmployee pension
    
    16
    
    
    3,263
    
    
    
    239
    
    
    
    570
    
    
    
    630
    
    
    
    1,8243rd party data processor contract
    
    21
    
    
    918
    
    
    
    204
    
    
    
    408
    
    
    
    306
    
    
    
    Supplemental retirement and
deferred compensation
    
    16
    
    
    3,895
    
    
    
    411
    
    
    
    799
    
    
    
    766
    
    
    
    1,919$
    209,101
    
    
    $
    97,321
    
    
    $
    69,842
    
    
    $
    37,381
    
    
    $
    4,557
 Capital Risk
  Market / Interest Rate Risk




---



##### 



Change in NetChange in
    
    Interest IncomeInterest Rates
    
    Due to Interest(Basis Points)
    
    Rate Risk200
    
    
    $
    46100
    
    
    
    230
    
    
    
    -100
    
    
    
    (161
    )-200
    
    
    
    (322
    )
 Securities Value Risk
  Economic Risk
  Off-Balance Sheet Arrangements




---



##### 



Effects of Inflation




---



##### 



Table 4
MATURITY DISTRIBUTION
AS OF DECEMBER 31, 2005   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
    
    $
    66
    
    
    $
    
    
    
    $
    
    
    
    $
    5,660
    
    
    $
    
    
    
    $
    5,726Investment securities:U.S. Treasury securities and
obligations of other
U.S. Government agencies
and corporations
    
    
    500
    
    
    
    4,950
    
    
    
    15,369
    
    
    
    29,708
    
    
    
    
    
    
    
    50,527Obligations of state and
political subdivisions
    
    
    
    
    
    
    913
    
    
    
    2,629
    
    
    
    11,132
    
    
    
    100
    
    
    
    14,774Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,157
    
    
    
    2,445
    
    
    
    3,603Stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,288
    
    
    
    1,288Loans:Commercial, financial, and
agricultural
    
    
    21,661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,661Real estate  commercial
    
    
    27,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,588Real estate  construction
    
    
    28,323
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,323Real estate  mortgage
    
    
    100
    
    
    
    4,058
    
    
    
    25,186
    
    
    
    77,317
    
    
    
    29,331
    
    
    
    135,992Home equity
    
    
    9,285
    
    
    
    20
    
    
    
    98
    
    
    
    160
    
    
    
    520
    
    
    
    10,083Personal (net of unearned
discount)
    
    
    8,526
    
    
    
    114
    
    
    
    518
    
    
    
    19,166
    
    
    
    41,265
    
    
    
    69,589Obligations of state and
political subdivisions
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    2,418
    
    
    
    2,281
    
    
    
    4,827Total Interest Earning Assets
    
    
    96,049
    
    
    
    10,055
    
    
    
    43,929
    
    
    
    146,718
    
    
    
    77,230
    
    
    
    373,981Interest Bearing LiabilitiesDemand deposits
    
    
    45,225
    
    
    
    685
    
    
    
    2,741
    
    
    
    9,593
    
    
    
    10,278
    
    
    
    68,522Savings deposits
    
    
    28,844
    
    
    
    437
    
    
    
    1,748
    
    
    
    6,118
    
    
    
    6,555
    
    
    
    43,703Certificates of deposit over $100,000
    
    
    8,791
    
    
    
    4,690
    
    
    
    6,570
    
    
    
    19,580
    
    
    
    
    
    
    
    39,631Time deposits
    
    
    19,610
    
    
    
    19,840
    
    
    
    22,065
    
    
    
    84,055
    
    
    
    
    
    
    
    145,570Securities sold under agreements
to repurchase
    
    
    4,201
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,201Short-term borrowings
    
    
    5,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,600Long-term debt
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Other interest bearing liabilities
    
    
    819
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    819Total Interest Bearing Liabilities
    
    
    113,090
    
    
    
    25,652
    
    
    
    38,124
    
    
    
    119,347
    
    
    
    16,834
    
    
    
    313,046Gap
    
    $
    (17,041
    )
    
    $
    (15,597
    )
    
    $
    5,805
    
    
    $
    27,372
    
    
    $
    60,396
    
    
    $
    60,935Cumulative Gap
    
    $
    (17,041
    )
    
    $
    (32,638
    )
    
    $
    (26,833
    )
    
    $
    539
    
    
    $
    60,935Cumulative sensitivity ratio
    
    
    0.85
    
    
    
    0.76
    
    
    
    0.85
    
    
    
    1.00
    
    
    
    1.19Commercial, financial and
agricultural
loans maturing after one year
with:Fixed interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Variable interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    




---



##### 



Results of Operations
 2005
Financial Performance Overview
  2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Return on average assets
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %
    
    
    1.37
    %
    
    
    1.33
    %Return on average equity
    
    
    9.43
    
    
    
    11.95
    
    
    
    11.86
    
    
    
    10.85
    
    
    
    10.47Yield on earning assets
    
    
    6.00
    
    
    
    5.98
    
    
    
    6.33
    
    
    
    6.91
    
    
    
    7.67Cost to fund earning assets
    
    
    2.12
    
    
    
    1.77
    
    
    
    2.10
    
    
    
    2.74
    
    
    
    3.71Net interest margin (fully tax equivalent)
    
    
    4.00
    
    
    
    4.34
    
    
    
    4.42
    
    
    
    4.40
    
    
    
    4.20Noninterest income (excluding gains on
sales of securities) to average assets
    
    
    0.77
    
    
    
    0.78
    
    
    
    0.71
    
    
    
    0.55
    
    
    
    0.63Noninterest expense to average assets
    
    
    2.87
    
    
    
    2.69
    
    
    
    2.59
    
    
    
    2.49
    
    
    
    2.47
  
    
    Interest rate environment(affecting net interest income, BOLI and defined benefit costs)
    
    Loan quality
    
    Reduced gains on sales of investment securities
    
    Employee severance
    
    Expense associated with late initial compliance to the Sarbanes-Oxley Act of 2002
    
    Ongoing expense control




---



##### 



2005
    
    
    2004% of Average
    
    
    
    
    
    
    % of AverageAssets
    
    
    
    
    
    
    AssetsNet interest income
    
    $
    14,692
    
    
    
    3.61
    %
    
    $
    15,279
    
    
    
    3.88
    %Loan loss provision
    
    
    (28
    )
    
    
    (0.01
    )
    
    
    (326
    )
    
    
    (0.08
    )Trust fees
    
    
    374
    
    
    
    0.09
    
    
    
    452
    
    
    
    0.11Deposit service fees
    
    
    1,390
    
    
    
    0.34
    
    
    
    1,311
    
    
    
    0.33BOLI
    
    
    364
    
    
    
    0.09
    
    
    
    467
    
    
    
    0.12Commissions on sales of
annuities and mutual funds
    
    
    426
    
    
    
    0.10
    
    
    
    355
    
    
    
    0.09Other fees
    
    
    574
    
    
    
    0.14
    
    
    
    491
    
    
    
    0.12Security gains
    
    
    175
    
    
    
    0.04
    
    
    
    358
    
    
    
    0.09Gains on sale of other assets
    
    
    20
    
    
    
    0.00
    
    
    
    11
    
    
    
    0.00Total noninterest income
    
    
    3,323
    
    
    
    0.82
    
    
    
    3,445
    
    
    
    0.88Employee expense
    
    
    (5,757
    )
    
    
    (1.42
    )
    
    
    (5,575
    )
    
    
    (1.42
    )Employee severance
    
    
    (284
    )
    
    
    (0.07
    )
    
    
    
    
    
    
    0.00Occupancy and equipment
    
    
    (1,413
    )
    
    
    (0.35
    )
    
    
    (1,378
    )
    
    
    (0.35
    )Data processing expense
    
    
    (1,224
    )
    
    
    (0.30
    )
    
    
    (1,147
    )
    
