UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

   For the Fiscal Year Ended December 31, 2002 Commission File Number 0-13232

                         JUNIATA VALLEY FINANCIAL CORP.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

               Pennsylvania                            23-2235254
               ------------                            ----------
      (State or other jurisdiction of              (I.R.S. Employer
       incorporation or organization)           Identification Number)

          Bridge & Main Streets, PO Box 66, Mifflintown, PA 17059-0066
          ------------------------------------------------------------
              (Address of principal executive offices)      (Zip Code)

       Registrant's telephone number, including area code: (717) 436-8211
                                                           --------------

        SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
                     Common Stock, Par Value $1.00 Per Share
                     ---------------------------------------

                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No
                                      ---    ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes      No  X
   ----    ---

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of June 30, 2002.
                   Common Stock, $1.00 Par Value - $58,334,250
                   -------------------------------------------

Indicate the number of shares outstanding of each issuer's classes of common
stock, as of January 31, 2003.
                 Common Stock, $1.00 Par Value, 2,311,485 shares
                 -----------------------------------------------

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Annual Report to Shareholders for the year ended December 31,
2002, are incorporated by reference into Parts I, II and III.

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held April 15, 2003, are incorporated by reference into Part III.


<PAGE>

PART I

ITEM 1.   BUSINESS

          Incorporated by reference are the data appearing on Pages 7 through 15
          of the 2002 Annual Report.

ITEM 2.   PROPERTIES

          The physical properties of the Juniata Valley FinancialCorp. are all
          owned or leased by The Juniata Valley Bank.

          The Bank owns the buildings located at: Bridge and Main Streets,
          Mifflintown, Pennsylvania (its corporate headquarters); Butcher Shop
          Road, Mifflintown, Pennsylvania (financial center); 301 Market Street,
          Port Royal, Pennsylvania; corner of Main and School Streets,
          McAlisterville, Pennsylvania; Four North Market Street, Millerstown,
          Pennsylvania; Main Street, Blairs Mills, Pennsylvania; Monument
          Square, Lewistown, Pennsylvania; Route 322 Reedsville, Pennsylvania;
          100 East Market Street, Lewistown, Pennsylvania; 100 West Water
          Street, Lewistown, Pennsylvania; 302 South Logan Boulevard, Burnham,
          Pennsylvania. In addition thereto, the Bank leases three offices. One
          is in the Shopping Plaza located on Legislative Route 31, Mifflintown,
          Pennsylvania, which lease with extension expires in 2007. One is
          located in the Wal-Mart Supercenter, Lewistown, Pennsylvania, which
          expires in October 2006, and one is a loan production office located
          at 1525 Science Street, State College, Pennsylvania, which renews
          month to month. All of the buildings used by the Bank are freestanding
          and are used exclusively for banking purposes.

ITEM 3.   LEGAL PROCEEDINGS

          The nature of the Corporation's and Bank's business, at times,
          generates litigation involving matters arising in the ordinary course
          of business. However, in the opinion of management of the Corporation,
          there are no proceedings pending to which the Bank is a party or to
          which its property is subject, which, if determined adversely to the
          Bank, would be material in relation to the Bank's financial condition.
          In addition, no material proceedings are pending or are known to be
          threatened or contemplated against the Bank by government authorities
          or others.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None


<PAGE>


PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
          MATTERS

          Incorporated by reference are the data appearing on page 2 of the 2002
          Annual Report.

<TABLE>
<CAPTION>
                             Equity Compensation Plan Information
-----------------------------------------------------------------------------------------------
<S>                     <C>                      <C>                      <C>
Plan Category           Number of securities     Weighted average         Number of securities
                        to be issued upon        exercise price of        remaining available
                        exercise of              outstanding options,     for future issuance
                        outstanding options,     warrants and rights      under equity
                        warrants and rights                               compensation plans
                                                                          (excluding securities
                                                                          reflected in column
                                                                          (a))
                        (a)                      (b)                      (c)
-----------------------------------------------------------------------------------------------
Equity compensation                   16,584                    28.36                   296,020
plans approved by
security holders
-----------------------------------------------------------------------------------------------
Equity compensation                      -0-                      N/A                       -0-
plans not approved
by security holders
-----------------------------------------------------------------------------------------------
Total                                 16,584                    28.36                   296,020
-----------------------------------------------------------------------------------------------
</TABLE>

ITEM 6.   SELECTED FINANCIAL DATA

          Incorporated by reference are the data appearing on Page 16 of the
          2002 Annual Report.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

          Incorporated by reference are the data appearing on Pages 17 through
          32 of the 2002 Annual Report.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          Incorporated by reference are the data under the caption "Market Rate
          Risk" appearing on Pages 27 through 30 of the 2002 Annual Report.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          Incorporated by reference are the financial statements and notes on
          Pages 33 through 55 of the 2002 Annual Report and the Quarterly
          Results of Operations on Page 15 of the 2002 Annual Report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          Incorporated by reference is information appearing under the captions
          "Election of Directors of JVF" in the Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION

          Incorporated by reference in the proxy statement under the caption
          "Compensation of Executive Officers".

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Incorporated by reference is the following information contained in
          the Proxy Statement filed under the captions "Election of Directors of
          JVF".

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Incorporated by reference is the information pertaining to
          transactions with directors and officers of the Bank within the
          footnote "Transactions with Executive Officers and Directors": on Page
          50 of the 2002 Annual Report.


<PAGE>


PART IV

ITEM 14.  CONTROLS AND PROCEDURES

          The Company maintains disclosure controls and procedures, as defined
          in Rule 13a-14 promulgated under the Securities Exchange Act of 1934
          (the "Exchange Act"), that are designed to ensure that information
          required to be disclosed by the Company in the reports that it files
          or submits under the Exchange Act is recorded, processed, summarized
          and reported within the time periods specified in the Securities and
          Exchange Commission's rules and forms and that such information is
          accumulated and communicated to the Company's management, including
          its Chief Executive Officer and Chief Financial Officer, as
          appropriate to allow timely decisions regarding required disclosure.
          Within 90 days prior to the date of this report, the Company carried
          out an evaluation, under the supervision and with the participation of
          the Company's management, including the Company's Chief Executive
          Officer and Chief Financial Officer, of the effectiveness of the
          design and operation of the Company's disclosure controls and
          procedures. Based on the evaluation of these disclosure controls and
          procedures, the Chief Executive Officer and Chief Financial Officer
          concluded that the Company's disclosure controls and procedures were
          effective.

          There were no significant changes in the Company's internal controls
          or in other factors that could significantly affect the internal
          controls subsequent to the date that the Company completed its
          evaluation.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


          (a) 1. Financial Statements

                 The Consolidated Financial Statements of Juniata Valley
                 Financial Corp., as included in the 2002 Annual Report to
                 Shareholders, are incorporated in this report by reference.

              2. All schedules are omitted because they are not applicable, the
                 data is not significant, or the required information is shown
                 in the financial statements or the notes thereto.

          (b) Reports on Form 8-K

              None.