    
    (0.29
    )Director compensation
    
    
    (476
    )
    
    
    (0.12
    )
    
    
    (485
    )
    
    
    (0.12
    )Professional fees
    
    
    (788
    )
    
    
    (0.19
    )
    
    
    (343
    )
    
    
    (0.09
    )Taxes, other than income
    
    
    (519
    )
    
    
    (0.13
    )
    
    
    (514
    )
    
    
    (0.13
    )Other noninterest expense
    
    
    (1,219
    )
    
    
    (0.30
    )
    
    
    (1,158
    )
    
    
    (0.29
    )Total noninterest expense
    
    
    (11,680
    )
    
    
    (2.87
    )
    
    
    (10,600
    )
    
    
    (2.69
    )Income tax expense
    
    
    (1,741
    )
    
    
    (0.43
    )
    
    
    (1,969
    )
    
    
    (0.50
    )Net income
    
    $
    4,566
    
    
    
    1.12
    %
    
    $
    5,829
    
    
    
    1.48
    %Average assets
    
    $
    406,706
    
    
    
    
    
    
    $
    393,554
 Net Interest Income




---



##### 



AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
 Years Ended December 31,2005
    
    
    
    2004
    
    
    
    2003Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    
    Average
    
    
    
    
    
    
    Yield/Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    Rate
    
    
    
    Balance (1)
    
    
    Interest
    
    
    RateASSETSInterest earning assets:Taxable loans (5)
    
    $
    285,546
    
    
    $
    19,608
    
    
    
    6.87
    %
    
    
    $
    263,540
    
    
    $
    18,496
    
    
    
    7.02
    %
    
    
    $
    239,667
    
    
    $
    18,313
    
    
    
    7.64
    %Tax-exempt loans
    
    
    4,781
    
    
    
    159
    
    
    
    3.33
    
    
    
    
    4,379
    
    
    
    146
    
    
    
    3.33
    
    
    
    
    3,321
    
    
    
    128
    
    
    
    3.85Total loans
    
    
    290,327
    
    
    
    19,767
    
    
    
    6.81
    
    
    
    
    267,919
    
    
    
    18,642
    
    
    
    6.96
    
    
    
    
    242,988
    
    
    
    18,441
    
    
    
    7.59Taxable investment securities
    
    
    56,966
    
    
    
    1,872
    
    
    
    3.29
    
    
    
    
    62,012
    
    
    
    2,052
    
    
    
    3.31
    
    
    
    
    69,111
    
    
    
    2,642
    
    
    
    3.82Tax-exempt investment securities
    
    
    19,800
    
    
    
    654
    
    
    
    3.30
    
    
    
    
    23,742
    
    
    
    807
    
    
    
    3.40
    
    
    
    
    31,427
    
    
    
    1,191
    
    
    
    3.79Total investment securities
    
    
    76,766
    
    
    
    2,526
    
    
    
    3.29
    
    
    
    
    85,754
    
    
    
    2,859
    
    
    
    3.33
    
    
    
    
    100,538
    
    
    
    3,833
    
    
    
    3.81Interest bearing deposits
    
    
    6,420
    
    
    
    257
    
    
    
    4.00
    
    
    
    
    5,569
    
    
    
    167
    
    
    
    3.00
    
    
    
    
    5,342
    
    
    
    154
    
    
    
    2.88Federal funds sold
    
    
    4,679
    
    
    
    157
    
    
    
    3.36
    
    
    
    
    3,933
    
    
    
    49
    
    
    
    1.25
    
    
    
    
    6,565
    
    
    
    72
    
    
    
    1.10Total interest earning assets
    
    
    378,192
    
    
    
    22,707
    
    
    
    6.00
    
    
    
    
    363,175
    
    
    
    21,717
    
    
    
    5.98
    
    
    
    
    355,433
    
    
    
    22,500
    
    
    
    6.33Non-interest earning assets:Cash and due from banks
    
    
    9,449
    
    
    
    
    
    
    
    
    
    
    
    
    10,201
    
    
    
    
    
    
    
    
    
    
    
    
    10,415Allowance for loan losses
    
    
    (2,976
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,916
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,780
    )Premises and equipment
    
    
    6,606
    
    
    
    
    
    
    
    
    
    
    
    
    6,736
    
    
    
    
    
    
    
    
    
    
    
    
    6,234Other assets (7)
    
    
    15,435
    
    
    
    
    
    
    
    
    
    
    
    
    16,358
    
    
    
    
    
    
    
    
    
    
    
    
    17,272Total assets
    
    $
    406,706
    
    
    
    
    
    
    
    
    
    
    
    $
    393,554
    
    
    
    
    
    
    
    
    
    
    
    $
    386,574LIABILITIES
AND SHAREHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits (2)
    
    $
    64,118
    
    
    
    952
    
    
    
    1.48
    
    
    
    $
    62,494
    
    
    
    526
    
    
    
    0.84
    
    
    
    $
    62,381
    
    
    
    723
    
    
    
    1.16Savings deposits
    
    
    44,638
    
    
    
    692
    
    
    
    1.55
    
    
    
    
    44,988
    
    
    
    427
    
    
    
    0.95
    
    
    
    
    40,043
    
    
    
    494
    
    
    
    1.23Time deposits
    
    
    185,615
    
    
    
    6,022
    
    
    
    3.24
    
    
    
    
    181,707
    
    
    
    5,393
    
    
    
    2.97
    
    
    
    
    186,248
    
    
    
    6,236
    
    
    
    3.35Other, including short-term
borrowings,
long-term debt and other
interest bearing liabilities
    
    
    11,765
    
    
    
    349
    
    
    
    2.97
    
    
    
    
    4,203
    
    
    
    92
    
    
    
    2.19
    
    
    
    
    1,090
    
    
    
    19
    
    
    
    1.74Total interest bearing liabilities
    
    
    306,136
    
    
    
    8,015
    
    
    
    2.62
    
    
    
    
    293,392
    
    
    
    6,438
    
    
    
    2.19
    
    
    
    
    289,762
    
    
    
    7,472
    
    
    
    2.58Non-interest bearing liabilities:Demand deposits
    
    
    47,208
    
    
    
    
    
    
    
    
    
    
    
    
    45,402
    
    
    
    
    
    
    
    
    
    
    
    
    42,010Other
    
    
    4,959
    
    
    
    
    
    
    
    
    
    
    
    
    5,984
    
    
    
    
    
    
    
    
    
    
    
    
    7,173Shareholders equity
    
    
    48,403
    
    
    
    
    
    
    
    
    
    
    
    
    48,776
    
    
    
    
    
    
    
    
    
    
    
    
    47,629Total liabilities
and shareholders equity
    
    $
    406,706
    
    
    
    
    
    
    
    
    
    
    
    $
    393,554
    
    
    
    
    
    
    
    
    
    
    
    $
    386,574Net interest income
    
    
    
    
    
    $
    14,692
    
    
    
    
    
    
    
    
    
    
    
    $
    15,279
    
    
    
    
    
    
    
    
    
    
    
    $
    15,028Net yield on interest earning assets (3)
    
    
    
    
    
    
    
    
    
    
    3.88
    %
    
    
    
    
    
    
    
    
    
    
    
    4.21
    %
    
    
    
    
    
    
    
    
    
    
    
    4.23
    %Net interest income and yield 
Tax equivalent basis (4)
    
    
    
    
    
    $
    15,111
    
    
    
    4.00
    %
    
    
    
    
    
    
    $
    15,770
    
    
    
    4.34
    %
    
    
    
    
    
    
    $
    15,707
    
    
    
    4.42
    %  
 (1)
    
    Average balances were calculated using a daily average.(2)
    
    Includes SuperNow and money market accounts.(3)
    
    Net yield 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%.




---



##### 



RATE  VOLUME ANALYSIS OF NET INTEREST INCOME
 2005 Compared to 2004
    
    
    
    2004 Compared to 2003Increase (Decrease) Due To (6)
    
    
    
    Increase (Decrease) Due To (6)Volume
    
    
    Rate
    
    
    Total
    
    
    
    Volume
    
    
    Rate
    
    
    TotalASSETSInterest earning assets:Taxable loans (5)
    
    $
    1,518
    
    
    $
    (406
    )
    
    $
    1,112
    
    
    
    $
    1,739
    
    
    $
    (1,556
    )
    
    $
    183Tax-exempt loans
    
    
    13
    
    
    
    (0
    )
    
    
    13
    
    
    
    
    37
    
    
    
    (19
    )
    
    
    18Total loans
    
    
    1,531
    
    
    
    (406
    )
    
    
    1,125
    
    
    
    
    1,776
    
    
    
    (1,575
    )
    
    
    201Taxable investment securities
    
    
    (166
    )
    
    
    (14
    )
    
    
    (180
    )
    
    
    
    (257
    )
    
    
    (333
    )
    
    
    (590
    )Tax-exempt investment securities
    
    
    (131
    )
    
    
    (22
    )
    
    
    (153
    )
    
    
    
    (270
    )
    
    
    (114
    )
    
    
    (384
    )Total investment securities
    
    
    (297
    )
    
    
    (36
    )
    
    
    (333
    )
    
    
    
    (527
    )
    
    
    (447
    )
    
    
    (974
    )Interest bearing deposits
    
    
    28
    
    
    
    62
    
    
    
    90
    
    
    
    
    7
    
    
    
    6
    
    
    
    13Federal funds sold
    
    
    11
    
    
    
    97
    
    
    
    108
    
    
    
    
    (32
    )
    
    
    9
    
    
    
    (23
    )Total interest earning assets
    
    
    1,274
    
    
    
    (284
    )
    
    
    990
    
    
    
    
    1,224
    
    
    
    (2,007
    )
    
    
    (783
    )LIABILITIES
AND SHAREHOLDERS EQUITYInterest bearing liabilities:Interest bearing demand deposits(2)
    
    
    14
    
    
    
    412
    
    
    
    426
    
    
    
    
    1
    
    
    
    (198
    )
    
    
    (197
    )Savings deposits
    
    
    (3
    )
    
    
    268
    
    
    
    265
    
    
    
    
    55
    
    
    
    (122
    )
    
    
    (67
    )Time deposits
    
    
    118
    
    
    
    511
    
    
    
    629
    
    
    
    
    (149
    )
    
    
    (694
    )
    
    
    (843
    )Other, including short-term
borrowings,
long-term debt and other
interest bearing liabilities
    
    
    215
    
    
    
    42
    
    
    
    257
    
    
    
    
    67
    
    
    
    6
    
    
    
    73Total interest bearing liabilities
    
    
    343
    
    
    
    1,234
    
    
    
    1,577
    
    
    
    
    (26
    )
    
    
    (1,008
    )
    
    
    (1,034
    )Net interest income
    
    $
    930
    
    
    $
    (1,517
    )
    
    $
    (587
    )
    
    
    $
    1,250
    
    
    $
    (999
    )
    
    $
    251
 
 (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: $(137) in 2005,
$1,396 in 2004 and $2,490 in 2003.




---



##### 



Provision for Loan Losses
  Noninterest Income




---



##### 



Noninterest Expense




---



##### 



Income Taxes
  Net Income
  2005
    
    
    2004
    
    
    2003Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Return on average assets
    
    
    1.12
    %
    
    
    1.48
    %
    
    
    1.46
    %Return on average equity
    
    
    9.43
    %
    
    
    11.95
    %
    
    
    11.86
    %
 Outlook for 2006
  2004
Financial Performance Overview




---



##### 



Net Interest Income
      Provision for Loan Losses
  Noninterest income




---



##### 



Noninterest expense
  Income taxes




---



##### 



Report on Managements Assessment of Internal Control over Financial Reporting
   control deficiency
 significant deficiency
 material weakness
 Internal Control  Integrated Framework
 Internal Control  Integrated Framework
  /s/ Francis J. EvanitskyFrancis J. Evanitsky, President and Chief Executive Officer/s/ JoAnn N. McMinnJoAnn N. McMinn, Chief Financial Officer




---



##### 



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




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 December 31,2005
    
    
    2004ASSETSCash and due from banks
    
    $
    16,373
    
    
    $
    10,733Interest bearing deposits with banks
    
    
    66
    
    
    
    167Federal funds sold
    
    
    
    
    
    
    3,900Cash and cash equivalents
    
    
    16,439
    
    
    
    14,800Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    6,760Securities available for sale
    
    
    66,699
    
    
    
    71,583Securities held to maturity, fair value of $3,436 and $4,489 respectively
    
    
    3,493
    
    
    
    4,485Federal Home Loan Bank (FHLB) stock
    
    
    1,356
    
    
    
    1,329Total loans, net of unearned interest
    
    
    298,063
    
    
    
    279,748Less: Allowance for loan losses
    
    
    (2,763
    )
    
    
    (2,989
    )Total loans, net of allowance for loan losses
    
    
    295,300
    
    
    
    276,759Premises and equipment, net
    
    
    6,211
    
    
    
    6,802Bank owned life insurance
    
    
    10,647
    
    
    
    10,464Accrued interest receivable and other assets
    
    
    4,997
    
    
    
    4,092Total assets
    
    $
    410,802
    
    
    $
    397,074LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    46,041
    
    
    $
    47,459Interest bearing
    
    
    297,426
    
    
    
    285,183Total deposits
    
    
    343,467
    
    
    
    332,642Securities sold under agreements to repurchase
    
    
    4,201
    
    
    
    4,716Short-term borrowings
    
    
    5,600
    
    
    
    Long-term debt
    
    
    5,000
    
    
    
    5,000Other interest bearing liabilities
    
    
    819
    
    
    
    722Accrued interest payable and other liabilities
    
    
    4,596
    
    
    
    3,841Total liabilities
    
    
    363,683
    
    
    
    346,921Stockholders Equity:Preferred stock, no par value:Authorized  500,000 shares, none issuedCommon stock, par value $1.00 per share:Authorized  20,000,000 shares;Issued 4,745,826 shares at December 31, 2005;2,372,913 shares at December 31, 2004Outstanding 4,503,392 shares at December 31, 2005;2,280,629 shares at December 31, 2004
    
    
    4,746
    
    
    
    2,373Surplus
    
    
    18,177
    
    
    
    20,386Retained earnings
    
    
    29,486
    
    
    
    29,966Accumulated other comprehensive (loss) income
    
    
    (694
    )
    
    
    414Cost of common stock in Treasury:242,434 shares at December 31, 2005;92,284 shares at December 31, 2004
    
    
    (4,596
    )
    
    
    (2,986
    )Total stockholders equity
    
    
    47,119
    
    
    
    50,153Total liabilities and stockholders equity
    
    $
    410,802
    
    
    $
    397,074




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Interest income:Loans, including fees
    
    $
    19,767
    
    
    $
    18,642
    
    
    $
    18,441Taxable securities
    
    
    1,872
    
    
    
    2,048
    
    
    
    2,642Tax-exempt securities
    
    
    654
    
    
    
    811
    
    
    
    1,191Other interest income
    
    
    414
    
    
    
    216
    
    
    
    226Total interest income
    
    
    22,707
    
    
    
    21,717
    
    
    
    22,500Interest expense:Deposits
    
    
    7,666
    
    
    
    6,346
    
    
    
    7,454Securities sold under agreements to repurchase
    
    
    167
    
    
    
    24
    
    
    
    Short-term borrowings
    
    
    14
    
    
    
    3
    
    
    
    6Long-term debt
    
    
    148
    
    
    
    54
    
    
    
    Other interest bearing liabilities
    
    
    20
    
    
    
    11
    
    
    