<PAGE>


          (c) Exhibits

              (10.1)   1982 Directors Deferred Compensation Agreement for A.
                       Jerome Cook

              (10.2)   1982 Directors Deferred Compensation Agreement for Don
                       E. Haubert

              (10.3)   1983 Directors Deferred Compensation Agreement for John
                       A. Renninger

              (10.4)   1986 Directors Deferred Compensation Agreement for A.
                       Jerome Cook

              (10.5)   1986 Directors Deferred Compensation Agreement for Don
                       E. Haubert

              (10.6)   1987 Directors Deferred Compensation Agreement for
                       John A. Renninger

              (10.7)   1991 Directors Deferred Compensation Agreement for
                       A. Jerome Cook

              (10.8)   1992 Directors Deferred Compensation Agreement for
                       John A. Renninger

              (10.9)   1992 Directors Deferred Compensation Agreement for
                       Ronald H. Witherite

              (10.10)  1993 Directors Deferred Compensation Agreement for
                       Dale G. Nace

              (10.11)  1988 Retirement Program for Directors. Directors A.
                       Jerome Cook and Harold B. Shearer participate in this
                       plan.

              (10.12)  1999 Directors Deferred Compensation Agreement.
                       Directors Philip E. Gingerich Jr., Marshall L. Hartman,
                       Timothy I. Havice, Charles L.Hershberger, Robert K.
                       Metz Jr., Dale G. Nace, Harold B. Shearer and Jan G.
                       Snedeker participate in this plan.

              (10.13)  Director Supplemental Life Insurance/Split Dollar
                       Plan. All Directors are covered by this plan.

              (10.14)  2001 Director Retirement Agreement. Directors Joe E.
                       Benner, Martin L. Dreibelbis, Francis J. Evanitsky,
                       Philip E. Gingerich Jr., Marshall L. Hartman, Don E.
                       Haubert, Timothy I. Havice, Charles L. Hershberger,
                       Robert K. Metz Jr., Dale G. Nace, John A. Renninger,
                       Richard M. Scanlon, DMD, Jan G. Snedeker and
                       Ronald H. Witherite participate in this plan.

              (13)     Annual Report to Shareholders

              (21)     Subsidiaries of the Registrant - As of the date
                       of this report Juniata Valley Bank is the only
                       subsidiary of the Registrant.

              (23)     Consent of Beard Miller Company LLP, Independent
                       Auditors

              (99.1)   Certification of Chief Executive Officer

              (99.2)   Certification of Chief Financial Officer


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                   JUNIATA VALLEY FINANCIAL CORP. (REGISTRANT)
                              Date: March 18, 2003

                        By
                           ---------------------------
                             Francis J. Evanitsky
                             Director, President and
                             Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


      -------------------------                 -------------------------
      Ronald H. Witherite                       Joe E. Benner
      Vice Chairman, Secretary                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Jan G. Snedeker                           A. Jerome Cook
      Director                                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Don E. Haubert                            Martin L. Dreibelbis
      Director                                  Chairman
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      John A. Renninger                         Dale G. Nace
      Director                                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Francis J. Evanitsky                      Harold B. Shearer
      President & CEO                           Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Philip E. Gingerich Jr.                   Charles L. Hershberger
      Director                                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Marshall L. Hartman                       Robert K. Metz, Jr.
      Director                                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------                 -------------------------
      Timothy I. Havice                         Richard M. Scanlon, DMD
      Director                                  Director
      Date: March 18, 2003                      Date: March 18, 2003


      -------------------------
      Linda L. Engle
      Chief Financial Officer
      Chief Accounting Officer
      Date:  March 18, 2003


<PAGE>


CERTIFICATION OF CHIEF EXECUTIVE OFFICER
----------------------------------------

I, Francis J. Evanitsky, certify that:

1. I have reviewed this annual report on Form 10-K of Juniata Valley Financial
Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
     c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

     a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




-------------------------------------
Francis J. Evanitsky, President & CEO

Dated:
      -------------------------------


<PAGE>


CERTIFICATION OF CHIEF FINANCIAL OFFICER
----------------------------------------

I, Linda L. Engle, certify that:

1. I have reviewed this annual report on Form 10-K of Juniata Valley Financial
Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
     c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

     a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




-------------------------------------
 Linda L. Engle, Executive VP & CFO

Dated:
      -------------------------------


<PAGE>


JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                             THE JUNIATA VALLEY BANK
                                DECEMBER 31, 2002




                               MISSION STATEMENT

The Juniata Valley Bank, as an independent community bank, will endeavor to
identify customers' financial needs and exceed their expectations in delivering
quality products and services at a fair price to assure shareholders an above
average return and employees competitive salaries and benefits. The business of
the bank will be conducted with integrity and responsiveness to the communities
served.

                                    CONTENTS


                                                                            Page
Stock, Dividend and Broker Information.........................................2
Letter to Shareholders ........................................................3
Corporation Officers and Directors ............................................4
Advisory Board Members ........................................................5
Bank Officers .................................................................6
Business..................................................................7 - 15
Financial Highlights .........................................................16
Management's Discussion and Analysis of Financial Condition and
   Results of Operations ................................................17 - 32
Report of Independent Auditors ...............................................33
Financial Statements:
     Consolidated Balance Sheets .............................................34
     Consolidated Statements of Income .......................................35
     Consolidated Statements of Stockholders' Equity .........................36
     Consolidated Statements of Cash Flows ...................................37
     Notes to Consolidated Financial Statements .........................38 - 55

<PAGE>

STOCK, DIVIDEND AND BROKER INFORMATION

Common stock issued by Juniata Valley Financial Corp. is quoted under the symbol
"JUVF" on the over-the-counter ("OTC") Electronic Bulletin Board, an automated
quotation service, made available through, and governed by, the NASDAQ system.

Prices presented in the table below are bid prices between broker-dealers which
do not include retail mark-ups or mark-downs or any commission to the
broker-dealer. The published bid prices do not necessarily reflect prices in
actual transactions. Cash dividends paid for 2002 and 2001 are provided in the
table below.