    12Total interest expense
    
    
    8,015
    
    
    
    6,438
    
    
    
    7,472Net interest income
    
    
    14,692
    
    
    
    15,279
    
    
    
    15,028Provision for loan losses
    
    
    28
    
    
    
    326
    
    
    
    304Net interest income after provision for loan losses
    
    
    14,664
    
    
    
    14,953
    
    
    
    14,724Noninterest income:Trust fees
    
    
    374
    
    
    
    452
    
    
    
    411Customer service fees
    
    
    1,390
    
    
    
    1,311
    
    
    
    788Earnings on bank-owned life insurance
    
    
    364
    
    
    
    467
    
    
    
    452Commissions from sales of annuities and mutual funds
    
    
    426
    
    
    
    355
    
    
    
    338Gain on sales of loans and other assets
    
    
    20
    
    
    
    11
    
    
    
    Gain on sales of securities
    
    
    175
    
    
    
    358
    
    
    
    Other noninterest income
    
    
    574
    
    
    
    491
    
    
    
    771Total noninterest income
    
    
    3,323
    
    
    
    3,445
    
    
    
    2,760Noninterest expense:Salaries and wages
    
    
    4,285
    
    
    
    4,194
    
    
    
    4,070Employee benefits
    
    
    1,472
    
    
    
    1,381
    
    
    
    1,379Employee severance expense
    
    
    284
    
    
    
    
    
    
    
    Occupancy
    
    
    821
    
    
    
    805
    
    
    
    753Equipment
    
    
    592
    
    
    
    573
    
    
    
    503Data processing expense
    
    
    1,224
    
    
    
    1,147
    
    
    
    908Director compensation
    
    
    476
    
    
    
    485
    
    
    
    412Professional fees
    
    
    788
    
    
    
    343
    
    
    
    189Taxes, other than income
    
    
    519
    
    
    
    514
    
    
    
    516Other noninterest expense
    
    
    1,219
    
    
    
    1,158
    
    
    
    1,287Total noninterest expense
    
    
    11,680
    
    
    
    10,600
    
    
    
    10,017Income before income taxes
    
    
    6,307
    
    
    
    7,798
    
    
    
    7,467Provision for income taxes
    
    
    1,741
    
    
    
    1,969
    
    
    
    1,820Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Earnings per shareBasic
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24Diluted
    
    $
    1.00
    
    
    $
    1.27
    
    
    $
    1.23Cash dividends declared per share
    
    $
    1.11
    
    
    $
    1.07
    
    
    $
    0.50Weighted average shares outstanding
    
    
    4,550,483
    
    
    
    4,559,168
    
    
    
    4,581,918Weighted average shares and share equivalents outstanding
    
    
    4,568,098
    
    
    
    4,571,510
    
    
    
    4,584,168




---



##### 



Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Stockholders Equity
 Years Ended December 31, 2005, 2004 and 2003AccumulatedNumber
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Otherof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    (Loss) Income
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Net of Tax
    
    
    Stock
    
    
    EquityBalance at December 31, 2002
    
    
    2,313,477
    
    
    $
    2,373
    
    
    $
    20,212
    
    
    $
    25,652
    
    
    $
    1,795
    
    
    $
    (1,705
    )
    
    $
    48,327Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,647
    
    
    
    
    
    
    
    
    
    
    
    5,647Change in unrealized losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (323
    )
    
    
    
    
    
    
    (323
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,324Cash dividends at $0.50 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,283
    )
    
    
    
    
    
    
    
    
    
    
    (2,283
    )Purchase of treasury stock, at cost
    
    
    (47,043
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,425
    )
    
    
    (1,425
    )Treasury stock issued for dividend
reinvestment plan
    
    
    16,042
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    458
    
    
    
    482Treasury stock issued for stock option
and stock purchase plans
    
    
    2,227
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    58Balance 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 losses on securities
available for sale, net of reclassifica-
tion 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 losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (804
    )
    
    
    
    
    
    
    (804
    )Minimum pension liability, net of
tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )
    
    
    
    
    
    
    (304
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,458Cash dividends at $1.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,046
    )
    
    
    
    
    
    
    
    
    
    
    (5,046
    )Purchase of treasury stock, at cost
    
    
    (62,907
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,242
    )
    
    
    (2,242
    )Treasury stock issued for dividend
reinvestment plan
    
    
    20,434
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    651Treasury stock issued for stock option
and stock purchase plans
    
    
    5,464
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    145Stock issued pursuant to 2 for 1 stock
split effective October 31, 2005
    
    
    2,259,772
    
    
    
    2,373
    
    
    
    (2,373
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2005
    
    
    4,503,392
    
    
    $
    4,746
    
    
    $
    18,177
    
    
    $
    29,486
    
    
    $
    (694
    )
    
    $
    (4,596
    )
    
    $
    47,119




---



##### 



Juniata Valley Financial Corp. and Subsidiary
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Operating activities:Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    28
    
    
    
    326
    
    
    
    304Provision for depreciation
    
    
    590
    
    
    
    560
    
    
    
    457Net amortization of security premiums
    
    
    209
    
    
    
    228
    
    
    
    280Net realized gains on sales of securities
    
    
    (175
    )
    
    
    (358
    )
    
    
    Earnings on investment in life insurance
    
    
    (364
    )
    
    
    (319
    )
    
    
    (452
    )Deferred compensation expense
    
    
    234
    
    
    
    515
    
    
    
    515Payment of deferred compensation
    
    
    (176
    )
    
    
    (354
    )
    
    
    (258
    )Deferred income tax (credit) expense
    
    
    (134
    )
    
    
    93
    
    
    
    95Decrease in accrued interest receivable and other assets
    
    
    372
    
    
    
    170
    
    
    
    94Increase (decrease) in accrued interest payable and
other liabilities
    
    
    18
    
    
    
    (227
    )
    
    
    (733
    )Net cash provided by operating activities
    
    
    5,168
    
    
    
    6,463
    
    
    
    5,949Investing activities:Net decrease (increase) in interest bearing time deposits
    
    
    1,100
    
    
    
    (2,670
    )
    
    
    1,300Purchases of:Securities available for sale
    
    
    (12,673
    )
    
    
    (15,451
    )
    
    
    (48,626
    )Held to maturity securities
    
    
    (4,400
    )
    
    
    (1,295
    )
    
    
    (3,002
    )FHLB stock
    
    
    (896
    )
    
    
    (863
    )
    
    
    (817
    )Bank premises and equipment
    
    
    (255
    )
    
    
    (607
    )
    
    
    (1,445
    )Bank-owned life insurance
    
    
    (63
    )
    
    
    
    
    
    
    (310
    )Proceeds from:Sales of available for sale securities
    
    
    414
    
    
    
    3,405
    
    
    
    Maturities of and principal repayments on:Securities available for sale
    
    
    15,882
    
    
    
    22,583
    
    
    
    34,827Held to maturity securities
    
    
    5,400
    
    
    
    11,819
    
    
    
    17,833Redemption of FHLB stock
    
    
    869
    
    
    
    641
    
    
    
    349Bank-owned life insurance
    
    
    244
    
    
    
    
    
    
    
    238Net increase in loans receivable
    
    
    (18,569
    )
    
    
    (27,125
    )
    
    
    (14,767
    )Net cash used in investing activities
    
    
    (12,947
    )
    
    
    (9,563
    )
    
    
    (14,420
    )Financing activities:Net increase (decrease) in deposits
    
    
    10,825
    
    
    
    (342
    )
    
    
    10,365Net increase in short-term borrowings and securities
sold under agreements to repurchase
    
    
    5,085
    
    
    
    4,716
    
    
    
    Long term debt advances
    
    
    
    
    
    
    5,000
    
    
    
    Cash dividends
    
    
    (5,046
    )
    
    
    (4,879
    )
    
    
    (2,283
    )Purchase of treasury stock
    
    
    (2,242
    )
    