                2002                                         2001
                ----                                         ----
                             Dividends                                 Dividends
Quarter    High      Low     per share      Quarter    High    Low     per share
-------    ----      ---     ---------      -------    ----    ---     ---------
First     $28.75   $28.20                   First     $23.17  $22.72
Second     28.60    28.30       $.43        Second     26.75   23.17     $.39
Third      28.90    28.45                   Third      28.90   26.75
Fourth     29.25    28.50        .45        Fourth     29.00   28.10      .41


     For further information, we refer you to:

Ferris Baker Watts, Inc.
100 Light Street
Baltimore, MD 21202
(800) 638-7411

F.J. Morrissey & Co., Inc.
1700 Market St., Suite 1420
Philadelphia, PA 19103-3913
(800) 842-8928

Ryan, Beck & Co.
150 Monument Road, Suite 106
Bala Cynwyd, PA 19004
(800) 223-8969

Janney, Montgomery, Scott, Inc.
48 E. Market St., P.O. Box 2246
York, PA 17405-2246
(717) 845-5611


DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

Information regarding the Corporation's Dividend Reinvestment and Stock Purchase
Plan may be obtained by calling (717) 436-8211 or by writing to:

                               Ms. Linda L. Engle
                         Juniata Valley Financial Corp.
                                   P.O. Box 66
                             Mifflintown, PA 17059

DIVIDEND DIRECT DEPOSIT PROGRAM

Juniata Valley Financial Corp. now offers a dividend direct deposit program
whereby shareholders with registered stock in their own names may choose to have
their dividends deposited directly into the bank account of their choice on
dividend payment date. Information concerning this optional program is available
by calling (717) 436-8211 or writing to:

                               Ms. Linda L. Engle
                         Juniata Valley Financial Corp.
                                  P.O. Box 66
                             Mifflintown, PA 17059

-2-

<PAGE>

                  [JUNIATA VALLEY LETTERHEAD GRAPHIC OMITTED]




Dear Shareholder:

     An uncertain economy, a volatile equity market, and an additional short
term interest rate reduction beyond the eleven short-term rate reductions in
2001. Sounds like a repeat of 2001. Frankly, it was. The volatility in the
equity market deepened and an uncertain economy continued to deteriorate. These
factors along with the threat of war continued to cause concern and provide
significant challenges to our industry and your Bank during 2002.

     While these factors did indeed cause concern and provide obstacles, they
also afforded us the opportunity to continue to develop our goal of becoming a
one-stop provider of Financial Services.

     The year 2002 marked significant financial improvement over 2001 for the
Juniata Valley Financial Corp. A meaningful improvement in net interest income
was the primary driving force which resulted in a net income increase of 8.0% to
$5,015,000 for the year 2002, from $4,642,000 in 2001.

     Total assets increased 5.3% to $375,735,000 in 2002 from $356,757,000 in
2001, an increase of $18,978,000. Fueled by the uncertain economy, and the
volatile equity market, deposits increased 5.6% to $322,619,000 from
$305,468,000 an increase of $17,151,000.

     Although, as we have indicated, 2002 was a very uncertain year from many
aspects, the Bank was able to achieve a modest loan growth of 3.3%. This
increase brought total loans outstanding to $235,497,000 for 2002 from
$227,998,000 in 2001.

     As a result of the growth in loans, deposits, and the improvement in net
interest income, earnings per share increased 9.7% from $1.96 in 2001 to $2.15
in 2002. Dividends paid to our shareholders increased 10% in 2002 to $.88 per
share from $.80 per share in 2001.

     The two most commonly used financial measurements in the banking industry
also showed nice increases over 2001. Return on Average Assets (ROAA) improved
from 1.33% in 2001 to 1.37% in 2002, and Return on Average Equity (ROAE)
improved from 10.47% in 2001 to 10.85% in 2002.

     As always, we would like to thank you, our shareholders, for your continued
loyalty and support. Further, we want to assure you that the officers, directors
and employees will continue to work diligently to ensure that the Juniata Valley
Financial Corp. continues to be a quality financial institution.

                                                  Sincerely,


                                                  /s/Francis J. Evanitsky
                                                  -----------------------------
                                                  Francis J. Evanitsky
                                                  President & CEO

                                                                             -3-
<PAGE>

                    JUNIATA VALLEY FINANCIAL CORP. OFFICERS

MARTIN L. DREIBELBIS                          RONALD H. WITHERITE
Chairman                                      Vice Chairman, Secretary

FRANCIS J. EVANITSKY                          LINDA L. ENGLE
President                                     Treasurer


<TABLE>
<CAPTION>

                                   DIRECTORS

<S>                                                        <C>
JOE E. BENNER                                              ROBERT K. METZ, JR.
Owner, Benner Automotive                                   Retired President, Metz Poultry Farms, Inc.

A. JEROME COOK                                             DALE G. NACE
Retired President, The Juniata Valley Bank                 Owner, Glenn Nace Plumbing & Heating;
                                                           GlenDale Storage
MARTIN L. DREIBELBIS
Chairman, Self-Employed, Petroleum Consultant              JOHN A. RENNINGER
                                                           Retired President, A. D. Renninger
FRANCIS J. EVANITSKY                                       Lumber Company
President & CEO, The Juniata Valley Bank
                                                           RICHARD M. SCANLON, DMD
PHILIP E. GINGERICH, JR.                                   Self-Employed, Dentist
President, Central Insurers Group, Inc.
                                                           HAROLD B. SHEARER
MARSHALL L. HARTMAN                                        Retired, Self-employed, Farmer
Owner, Traditions, Ltd.
                                                           JAN G. SNEDEKER
DON E. HAUBERT                                             President, Snedeker Oil Co., Inc.
President, Haubert Homes, Inc.
                                                           RONALD H. WITHERITE
TIMOTHY I. HAVICE                                          Owner, Ron's Fruit Market, Inc.
Owner, T.I. Havice, Developer

CHARLES L. HERSHBERGER
President, Stonewall Equity, Inc.


          NOTE: Above Directors also comprise the Board of Directors for The Juniata Valley Bank

</TABLE>

-4-

<PAGE>

                             ADVISORY BOARD MEMBERS

MILLERSTOWN OFFICE                     MONUMENT SQUARE/WAL-MART OFFICES
R. Franklin Campbell                   William R. Carter
Lowell R. Frantz, C.L.U.               Lee Ellen Foose
Gregory J. Gordon                      Sharon Havice
Gerald M. Lyter                        Nancy S. Reinke
James A. Witmer                        Frank A. Zampelli
Gary G. Wright

PORT ROYAL OFFICE                      GARDENVIEW OFFICE
Kim E. Bomberger                       David B. Esh
Larry B. Cottrill, Jr.                 M. Randall French
Robert D. Hower                        H. Ross Harshbarger
Richard J. Junk                        Donald R. Hartzler
N. Jeffrey Leonard                     Jerry L. Wagner
Dennis A. Long

McALISTERVILLE OFFICE                  MARKET STREET/WATER STREET OFFICES
Mark Apple                             George W. Anderson
M. Richard Dimm                        Catherine J. Laub
Samuel E. Knouse                       Susan M. McCartney
Joseph D. Ritzman                      J. Neal Shawver
Richard J. Sankey                      Steve R. Watson

BLAIRS MILLS OFFICE                    BURNHAM OFFICE
Robert G. Allison                      Mark S. Elsesser
William R. Goshorn                     Daniel B. Firth
Clair L. Yohn                          Leann M. Fisher
                                       David E. Walker


                                                                             -5-

<PAGE>

                        THE JUNIATA VALLEY BANK OFFICERS

          A Wholly-Owned Subsidiary of Juniata Valley Financial Corp.

EXECUTIVE
    Francis J. Evanitsky......................................President & C.E.O.
    Linda L. Engle..............................Executive Vice President, C.F.O.
    Judy E. Robinson.........................................Executive Secretary
ADMINISTRATION
    Donald L. Musser.............Sr. Vice President, Facilities/Security Manager
    Pamela S. Eberman.................Sr. Vice President, Human Resource Manager
    Lou Ann Wilson............................Vice President, Compliance Officer
    Paul M. Lipka....................Assistant Vice President, Marketing Officer
    Thomas L. Parrish.....Sr. Vice President, Community Banking Division Manager
ACCOUNTING
    Kristi J. Burdge............................................Staff Accountant
    Anna Mae Peoples.......................Vice President, Accounting Specialist
LOANS
    Edward L. Kauffman.................Sr. Vice President, Loan Division Manager
    Robert G. Dillon........Vice President, Sr. Loan Officer/Collections Manager
    Scott E. Nace....................Vice President, Loan Administration Manager
    David A. Pecht.............Vice President, Secondary Mortgage Market Manager
    Kurt L. McKinney, Jr........................Vice President, Sr. Loan Officer
    R. Jack Morgan..................................................Loan Officer
    John B. Zavacky.................................................Loan Officer
OPERATIONS
    Judy R. Aumiller..Sr. Vice President, Operations Technology Division Manager
    Kathy D. Hutchinson.......Vice President, Data/Operations/Technology Manager
    Deborah A. Sheaffer.......................Vice President, Money Desk Manager
    Sherise Y. Pelizzari............Assistant Vice President, Operations Manager
    S. Marlene Hubler................................Computer Operations Manager
TRUST
    James C. Dillman..................Sr. Vice President, Trust Division Manager
    Cynthia L. Williams............................Vice President, Trust Officer
BLAIRS MILLS OFFICE
    Wayne S. McCoy......................................Community Office Manager
    Wanda K. Rowles.....................................Customer Service Officer
BURNHAM OFFICE
    Leann M. Fisher.....................Vice President, Community Office Manager
GARDENVIEW OFFICE
    M. Randall French...................Vice President, Community Office Manager
    Christine L. Searer.................................Customer Service Officer
MARKET STREET OFFICE
    J. Neal Shawver.....................Vice President, Community Office Manager
    Winston L. Libby..................................Financial Services Officer
McALISTERVILLE OFFICE
    Joseph D. Ritzman...................Vice President, Community Office Manager
    Leslie A. Miller....................................Customer Service Officer
MIFFLINTOWN OFFICE
    Betty D. Ryan.......................Vice President, Community Office Manager
MILLERSTOWN OFFICE
    James A. Witmer.....................Vice President, Community Office Manager
    Barbara I. Seaman...................................Customer Service Officer
MONUMENT SQUARE OFFICE
    Lee Ellen Foose.....................Vice President, Community Office Manager
    Suzanne E. Booher...................................Customer Service Officer
MOUNTAIN VIEW OFFICE
    Brenda A. Brubaker..................................Community Office Manager
PORT ROYAL OFFICE
    Larry B. Cottrill, Jr...............Vice President, Community Office Manager
    Lona Rae Hawthorne..................................Customer Service Officer
WAL-MART OFFICE
    Christine L. Weyer..................................Community Office Manager
    Denise M. Rothrock..................................Customer Service Officer
WATER STREET OFFICE
    Catherine J. Laub...................Vice President, Community Office Manager

-6-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

DESCRIPTION OF BUSINESS

On April 19, 1983, the shareholders of The Juniata Valley Bank (The Bank)
approved a plan of merger and reorganization. The plan was approved by the
various regulatory agencies on June 7, 1983 and the Juniata Valley Financial
Corp., a one bank holding company, registered under the Bank Holding Company Act
of 1956, as amended, was organized. The Bank is the oldest independent
commercial bank in Juniata and Mifflin County having originated under a state
bank charter in 1867.

The Juniata Valley Bank operates twelve branch banking offices, two trust
service offices, and one loan production office. At December 31, 2002, the Bank
had 135 full-time equivalent employees. The Bank is engaged in commercial
banking and trust business as authorized by the Pennsylvania Banking Code of
1965. This includes accepting time and demand deposits, making secured and
unsecured commercial and consumer loans, financing commercial transactions,
making construction and mortgage loans, and administering corporate, pension and
personal trust services. The Bank provides its services to individuals,
corporations, partnerships, associations, municipalities and other governmental
bodies. As of December 31, 2002, the Bank had four offices in Juniata County,
one office in Perry County, six offices in Mifflin County, one office in
Huntingdon County, and a loan production office in Centre County.

In 2002 the Bank celebrated 135 years of continuing service to the Juniata
Valley. In planning for the future and hoping to continue another 135 years, the
Bank is making a significant investment in technology in 2003. Approximately
$600,000 will be spent in the following areas: connecting the branches with a
wide-area network, teller automation and relationship management software. The
wide-area network will allow for faster and secure communications among the
branches. Software updates can be completed from one location creating more
efficiencies. Teller automation and relationship management will allow complete
access to customer history and transactions and make the Bank more efficient by
serving the customer more quickly.

COMPETITION

The Bank's principal market area includes all of Mifflin and Juniata Counties,
and portions of Perry, Huntingdon, Centre, Franklin and Snyder Counties. There
are 14 commercial banks which are headquartered or have branch offices located
within the Bank's market area which the Bank considers its primary competitors.
Of the 14 commercial banks with operations in the Bank's market area, the Bank
ranked third in assets as of December 31, 2002.

Additionally, the Bank has been subjected to competition from non-bank firms,
such as credit unions, brokerage firms, insurance companies, mutual fund
companies, consumer finance and credit card firms, retail and manufacturing
conglomerates, and other firms providing financial services and credit to
customers. Although many non-bank industries now offer services traditionally
provided only by banks, banks are constrained by costly regulations and
time-worn laws to compete effectively against non-bank providers of financial
services. However, the Bank strives to remain competitive with respect to
interest rates, service fees and service quality in order to achieve continued
growth and success in its market. The Bank also continues to develop and
strengthen its strong ties to the communities it serves, relying on the unique
and strong relationship that a community bank has with its customers and
community by providing excellent, personal customer service.

The deposit base of The Juniata Valley Bank is such that the loss of one
depositor or a related group of depositors would not have a dramatically adverse
effect on the Bank's business. In addition, the loan portfolio is very well
diversified, so that one industry or group or related industries does not
comprise a material portion of total loans outstanding. The Bank's business is
not seasonal, nor does it have any risks attendant to foreign sources.

SUPERVISION AND REGULATION

Juniata Valley Financial Corp. operates in a highly regulated industry, and thus
may be affected by changes in state and federal regulations and legislation. As
a registered bank holding company under the Bank Holding Company Act of 1956, as
amended (the Act), the Corporation is subject to supervision and examination by
the Board of Governors of the Federal Reserve System and is required to file
with the Federal Reserve Board quarterly reports and information regarding its
business operations and those of its subsidiary.

The Act requires the Corporation to obtain Federal Reserve approval before:
acquiring more than five percent ownership interest in any class of the voting
securities of any bank; acquiring all or substantially all of the assets of a
bank; or, merging or consolidating with another bank holding company. In
addition, the Act prohibits a bank holding company from acquiring the assets, or
more than five percent of the voting securities, of a bank located in another
state, unless such acquisition is specifically authorized by the statutes of the
state in which the bank is located.