    
    (960
    )
    
    
    (1,425
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plan
    
    
    796
    
    
    
    738
    
    
    
    540Net cash provided by financing activities
    
    
    9,418
    
    
    
    4,273
    
    
    
    7,197Net increase (decrease) in cash and cash equivalents
    
    
    1,639
    
    
    
    1,173
    
    
    
    (1,274
    )Cash and cash equivalents at beginning of period
    
    
    14,800
    
    
    
    13,627
    
    
    
    14,901Cash and cash equivalents at end of period
    
    $
    16,439
    
    
    $
    14,800
    
    
    $
    13,627Supplemental information:Interest paid
    
    $
    7,861
    
    
    $
    6,441
    
    
    $
    7,635Income taxes paid
    
    $
    1,851
    
    
    $
    1,956
    
    
    $
    1,858Supplemental schedule of noncash investing and financing activitiesTransfer of fixed asset to real estate held for investment
    
    $
    256
    
    
    $
    
    
    
    $
    




---



##### 



JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
 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




---



##### 



Other real estate owned
  Premises and equipment and depreciation
  Trust assets and revenues
  Bank-owned life insurance
  Income taxes




---



##### 



Advertising
  Off-balance sheet financial instruments
  Transfer of financial assets
  Stock-based compensation
   2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Total stock-based employee compensation expense
(net of tax) determined under fair value based
method for all awards
    
    
    (21
    )
    
    
    (23
    )
    
    
    (16
    )Pro forma net income
    
    $
    4,545
    
    
    $
    5,806
    
    
    $
    5,631Basic earnings per shareAs reported
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24Pro forma
    
    
    1.00
    
    
    
    1.27
    
    
    
    1.24Diluted earnings per shareAs reported
    
    $
    1.00
    
    
    $
    1.27
    
    
    $
    1.23Pro forma
    
    
    1.00
    
    
    
    1.26
    
    
    
    1.23




---



##### 



2005
    
    2004
    
    2003Expected life of options
    
    7 years
    
    7 years
    
    7 yearsRisk-free interest rate
    
    
    4.40
    %
    
    
    4.19
    %
    
    
    3.65
    %Expected volatility
    
    
    21.13
    %
    
    
    20.02
    %
    
    
    16.81
    %Expected dividend yield
    
    
    3.20
    %
    
    
    5.10
    %
    
    
    2.90
    %
  Segment reporting




---



##### 



2. Recent Accounting Pronouncements
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  Share-Based Payment
 Exchanges of Nonmonetary Assets  An Amendment of APB
Opinion No. 29 Accounting for Nonmonetary Transactions
 Accounting Changes and Errors Corrections, a replacement
of APB Opinion No. 20 and FAS No. 3




---



##### 



3. Restrictions on Cash and Due From Banks




---



##### 



4. Securities
  December 31, 2005Securities Available for Sale
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    20,049
    
    
    $
    19,827
    
    
    $
    1
    
    
    $
    (223
    )After one year but within five years
    
    
    27,735
    
    
    
    27,207
    
    
    
    6
    
    
    
    (534
    )After five years but within ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    )
 Securities Held to Maturity
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    992
    
    
    $
    992
    
    
    $
    
    
    
    $
    After one year but within five years
    
    
    2,501
    
    
    
    2,444
    
    
    
    
    
    
    
    (57
    )After five years but within ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,493
    
    
    $
    3,436
    
    
    $
    
    
    
    $
    (57
    )




---



##### 



December 31, 2004Securities Available for Sale
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsWithin one year
    
    $
    11,540
    
    
    $
    11,565
    
    
    $
    45
    
    
    $
    (20
    )After one year but within five years
    
    
    36,880
    
    
    
    36,682
    
    
    
    135
    
    
    
    (333
    )After five years but within ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,420
    
    
    
    48,247
    
    
    
    180
    
    
    
    (353
    )Obligations of state and political subdivisionsWithin one year
    
    
    1,878
    
    
    
    1,895
    
    
    
    17
    
    
    
    After one year but within five years
    
    
    14,988
    
    
    
    15,339
    
    
    
    351
    
    
    
    After five years but within ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,866
    
    
    
    17,234
    
    
    
    368
    
    
    
    Mortgage-backed securities
    
    
    4,984
    
    
    
    4,947
    
    
    
    21
    
    
    
    (58
    )Equity securities
    
    
    685
    
    
    
    1,155
    
    
    
    478
    
    
    
    (8
    )Total
    
    $
    70,955
    
    
    $
    71,583
    
    
    $
    1,047
    
    
    $
    (419
    )
 Securities Held to Maturity
    
    
    
    
    
    
    
    
    
    Gross
    
    
    GrossAmortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationswithin one year
    
    $
    1,000
    
    
    $
    1,000
    
    
    $
    
    
    
    $
    After one year but within five years
    
    
    3,485
    
    
    
    3,489
    
    
    
    39
    
    
    
    (35
    )After five years but within ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    4,485
    
    
    $
    4,489
    
    
    $
    39
    
    
    
    (35
    )
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Gross proceeds from sales of securities
    
    $
    414
    
    
    $
    3,405
    
    
    $
    Securities available for sale:Gross realized gains
    
    $
    175
    
    
    $
    358
    
    
    $
    Gross realized losses
    
    $
    
    
    
    $
    
    
    
    $
    




---



##### 



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
    )
    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
    
    $
    33,737
    
    
    $
    (364
    )
    
    $
    1,352
    
    
    $
    (24
    )
    
    $
    35,089
    
    
    $
    (388
    )Obligations of state and political
subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    1,106
    
    
    
    (14
    )
    
    
    2,069
    
    
    
    (44
    )
    
    
    3,175
    
    
    
    (58
    )Debt securities
    
    
    34,843
    
    
    
    (378
    )
    
    
    3,421
    
    
    
    (68
    )
    
    
    38,264
    
    
    
    (446
    )Equity securities
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    (8
    )
    
    
    76
    
    
    
    (8
    )Total temporarily impaired securities
    
    $
    34,843
    
    
    $
    (378
    )
    
    $
    3,497
    
    
    $
    (76
    )
    
    $
    38,340
    
    
    $
    (454
    )




---



##### 



5. LOANS
  December 31,2005
    
    
    2004Commercial, financial and agricultural
    
    $
    21,661
    
    
    $
    23,301Real estate  commercial
    
    
    27,588
    
    
    
    25,068Real estate  construction
    
    
    28,323
    
    
    
    24,968Real estate  mortgage
    
    
    135,992
    
    
    
    132,243Home equity
    
    
    10,083
    
    
    
    8,766Obligations of states and political subdivisions
    
    
    4,827
    
    
    
    4,294Personal
    
    
    70,703
    
    
    
    63,218Unearned interest
    
    
    (1,114
    )
    
    
    (2,110
    )Total
    
    $
    298,063
    
    
    $
    279,748
  December 31,2005
    
    
    2004(In thousands)Nonaccrual loans
    
    $
    1,515
    
    
    $
    Accruing loans past due 90 days or more
    
    
    724
    
    
    
    365Restructured loans
    
    
    
    
    
    
    Total non-performing loans
    
    $
    2,239
    
    
    $
    365




---



##### 



6. Allowance For Loan Losses
   Years ended December 31,2005
    
    
    2004
    
    
    2003Balance of allowance  beginning of period
    
    $
    2,989
    
    
    $
    2,820
    
    
    $
    2,731Loans charged off:Commercial, financial and agricultural
    
    
    171
    
    
    
    43
    
    
    
    78Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    30
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    3
    
    
    
    10
    
    
    
    50Personal
    
    
    75
    
    
    
    122
    
    
    
    107Total charge-offs
    
    
    279
    
    
    
    175
    
    
    
    235Recoveries of loans previously charged off:Commercial, financial and agricultural
    
    
    6
    
    
    
    1
    
    
    
    2Real estate  commercial
    
    
    
    
    
    
    
    
    
    
    Real estate  construction
    
    
    5
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    2
    
    
    
    1Personal
    
    
    14
    
    
    
    15
    
    
    
    17Total recoveries
    
    
    25
    
    
    
    18
    
    
    
    20Net charge-offs
    
    
    254
    
    
    
    157
    
    
    
    215Provision for loan losses
    
    
    28
    
    
    
    326
    
    
    
    304Balance of allowance  end of period
    
    $
    2,763
    
    
    $
    2,989
    
    
    $
    2,820Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.09
    %
    
    
    0.06
    %
    
    
    0.09
    %
  December 31,2005
    
    
    2004Impaired loans:Recorded investment at period end
    
    $
    1,419
    
    
    $
    2,205Impaired loan balance for which:There is a related allowance
    
    
    1,419
    
    
    
    There is no related allowance
    
    
    
    
    
    
    2,205Related allowance on impaired loans
    
    
    250
    
    
    
    
 Years ended December 31,2005
    
    
    2004
    
    
    2003Average recorded investment in impaired loans
    
    $
    2,041
    
    
    $
    2,026
    
    
    $
    3,306Interest income recognized (on a cash basis)
    
    
    58
    
    
    
    121
    
    
    
    174




---



##### 



7. Bank-Owned Life Insurance and Annuities




---



##### 



8. Premises And Equipment
  December 31,2005
    
    
    2004Land
    
    $
    640
    
    
    $
    686Buildings and improvements
    
    
    6,679
    
    
    
    7,157Furniture, computer software
and equipment
    
    
    4,215
    
    
    
    4,02511,534
    
    
    
    11,868Less: accumulated depreciation
    
    
    (5,323
    )
    
    
    (5,066
    )$
    6,211
    
    
    $
    6,802




---



##### 



9. Deposits
  December 31,2005
    
    
    2004Demand, non-interest bearing
    
    $
    46,041
    
    
    $
    47,459NOW and Money Market
    
    
    68,522
    
    
    
    58,042Savings
    
    
    43,703
    
    
    
    43,639Time deposits, $100,000 or more
    
    
    39,631
    
    
    
    38,247Other time deposits
    
    
    145,570
    
    
    
    145,255$
    343,467
    
    
    $
    332,642
  Time DepositsMaturing in:
    
    $100,000 or more
    
    
    Other2006
    
    $
    20,051
    
    
    $
    61,5152007
    
    
    7,183
    
    
    
    35,6962008
    
    
    3,837
    
    
    
    21,2682009
    
    
    3,249
    
    
    
    11,2432010
    
    
    5,311
    
    
    
    15,848$
    39,631
    
    
    $
    145,570




---



##### 



10. Borrowings
  December 31, 2005
    
    
    December 31, 2004
    
    
    For the year 2005AverageOutstanding
    
    
    
    
    
    
    Outstanding
    
    
    
    
    
    
    Average
    
    
    WeightedBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateSecurities sold
under agreement to
repurchase
    
    
    4,201
    
    
    
    3.60
    %
    
    
    4,716
    
    
    
    1.94
    %
    
    
    5,616
    
    
    
    2.97
    %Short-term
borrowings 
Federal Home Loan
Bank overnight
advances
    
    
    5,600
    
    
    
    4.25
    %
    
    
    
    
    
    
    
    
    
    
    666
    
    
    
    2.55
    %Long-term debt 
Note payable to
Federal Home Loan
Bank
    
    
    5,000
    
    
    
    2.86
    %
    
    
    5,000
    
    
    
    2.86
    %
    
    
    5,000
    
    
    
    2.86
    %14,801
    
    
    
    3.60
    %
    
    
    9,716
    
    
    
    2.41
    %
    
    
    11,282
    
    
    
    2.90
    %




---



##### 



11. Operating Lease Obligations
   Years ending December 31,2006
    
    $
    952007
    
    
    522008
    
    
    192009
    
    
    192010
    
    
    19Total minimum payments required
    
    $
    204




---



##### 



12. Income Taxes
 2005
    
    
    2004
    
    
    2003Current tax expense
    
    $
    1,875
    
    
    $
    1,876
    
    
    $
    1,725Deferred tax (credit) expense
    
    
    (134
    )
    
    
    93
    
    
    
    95Total tax expense
    
    $
    1,741
    
    
    $
    1,969
    
    
    $
    1,820
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Income before income taxes
    
    $
    6,307
    
    
    $
    7,798
    
    
    $
    7,467Effective tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %Federal tax at statutory rate
    
    
    2,144
    
    
    
    2,651
    
    
    
    2,539Tax-exempt interest
    
    
    (242
    )
    
    
    (293
    )
    
    
    (401
    )Net earnings on BOLI
    
    
    (124
    )
    
    
    (168
    )
    
    
    (144
    )Life insurance proceeds
    
    
    (21
    )
    
    
    
    
    
    
    (117
    )Other permanent differences
    
    
    (16
    )
    
    
    (221
    )
    
    
    (57
    )Total tax expense
    
    $
    1,741
    
    
    $
    1,969
    
    
    $
    1,820Effective tax rate
    
    
    27.6
    %
    
    
    25.3
    %
    
    
    24.4
    %
  December 31,2005
    
    
    2004Deferred Tax AssetsAllowance for loan losses
    
    $
    813
    
    
    $
    888Deferred directors compensation
    
    
    713
    
    
    
    693Employee and director benefits
    
    
    663
    
    
    
    642Qualified pension liability
    
    
    80
    
    
    
    Accrued employee severance
    
    
    64
    
    
    
    Unrealized losses on securities available for sale
    
    
    201
    
    
    
    Other
    
    
    30
    
    
    
    2Total deferred tax assets
    
    
    2,564
    
    
    
    2,225Deferred Tax LiabilitiesDepreciation
    
    
    (252
    )
    
    
    (299
    )Qualified pension asset
    
    
    
    
    
    
    (108
    )Unrealized gains on securities available for sale
    
    
    
    
    
    
    (213
    )Prepaid expense
    
    
    (61
    )
    
    
    (61
    )Total deferred tax liabilities
    
    
    (313
    )
    
    
    (681
    )Net deferred tax asset
included in other assets
    
    $
    2,251
    
    
    $
    1,544




---



##### 



13. STOCKHOLDERS EQUITY AND REGULATORY MATTERS




---



##### 



Juniata Valley Financial Corp. (Consolidated)
    
    
    
    
    
    Minimum RequirementFor CapitalActual
    
    Adequacy PurposesAmount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2005:Total Capital (to Risk Weighted Assets)
    
    $
    50,658
    
    
    
    18.59
    %
    
    $
    21,800
    
    
    
    8.00
    %Tier 1 Capital (to Risk Weighted Assets)
    
    
    47,816
    
    
    
    17.55
    %
    
    
    10,898
    
    
    
    4.00
    %Tier 1 Capital (to Average Assets)
    
    
    47,816
    
    
    
    11.62
    %
    
    
    16,460
    
    
    
    4.00
    %As of December 31, 2004:Total Capital (to Risk Weighted Assets)
    
    $
    52,728
    
    
    
    20.15
    %
    
    $
    20,934
    
    
    
    8.00
    %Tier 1 Capital (to Risk Weighted Assets)
    
    
    49,739
    
    
    
    19.01
    %
    
    
    10,466
    
    
    
    4.00
    %Tier 1 Capital (to Average Assets)
    
    
    49,739
    
    
    
    12.47
    %
    
    
    15,955
    
    
    
    4.00
    %
 Minimum RegulatoryRequirements to beThe Juniata Valley Bank
    
    
    
    
    
    
    
    
    
    Minimum Requirement
    
    Well CapitalizedFor Capital
    
    under PromptActual
    
    Adequacy Purposes
    
    Corrective Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2005:Total Capital (to Risk Weighted Assets)
    