New banking legislation passed in November of 1999, modifies the 43-year old
Bank Holding Company Act of 1956 to permit a Bank Holding Company that owns a
commercial bank to engage in any type of financial activity. The commercial bank
has to be well-capitalized, well-managed and CRA-rated satisfactory or better.
Financial activities include securities, insurance, merchant banking/equity
investment, financial in nature, and complimentary activities.

                                                                             -7-

<PAGE>


        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

SUPERVISION AND REGULATION (CONTINUED)

The deposits of The Juniata Valley Bank are insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation (FDIC). Consequently, the Bank is
subject to regulations and reviews under the provisions of the Federal Deposit
Insurance Act, but the primary regulatory body is the Pennsylvania Department of
Banking. The Pennsylvania Department of Banking conducts regular reviews which
have resulted in satisfactory evaluations to date.

In 1991, the Federal Deposit Insurance Corporation Act (FDICIA) was signed into
law. FDICIA established five different levels of capitalization of financial
institutions, with prompt corrective actions and significant operational
restrictions imposed on institutions that are capital deficient. The five
categories are: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized.

To be considered well capitalized, an institution must have a total risk-based
capital ratio of at least 10%, a Tier I risk based capital ratio of at least 6%,
a leverage capital ratio of 5% and must not be subject to any order or directive
requiring the institution to improve its capital level. An institution falls
within the adequately capitalized category if it has a total risk-based capital
ratio of at least 8%, a Tier I risk-based capital ratio of at least 4%, and a
leverage capital ratio of at least 4%. Institutions with lower capital levels
are deemed to be undercapitalized, significantly undercapitalized, or critically
undercapitalized, depending on their actual capital levels.

The following table sets forth the computation of the Bank's regulatory capital
ratios. The Bank exceeded the minimum capital levels of the well capitalized
category. The Corporation's ratios were not materially different from those of
the Bank.

                                                        December 31,
                                                        ------------
                                                  2002      2001      2000
                                                  ----      ----      ----
Risk-weighted assets ratio:
     Tier I                                      18.76%    18.46%    18.46%
     Total                                       19.93%    19.56%    19.59%

Total assets leverage ratio:
     Tier I                                      12.04%    11.98%    12.30%

SECURITIES PORTFOLIO

The following table sets forth the carrying amount of securities at the dates
indicated:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                    ------------
                                                            2002        2001      2000
                                                            ----        ----      ----
                                                                   (In Thousands)

Available for sale securities (at fair value):
<S>                                                       <C>         <C>       <C>
    U.S. Treasury and other U.S. government obligations   $ 46,593    $30,960   $ 6,035
    States and political subdivisions                       16,299     15,691    15,341
    Other corporate                                          2,004      3,116     5,042
    Mortgage-backed                                          4,628      3,951     5,823
    Equity                                                     971        945       905
                                                          --------    -------   -------

                                                            70,495     54,663    33,146
                                                          --------    -------   -------

Held to maturity securities (at amortized cost):

    U.S. Treasury and other U.S. government obligations      3,467      3,461    13,071
    States and political subdivisions                       20,626     26,742    27,201
    Other corporate                                          5,814      8,409    10,968
                                                          --------    -------   -------

                                                            29,907     38,612    51,240
                                                          --------    -------   -------

        Total securities                                  $100,402    $93,275   $84,386
                                                          ========    =======   =======
</TABLE>

-8-

<PAGE>


        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

SECURITIES PORTFOLIO (CONTINUED)

The following table sets forth the maturities of securities at December 31, 2002
and the weighted average yields of such securities by contractual maturities or
call dates. Yields on obligations of state and political subdivisions are not
presented on a tax equivalent basis. Mortgage-backed securities with contractual
maturities after ten years from December 31, 2002, feature regular repayments of
principal and average lives of three to five years.

<TABLE>
<CAPTION>
                                                                   Maturing
                                                                   --------
                                                          After One         After Five
                                                          But Within         But Within           After
                                    Within One Year       Five Years         Ten Years          Ten Years
                                    Amount    Yield    Amount    Yield    Amount    Yield    Amount    Yield
                                    ------    -----    ------    -----    ------    -----    ------    -----
                                                              (In Thousands)
<S>                                <C>        <C>     <C>         <C>     <C>       <C>      <C>        <C>
Available for sale:

    U.S. Treasury and other U.S.
        government agencies        $ 3,858     4.64%  $42,710     4.05%       --       --    $   25     3.35%
    State and political
        subdivisions                   335     5.67    14,399     3.77     1,565     2.89        --       --
    Other corporate                  2,004     6.12        --       --        --       --        --       --
    Mortgage-backed                     --       --        48     7.69     2,058     4.62     2,522     5.54
                                   -------            -------            -------             ------
                                     6,197             57,157              3,623              2,547
                                   -------            -------            -------             ------
Held to maturity:

    U.S. Treasury and other U.S.
        government agencies          2,000     5.63     1,467     4.41        --       --        --       --
    State and political
        subdivisions                 8,152     4.03    12,474     3.87        --       --        --       --
    Other corporate                  5,314     5.90        --       --       500     5.84        --       --
                                   -------            -------            -------             ------
                                    15,466             13,941                500                 --
                                   -------            -------            -------             ------
           Total                   $21,663            $71,098            $ 4,123             $2,547
                                   =======            =======            =======             ======
</TABLE>

Securities classified as available for sale are those debt securities that the
Bank intends to hold for an indefinite period of time, but not necessarily to
maturity. Securities available for sale are carried at fair value. Unrealized
gains or losses are reported in other comprehensive income, net of the related
deferred tax effect. Securities classified as held to maturity are those debt
securities the Bank has both the intent and ability to hold to maturity. These
securities are carried at cost adjusted for amortization of premium and
accretion of discount.

                                                                             -9-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

LOAN PORTFOLIO

The highest loan concentration by activity type continues to be the trucking
industry. The percentage of these loans to total loans was approximately four
percent at the latest review. This industry services many other industries and
no potential significant risk is evident.

As with any lending activity, potential risk exists. Loans in the commercial,
financial and industrial category have remained relatively constant as a
percentage of total loans. The Bank prudently evaluates loans in this category
and generally secures such lending with collateral consisting of real and/or
tangible personal property.

All lending is granted on a variable rate basis except consumer loans which are
fixed rate. Consumer loans, consisting of approximately twenty-one percent of
total loans, average a three to four year repayment period and are fixed at such
a rate that rate sensitivity is considered to be limited.

The following table shows the Bank's loan distribution at the end of each of the
last five years:

<TABLE>
<CAPTION>
                                                                December 31,
                                                                ------------
                                             2002        2001       2000        1999       1998
                                             ----        ----       ----        ----       ----
                                                              (In Thousands)
<S>                                        <C>         <C>        <C>         <C>        <C>
    Commercial, financial and agricultural $ 26,815    $ 24,548   $ 23,327    $ 18,784   $ 15,047
    Real estate mortgage                    157,609     151,369    142,897     139,163    133,047
    Consumer (less unearned discount)        51,352      51,733     52,991      46,419     41,049
    All other                                 2,452       2,874      3,101       2,456      2,819
                                           --------    --------   --------    --------   --------
        Total loans                        $238,228    $230,524   $222,316    $206,822   $191,962
                                           ========    ========   ========    ========   ========
</TABLE>

This table shows the maturity of loans (excluding residential mortgages of 1-4
family residences and consumer loans) outstanding as of December 31, 2002.

<TABLE>
<CAPTION>

                                                      Maturing    Maturing   Maturing
                                                       During    From 2004     After
                                                        2003     Thru 2007      2007      Total
                                                        ----     ---------      ----      -----
                                                                     (In Thousands)
<S>                                                    <C>       <C>         <C>         <C>
    Commercial, agricultural and financial             $ 26,815  $      --   $      --   $ 26,815
    All other                                             2,452         --          --      2,452
                                                       --------   --------    --------   --------
        Total loans                                    $ 29,267  $      --   $      --   $ 29,267
                                                       ========  =========   =========   ========
</TABLE>

-10-

<PAGE>

         JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                             THE JUNIATA VALLEY BANK
                                    BUSINESS

NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS

The following table summarizes the Bank's nonaccrual, past due and restructured
loans:

<TABLE>
<CAPTION>
                                                             December 31,
                                                             ------------
                                            2002       2001       2000       1999      1998
                                            ----       ----       ----       ----      ----
                                                            (In Thousands)
<S>                                       <C>        <C>        <C>        <C>        <C>
   Average loans outstanding              $233,262   $223,487   $212,270   $193,305   $189,778
                                          ========   ========   ========   ========   ========
   Nonaccrual loans                       $    219   $    934   $    364   $    164   $     --
   Accruing loans past due
      90 days or more                          544        811        440        262        386
   Restructured loans                           --         --         --         --         --
                                          --------   --------   --------   --------   --------
      Total                               $    763   $  1,745   $    804   $    426   $    386
                                          ========   ========   ========   ========   ========
   Ratio of non-performing loans
      to average loans outstanding             .33%       .78%       .39%       .22%       .20%
</TABLE>

Information with respect to nonaccrual and restructured loans at December 31,

<TABLE>
<CAPTION>
                                            2002       2001       2000       1999      1998
                                            ----       ----       ----       ----      ----
                                                            (In Thousands)
<S>                                       <C>        <C>        <C>        <C>        <C>
   Nonaccrual loans                       $    219   $    934   $    364   $    164   $     --
   Restructured loans                           --         --         --         --         --
   Interest income that would have been
      recorded under original terms             20         84         38         16         --
   Interest income recorded
      during the period                         --         --         --         --         --
   Commitments to lend additional funds         --         --         --         --         --
</TABLE>

A loan is generally considered impaired when it is probable the Bank will be
unable to collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement. The accrual of interest is
discontinued when the contractual payment of principal and interest has become
90 days past due or management has serious doubts about further collectibility
of principal or interest, even though the loan is currently performing. A loan
may remain on accrual status if it is in process of collection and is either
guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid
interest credited to income in the current year is reversed and unpaid interest
accrued in prior years is charged against the allowance for loan losses.
Interest received on nonaccrual loans generally is either applied against
principal or reported as interest income, according to management's judgement as
to the collectibility of principal. Generally, loans are restored to accrual
status when the obligation is brought current, has performed in accordance with
the contractual terms for a reasonable period of time and the ultimate
collectibility of the total contractual principal and interest is no longer in
doubt.

                                                                            -11-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes the Bank's loan loss experience for each of the
five years ended December 31,

<TABLE>
<CAPTION>
                                                2002        2001        2000        1999        1998
                                                ----        ----        ----        ----        ----
                                                                   (In Thousands)
<S>                                           <C>         <C>         <C>         <C>         <C>
   Average loans outstanding                  $233,262    $223,487    $212,270    $193,305    $189,778
                                              ========    ========    ========    ========    ========

   Allowance for loan loss at January 1       $  2,526    $  2,497    $  2,486    $  2,477    $  2,390

   Losses charged to allowance
      Commercial                                    54          58         155           2          37
      Real estate                                   44          51          --          27          13
      Consumer                                     109         128          89         100          93
                                              --------    --------    --------    --------    --------

                                                   207         237         244         129         143
                                              --------    --------    --------    --------    --------
   Recoveries credited to allowance
      Commercial                                     5           2          13          --           1
      Real estate                                  103          19          --          --          --
      Consumer                                       4           5          12          18          19
                                              --------    --------    --------    --------    --------
                                                   112          26          25          18          20
                                              --------    --------    --------    --------    --------

   Net charge-offs                                  95         211         219         111         123

   Provision for loan losses                       300         240         230         120         210
                                              --------    --------    --------    --------    --------
   Allowance for loan losses at December 31   $  2,731    $  2,526    $  2,497    $  2,486    $  2,477
                                              ========    ========    ========    ========    ========
   Ratio of net charge-offs to
      average loans outstanding                    .04%        .09%        .10%        .06%        .06%
</TABLE>

The amount charged to operations and the related balance in the allowance for
loan losses is based upon periodic evaluations of the loan portfolio by
management. These evaluations consider several factors including, but not
limited to, general economic conditions, loan portfolio composition, prior loan
loss experience and management's estimate of future potential losses.

Management maintains an allowance for loan losses that it considers adequate
based on the evaluation process that it performs on a quarterly basis. As part
of this process, management considers it appropriate to maintain a portion of
the allowance that is based on credit quality trends, loan volume, current
economic trends and other uncertainties. This portion of the allowance for loan
losses is reflected as the unallocated portion in the table below that indicates
the distribution of the allowance as of the end of each of the last five years.

<TABLE>
<CAPTION>
                         2002            2001            2000           1999           1998
                         ----            ----            ----           ----           ----
                                                 (In Thousands)

                            % OF            % of            % of            % of           % of
                   AMOUNT   LOAN   Amount   Loan   Amount   Loan   Amount   Loan   Amount  Loan
                   ------   ----   ------   ----   ------   ----   ------   ----   ------  ----
<S>                <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>
   Commercial      $1,057   12.3%  $  970   11.9%  $  670   12.4%  $  577   10.3%  $  537   9.3%
   Real estate        561   66.2      747   65.7      472   64.3      468   67.3      483  69.3
   Consumer           853   21.5      656   22.4      770   23.3      750   22.4      741  21.4
   Unallocated        260     --      153     --      585     --      691     --      716    --
                   ------   ----   ------   ----   ------   ----   ------   ----   ------  ----
         Total     $2,731    100%  $2,526    100%  $2,497    100%  $2,486    100%  $2,477   100%
                   ======   ====   ======   ====   ======   ====   ======   ====   ======  ====
</TABLE>

-12-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

SUMMARY OF LOAN LOSS EXPERIENCE (CONTINUED)

While loans secured by real estate mortgages comprise greater than 66% of the
total loan portfolio, historically these accounts have resulted in marginal
loss. Therefore management's evaluation of the loan portfolio indicates a
relatively low allocation of the allowance for this category of loans.