    $
    45,747
    
    
    
    16.84
    %
    
    $
    21,733
    
    
    
    8.00
    %
    
    $
    27,166
    
    
    
    10.00
    %Tier 1 Capital (to Risk Weighted Assets)
    
    
    42,905
    
    
    
    15.79
    %
    
    
    10,869
    
    
    
    4.00
    %
    
    
    16,303
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets)
    
    
    42,905
    
    
    
    10.54
    %
    
    
    16,283
    
    
    
    4.00
    %
    
    
    20,353
    
    
    
    5.00
    %As of December 31, 2004:Total Capital (to Risk Weighted Assets)
    
    $
    48,728
    
    
    
    18.69
    %
    
    $
    20,857
    
    
    
    8.00
    %
    
    $
    26,072
    
    
    
    10.00
    %Tier 1 Capital (to Risk Weighted Assets)
    
    
    45,739
    
    
    
    17.54
    %
    
    
    10,431
    
    
    
    4.00
    %
    
    
    15,646
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets)
    
    
    45,739
    
    
    
    11.58
    %
    
    
    15,799
    
    
    
    4.00
    %
    
    
    19,749
    
    
    
    5.00
    %




---



##### 



14. Calculation Of Earnings Per Share
  Years Ended December 31,2005
    
    
    2004
    
    
    2003(Amounts, except earnings per share, in thousands)Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Weighted-average common shares outstanding
    
    
    4,550
    
    
    
    4,559
    
    
    
    4,582Basic earnings per share
    
    $
    1.00
    
    
    $
    1.28
    
    
    $
    1.24Weighted-average common shares outstanding
    
    
    4,550
    
    
    
    4,559
    
    
    
    4,582Common stock equivalents due to effect of
stock options
    
    
    18
    
    
    
    12
    
    
    
    2Total weighted-average common shares and
equivalents
    
    
    4,568
    
    
    
    4,571
    
    
    
    4,584Diluted earnings per share
    
    $
    1.00
    
    
    $
    1.27
    
    
    $
    1.23




---



##### 



15. Comprehensive Income
  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 gains 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 gains 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
 Year ended December 31, 2003Before
    
    
    Tax (Expense)Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountNet income
    
    $
    7,467
    
    
    $
    (1,820
    )
    
    $
    5,647Other comprehensive income (loss):Unrealized gains on available for sale securities :Unrealized holding losses arising during the period
    
    
    (489
    )
    
    
    166
    
    
    
    (323
    )Less reclassification adjustment for
gains included in net income
    
    
    
    
    
    
    
    
    
    
    Other comprehensive loss
    
    
    (489
    )
    
    
    166
    
    
    
    (323
    )Total comprehensive income
    
    $
    6,978
    
    
    $
    (1,654
    )
    
    $
    5,324




---



##### 



16. Employee Benefit Plans
 Stock Compensation Plan
   2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning
of year
    
    
    55,362
    
    
    $
    15.49
    
    
    
    47,600
    
    
    $
    14.49
    
    
    
    33,128
    
    
    $
    14.18Granted
    
    
    10,953
    
    
    
    24.00
    
    
    
    9,550
    
    
    
    20.25
    
    
    
    15,682
    
    
    
    15.13Exercised
    
    
    (4,528
    )
    
    
    14.24
    
    
    
    (200
    )
    
    
    15.13
    
    
    
    Forfeited
    
    
    (3,804
    )
    
    
    14.60
    
    
    
    (1,588
    )
    
    
    14.20
    
    
    
    (1,210
    )
    
    
    14.18Outstanding at end of year
    
    
    57,983
    
    
    $
    17.25
    
    
    
    55,362
    
    
    $
    15.49
    
    
    
    47,600
    
    
    $
    14.49Options exercisable at
year-end
    
    
    30,726
    
    
    $
    14.94
    
    
    
    24,266
    
    
    $
    14.31
    
    
    
    12,817
    
    
    $
    14.15Weighted-average fair
value of
of options granted
during the year
    
    $
    4.74
    
    
    
    
    
    
    $
    2.62
    
    
    
    
    
    
    $
    3.13




---



##### 



Defined Benefit Retirement Plan
  Years ended December 31,2005
    
    
    2004Change in projected benefit obligation (PBO)PBO at beginning of year
    
    $
    6,130
    
    
    $
    4,672Service cost
    
    
    287
    
    
    
    253Interest cost
    
    
    346
    
    
    
    321Actuarial (gain) loss
    
    
    (8
    )
    
    
    1,114Benefits paid
    
    
    (252
    )
    
    
    (230
    )PBO at end of year
    
    
    6,503
    
    
    
    6,130Change in plan assetsFair value of plan assets at beginning of year
    
    
    4,757
    
    
    
    4,225Actual return on plan assets, net of expenses
    
    
    271
    
    
    
    352Employer contribution
    
    
    300
    
    
    
    410Benefits paid
    
    
    (252
    )
    
    
    (230
    )Fair value of plan assets at end of year
    
    
    5,076
    
    
    
    4,757Reconciliation of funded status to net amount recognizedFunded status
    
    
    (1,427
    )
    
    
    (1,373
    )Unrecognized net actuarial loss
    
    
    1,667
    
    
    
    1,704Unrecognized transition asset
    
    
    (14
    )
    
    
    (15
    )Minimum pension liability adjustment
    
    
    (461
    )
    
    
    (Accrued) prepaid benefit cost
    
    $
    (235
    )
    
    $
    316Accumulated benefit obligation
    
    $
    5,311
    
    
    $
    4,441
   2005
    
    
    2004
    
    
    2003Service cost during the year
    
    $
    287
    
    
    $
    253
    
    
    $
    222Interest cost on projected benefit obligation
    
    
    346
    
    
    
    321
    
    
    
    298Expected return on plan assets
    
    
    (335
    )
    
    
    (307
    )
    
    
    (255
    )Net amortization
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Recognized net actuarial loss
    
    
    94
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    390
    
    
    $
    265
    
    
    $
    263




---



##### 



Discount rate
    
    
    5.75
    %
    
    
    7.00
    %
    
    
    7.00
    %Rate of compensation increase
    
    
    3.75
    
    
    
    4.00
    
    
    
    4.00
  Discount rate
    
    
    5.75
    %
    
    
    7.00
    %
    
    
    7.00
    %Expected long-term return on plan assets
    
    
    7.00
    
    
    
    7.00
    
    
    
    7.00Rate of compensation increase
    
    
    3.75
    
    
    
    4.00
    
    
    
    4.00
   2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011-2015$239
    
    $
    268
    
    
    $
    302
    
    
    $
    301
    
    
    $
    329
    
    
    $
    1,824
 Employee Stock Purchase Plan
  Supplemental retirement plans
  Deferred compensation plans
  Salary continuation plan




---



##### 



17. Fair Value of Financial Instruments




---



##### 



Financial Instruments
 December 31, 2005
    
    December 31, 2004Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and due from banks
    
    $
    16,373
    
    
    $
    16,373
    
    
    $
    10,733
    
    
    $
    10,733Interest bearing deposits with banks
    
    
    66
    
    
    
    66
    
    
    
    167
    
    
    
    167Federal funds sold
    
    
    
    
    
    
    
    
    
    
    3,900
    
    
    
    3,900Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,649
    
    
    
    6,760
    
    
    
    6,760Securities
    
    
    70,192
    
    
    
    70,135
    
    
    
    76,068
    
    
    
    76,072Restricted investment in FHLB stock
    
    
    1,356
    
    
    
    1,356
    
    
    
    1,329
    
    
    
    1,329Total loans, net of unearned interest
    
    
    298,063
    
    
    
    299,145
    
    
    
    279,748
    
    
    
    279,054Allowance for loan losses
    
    
    (2,763
    )
    
    
    (2,763
    )
    