In addition to management's regular reviews, the results of normal examination
of the loan portfolio by representatives of regulatory agencies are also
considered in determining the level at which the allowance should be maintained.
There are no material loans classified for regulatory purposes as loss,
doubtful, substandard or special mention which management expects to impact
future operating results, liquidity or capital resources. Additionally,
management is not aware of any information that would give serious doubt as to
the ability of its borrowers to substantially comply with loan repayment terms.

Highly leveraged transactions (HLTS) generally include loans and commitments
made in connection with recapitalizations, acquisitions and leveraged buyouts,
and result in the borrowers debt-to-total assets ratio exceeding 75%. The Bank
has no loans at December 31, 2002, that qualified as HLTS.

                                                                            -13-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS

DEPOSITS

The average daily amount of deposits and rates paid on such deposits is
summarized for December 31, in the following table:

                                      2002             2001            2000
                                      ----             ----            ----
                                 AMOUNT   RATE   Amount    Rate   Amount   Rate
                                 ------   ----   ------    ----   ------   ----
                                               (In Thousands)

   Non-interest bearing demand  $ 38,870        $ 36,623         $ 34,827
   Interest bearing demand        53,896  1.59%   50,056   2.36%   46,221  2.95%
   Savings deposits               35,382  1.82    31,204   2.44    31,033  2.67
   Time deposits                 186,425  4.18   181,085   5.51   175,535  5.52
                                --------        --------         --------
      Total                     $314,573        $298,968         $287,616
                                ========        ========         ========

As of December 31, 2002, certificates of deposit outstanding in an individual
amount of $100,000 or more totalled $35,167,000.

The maturity of these certificates of deposits is as follows:

                                 Over 3        Over 6
                   3 months     through 6    through 12     Over 12
                   or less       months        months        months
                   -------       ------        ------        ------
                                   (In Thousands)

                   $10,993       $3,871        $5,667        $14,636
                   =======       ======        ======        =======

-14-

<PAGE>


        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                                    BUSINESS


QUARTERLY RESULTS OF OPERATIONS

                                                  Three Months Ended
                                     March 31    June 30    Sept. 30    Dec. 31
                                     --------    -------    --------    -------
                                        (In Thousands, except per share data)

FOR THE YEAR 2002
   Interest income                     $5,850     $5,899      $5,897     $5,824
   Interest expense                    (2,424)    (2,305)     (2,321)    (2,249)
                                       ------     ------      ------     ------
   Net interest income                  3,426      3,594       3,576      3,575
   Provision for loan losses              (75)       (75)        (75)       (75)
   Other income                           505        517         475        517
   Other expenses                      (2,189)    (2,285)     (2,269)    (2,381)
                                       ------     ------      ------     ------
   Income before income taxes           1,667      1,751       1,707      1,636
   Income taxes                          (332)      (421)       (509)      (484)
                                       ------     ------      ------     ------
   Net income                          $1,335     $1,330      $1,198     $1,152
                                       ======     ======      ======     ======

   Per-share data:
      Basic and diluted earnings       $  .57     $  .57      $  .51     $  .50
      Cash dividends                       --        .43          --        .45



                                                  Three Months Ended
                                     March 31    June 30    Sept. 30    Dec. 31
                                     --------    -------    --------    -------
                                        (In Thousands, except per share data)

FOR THE YEAR 2001
   Interest income                     $6,311     $6,172      $6,192     $5,966
   Interest expense                    (3,073)    (3,073)     (3,029)    (2,754)
                                       ------     ------      ------     ------
   Net interest income                  3,238      3,099       3,163      3,212
   Provision for loan losses              (60)       (60)        (60)       (60)
   Other income                           366        563         509        756
   Other expenses                      (2,160)    (2,145)     (2,138)    (2,153)
                                       ------     ------      ------     ------
   Income before income taxes           1,384      1,457       1,474      1,755
   Income taxes                          (294)      (297)       (352)      (485)
                                       ------     ------      ------     ------
   Net income                          $1,090     $1,160      $1,122     $1,270
                                       ======     ======      ======     ======

   Per-share data:
      Basic and diluted earnings       $  .46     $  .49      $  .47     $  .54
      Cash dividends                       --        .39          --        .41

                                                                            -15-

<PAGE>

<TABLE>
<CAPTION>

         JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY
                             THE JUNIATA VALLEY BANK
            FIVE YEAR FINANCIAL HIGHLIGHTS o SELECTED FINANCIAL DATA

                                         2002        2001        2000        1999        1998
                                         ----        ----        ----        ----        ----
<S>                                    <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA (In Thousands)
   Assets                              $375,735    $356,757    $334,914    $336,119    $343,857
   Deposits                             322,619     305,468     287,221     283,350     293,890
   Loans receivable, net                235,497     227,998     219,819     204,336     189,485
   Securities                           106,431      98,073      85,571     104,650     123,505
   Stockholders' equity                  48,327      45,326      43,082      43,255      45,980
   Average equity                        46,210      44,348      42,106      44,526      44,448
   Average assets                       366,853     348,331     334,685     339,364     338,295

EARNINGS DATA (In Thousands)
   Interest income                     $ 23,470    $ 24,641    $ 24,679    $ 23,858    $ 24,864
   Interest expense                       9,299      11,929      11,880      11,354      12,136
                                       --------    --------    --------    --------    --------
   Net interest income                   14,171      12,712      12,799      12,504      12,728
   Provision for loan losses                300         240         230         120         210
                                       --------    --------    --------    --------    --------
   Net interest income after
      provision for loan losses          13,871      12,472      12,569      12,384      12,518
   Other income                           2,014       2,194       1,377       1,286       1,182
   Other expenses                         9,124       8,596       8,184       8,032       7,986
                                       --------    --------    --------    --------    --------
   Income before income taxes             6,761       6,070       5,762       5,638       5,714
   Federal income taxes                   1,746       1,428       1,375       1,360       1,313
                                       --------    --------    --------    --------    --------
   Net income                          $  5,015    $  4,642    $  4,387    $  4,278    $  4,401
                                       ========    ========    ========    ========    ========

RATIOS
   Return on average assets                1.37%       1.33%       1.31%       1.26%       1.30%
   Return on average equity               10.85       10.47       10.42        9.61        9.90
   Equity to assets (year end)            12.86       12.71       12.86       12.87       13.37
   Loans to deposits (year end)           73.00       74.64       76.53       72.11       64.47
   Dividend payout (percentage
      of income)                          40.72       40.78       66.90       68.61       37.99
   Efficiency ratio                       56.37       57.67       57.73       58.25       57.41

PER SHARE DATA
   Basic and diluted earnings              2.15        1.96        1.81        1.70        1.72
   Cash dividends                           .88         .80        1.21        1.16         .67
   Book value                             20.89       19.28       19.90       19.35       19.73
   Average shares outstanding         2,330,390   2,368,923   2,420,966   2,519,801   2,553,913
   Approximate number
      of stockholders                     1,751       1,719       1,725       1,696       1,607
</TABLE>