    
    (2,989
    )
    
    
    (2,989
    )Accrued interest receivable
    
    
    1,959
    
    
    
    1,959
    
    
    
    1,682
    
    
    
    1,682Financial liabilities:Non-interest bearing deposits
    
    
    46,041
    
    
    
    46,041
    
    
    
    47,459
    
    
    
    47,459Interest bearing deposits
    
    
    297,426
    
    
    
    294,278
    
    
    
    285,183
    
    
    
    286,529Securities sold under agreements to repurchase
    
    
    4,201
    
    
    
    4,201
    
    
    
    4,716
    
    
    
    4,716Short-term borrowings
    
    
    5,600
    
    
    
    5,600
    
    
    
    
    
    
    
    Long-term debt
    
    
    5,000
    
    
    
    4,926
    
    
    
    5,000
    
    
    
    5,000Other interest bearing liabilities
    
    
    819
    
    
    
    819
    
    
    
    722
    
    
    
    722Accrued interest payable
    
    
    747
    
    
    
    747
    
    
    
    593
    
    
    
    593Off-balance sheet financial instruments:Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    




---



##### 



18. Financial Instruments With Off-Balance Sheet Risk
    December 31,2005
    
    2004Commitments to grant loans
    
    $
    21,413
    
    
    $
    3,424Unfunded commitments under lines of credit
    
    
    29,043
    
    
    
    33,612Outstanding letters of credit
    
    
    755
    
    
    
    1,560




---



##### 



19. Related-Party Transactions
  20. Commitments And Contingent Liabilities
   21 . Subsequent Events




---



##### 



22. Juniata Valley Financial Corp. (Parent Company Only)
  CONDENSED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETS:Cash
    
    $
    202
    
    
    $
    7Interest bearing deposits with banks
    
    
    490
    
    
    
    490Cash and cash equivalents
    
    
    692
    
    
    
    497Investment in bank subsidiary
    
    
    42,215
    
    
    
    46,085Investment securities available for sale
    
    
    3,876
    
    
    
    3,531Other assets
    
    
    342
    
    
    
    75TOTAL ASSETS
    
    $
    47,125
    
    
    $
    50,188LIABILITIES:Accounts payable and other liabilities
    
    $
    6
    
    
    $
    35SHAREHOLDERS EQUITY
    
    
    47,119
    
    
    
    50,153TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    47,125
    
    
    $
    50,188
 CONDENSED STATEMENTS OF INCOME
 Years ended December 31,2005
    
    
    2004
    
    
    2003INCOME:Interest on deposits with banks
    
    $
    18
    
    
    $
    14
    
    
    $
    17Interest and dividends on investment securities available for sale
    
    
    134
    
    
    
    110
    
    
    
    129Dividends from bank subsidiary
    
    
    7,380
    
    
    
    5,840
    
    
    
    3,708Gain on the sale of investment securities
    
    
    45
    
    
    
    
    
    
    
    TOTAL INCOME
    
    
    7,577
    
    
    
    5,964
    
    
    
    3,854EXPENSE:Non-interest expense
    
    
    169
    
    
    
    96
    
    
    
    90TOTAL EXPENSE
    
    
    169
    
    
    
    96
    
    
    
    90INCOME BEFORE INCOME TAXES AND EQUITY
IN UNDISTRIBUTED NET INCOME OF SUBSIDIARY
    
    
    7,408
    
    
    
    5,868
    
    
    
    3,764Income tax
    
    
    8
    
    
    
    
    
    
    
    7,400
    
    
    
    5,868
    
    
    
    3,764Equity in undistributed (excess of distributed) net income of subsidiary
    
    
    (2,834
    )
    
    
    (39
    )
    
    
    1,883NET INCOME
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647




---



##### 



CONDENSED
STATEMENTS OF CASH FLOWS
 Years ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    4,566
    
    
    $
    5,829
    
    
    $
    5,647Adjustments to reconcile net income to net cash
provided by operating activities:Distribution in excess of (undistributed) net income of subsidiary
    
    
    2,834
    
    
    
    39
    
    
    
    (1,883
    )Realized gains on sales of investment securities
    
    
    (45
    )
    
    
    
    
    
    
    Increase in interest and other receivable
    
    
    (267
    )
    
    
    (22
    )
    
    
    (27
    )Increase in taxes payable
    
    
    44
    
    
    
    
    
    
    
    Decrease in accounts payable and accrued expenses
    
    
    (35
    )
    
    
    (6
    )
    
    
    Net cash provided by operating activities
    
    
    7,097
    
    
    
    5,840
    
    
    
    3,737Cash flows from investing activities:Purchases of available for sale securities
    
    
    (489
    )
    
    
    (1,635
    )
    
    
    (2,330
    )Proceeds from the sale of available for sale securities
    
    
    79
    
    
    
    
    
    
    
    Proceeds from the maturity of available for sale investment securities
    
    
    
    
    
    
    900
    
    
    
    1,760Net cash used in investing activities
    
    
    (410
    )
    
    
    (735
    )
    
    
    (570
    )Cash flows from financing activities:Cash dividends
    
    
    (5,046
    )
    
    
    (4,879
    )
    
    
    (2,283
    )Acquisition of treasury stock
    
    
    (2,242
    )
    
    
    (960
    )
    
    
    (1,425
    )Re-issuance of treasury stock
    
    
    796
    
    
    
    738
    
    
    
    540Net cash used in financing activities
    
    
    (6,492
    )
    
    
    (5,101
    )
    
    
    (3,168
    )Net increase (decrease) in cash and cash equivalents
    
    
    195
    
    
    
    4
    
    
    
    (1
    )Cash and cash equivalents at beginning of period
    
    
    497
    
    
    
    493
    
    
    
    494Cash and cash equivalents at end of period
    
    $
    692
    
    
    $
    497
    
    
    $
    493Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    




---



##### 



23. Quarterly Results Of Operations (Unaudited)
  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
 2004 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Total interest income
    
    $
    5,314
    
    
    $
    5,441
    
    
    $
    5,473
    
    
    $
    5,489Total interest expense
    
    
    1,641
    
    
    
    1,550
    
    
    
    1,593
    
    
    
    1,654Net interest income
    
    
    3,673
    
    
    
    3,891
    
    
    
    3,880
    
    
    
    3,835Provision for loan losses
    
    
    80
    
    
    
    77
    
    
    
    82
    
    
    
    87Gains from the sale of assets
    
    
    137
    
    
    
    138
    
    
    
    3
    
    
    
    91Other income
    
    
    686
    
    
    
    784
    
    
    
    747
    
    
    
    859Other expense
    
    
    2,611
    
    
    
    2,642
    
    
    
    2,660
    
    
    
    2,687Income before income taxes
    
    
    1,805
    
    
    
    2,094
    
    
    
    1,888
    
    
    
    2,011Income tax expense
    
    
    450
    
    
    
    519
    
    
    
    572
    
    
    
    428Net income
    
    $
    1,355
    
    
    $
    1,575
    
    
    $
    1,316
    
    
    $
    1,583Per-share data:Basic earnings
    
    $
    .29
    
    
    $
    .35
    
    
    $
    .29
    
    
    $
    .35Diluted earnings
    
    
    .29
    
    
    
    .35
    
    
    
    .28
    
    
    
    .35Cash dividends
    
    
    .50
    
    
    
    .28
    
    
    
    
    
    
    
    .29




---



##### 



Common Stock Market Prices and Dividends
   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
 2004DividendsQuarter Ended
    
    High
    
    Low
    
    DeclaredMarch 31
    
    $
    19.00
    
    
    $
    17.25
    
    
    $
    0.50June 30
    
    
    20.50
    
    
    
    18.00
    
    
    
    0.28September 30
    
    
    21.00
    
    
    
    19.63
    
    
    
    December 31
    
    
    21.00
    
    
    
    20.00
    
    
    
    0.29
   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