-16-

<PAGE>

<TABLE>
<CAPTION>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------
                              FINANCIAL CONDITION
--------------------------------------------------------------------------------

TABLE 1 -- SOURCES AND USES OF FUNDS TRENDS

                                              2002   Increase (Decrease)       2001    Increase (Decrease)    2000
                                            AVERAGE  -------------------     Average   -------------------  Average
                                            BALANCE      Amount     %        Balance    Amount       %      Balance
                                            -------      ------     -        -------    ------       -      -------
                                                                      (Thousands of Dollars)
<S>                                        <C>          <C>        <C>      <C>         <C>         <C>     <C>
Funding uses:
   Interest earning assets:
      Loans:
         Commercial                         $ 70,906    $ 4,319    6.49%    $ 66,587    $ 1,843     2.85%   $ 64,744
         Mortgage                            113,149      6,538    6.13      106,611      6,818     6.83      99,793
         Consumer                             49,207     (1,082)  (2.15)      50,289      2,556     5.35      47,733
                                            --------    -------             --------    -------             --------

                                             233,262      9,775    4.37      223,487     11,217     5.28     212,270
         Less: Allowance for loan losses      (2,600)       (82)  (3.26)      (2,518)         1      .04      (2,519)
                                            --------    -------             --------    -------             --------

                                             230,662      9,693    4.39      220,969     11,218     5.35     209,751
      Interest bearing deposits
         with banks                            4,239      3,125  280.52        1,114        442    65.77         672
      Securities                              95,985      9,465   10.94       86,520    (12,276)  (12.43)     98,796
      Funds sold                               6,108     (4,132) (40.35)      10,240      6,670   186.83       3,570
                                            --------    -------             --------    -------             --------

                                             106,332      8,458    8.64       97,874     (5,164)   (5.01)    103,038
      Total interest earning
         assets                              336,994     18,151    5.69      318,843      6,054     1.94     312,789
      Other assets                            29,859        371    1.26       29,488      7,592    34.67      21,896
                                            --------    -------             --------    -------             --------

            Total uses                      $366,853    $18,522    5.32     $348,331    $13,646     4.08    $334,685
                                            ========    =======             ========    =======             ========
Funding sources:
      Deposits:
         Demand                             $ 38,870    $ 2,247    6.14     $ 36,623    $ 1,796     5.16    $ 34,827
         Interest bearing demand              53,896      3,840    7.67       50,056      3,835     8.30      46,221
         Savings                              35,382      4,178   13.39       31,204        171      .55      31,033
         Time under $100,000                 153,502      3,688    2.46      149,814       (612)    (.41)    150,426
                                            --------    -------             --------    -------             --------

         Total core deposits                 281,650     13,953    5.21      267,697      5,190     1.98     262,507
         Time over $100,000                   32,923      1,652    5.28       31,271      6,162    24.54      25,109
                                            --------    -------             --------    -------             --------

         Total deposits                      314,573     15,605    5.22      298,968     11,352     3.95     287,616
      Other liabilities                        5,933        939   18.80        4,994         31      .62       4,963
      Short-term borrowings                      137        116  552.38           21         21   100.00          --
      Stockholders' equity                    46,210      1,862    4.20       44,348      2,242     5.32      42,106
                                            --------    -------             --------    -------             --------

            Total sources                   $366,853    $18,522    5.32     $348,331    $13,646     4.08    $334,685
                                            ========    =======             ========    =======             ========
</TABLE>

This discussion concerns Juniata Valley Financial Corp. (Corporation) and its
wholly owned subsidiary, The Juniata Valley Bank (Bank). The purpose is to focus
on information concerning the Corporation's financial condition and results of
operations which is not readily apparent from the consolidated financial
statements. In order to obtain a clear understanding of this discussion, the
reader should reference the consolidated financial statements, the notes to the
statements, and other financial information presented in this Annual Report.

                                                                            -17-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                        FINANCIAL CONDITION (CONTINUED)
--------------------------------------------------------------------------------

The following discussion and analysis is intended to assist the reader in
reviewing the financial information presented and should be read in conjunction
with the consolidated financial statements and other financial data presented
elsewhere herein.

CRITICAL ACCOUNTING POLICIES

Disclosure of the Corporation's significant accounting policies is included in
footnotes to the consolidated financial statements under the heading "Summary of
Significant Accounting Policies". Certain of these policies are particularly
sensitive requiring significant judgements, estimates and assumptions to be made
by management. Additional information is contained in Management's Discussion
and Analysis for the most sensitive issues, including the provision and
allowance for loan losses and accounting for stock options.

Management, in determining the allowance for loan losses, makes significant
estimates. Consideration is given to current economic conditions,
diversification of the loan portfolio, delinquency statistics, results of
internal loan reviews, borrowers' perceived financial and managerial strengths,
the adequacy of the underlying collateral, if collateral dependent, or present
value of future cash flows and other relevant factors.

As permitted by SFAS No. 123, the Corporation accounts for stock-based
compensation in accordance with Accounting Principles Board Opinion (APB) No.
25. Under APB No. 25, no compensation expense is recognized in the income
statement related to any options granted under the Corporation stock option
plans. The pro forma impact to net income and earnings per share that would
occur if compensation expense was recognized, based on the estimated fair value
of the options on the date of the grant, is disclosed in the notes to the
consolidated financial statements. The Corporation intends to continue to
account for stock-based compensation in this manner unless there is more
specific guidance issued by the Financial Accounting Standards Board or unless a
clear consensus develops in the financial services industry on the application
of accounting methods.

FORWARD-LOOKING STATEMENTS

The information contained in this Annual Report contains forward-looking
statements (as defined in the Securities Exchange Act of 1934), including
without limitation, statements as to the future loan and deposit volumes, the
allowance and provision for possible loan losses, future interest rates and
their effect on the Corporation's financial condition or results of operations,
the classification of the investment portfolio and other statements which are
not historical facts or as to trends or management's intentions, plans, beliefs,
expectations, or opinions. Such forward-looking statements are subject to risks
and uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in these forward-looking statements
including without limitation, the effect of economic conditions and related
uncertainties, the effect of interest rates on the Corporation, federal and
state government regulation and competition. Certain of these risks,
uncertainties and other factors are discussed in this Annual Report or on Form
10-K for the year ended December 31, 2002, a copy of which may be obtained from
the Corporation upon request without charge.

OVERVIEW

The Corporation functions as a financial intermediary and therefore its
financial condition is analyzed in terms of changes in its sources and uses of
funds. Table 1 presents daily average balances, the dollar change, and
percentage change for the past two years. This table is referenced for the
discussion in this section.

The Corporation's average assets experienced an increase during 2002, reaching
the level of $366,853,000, an increase of $18,522,000 or 5.32% compared to 2001.
From 2000 to 2001 the Corporation experienced an increase in assets of
$13,646,000. The Corporation experienced an increase in average balances of
loans of $9,775,000 or 4.37% from 2001 to 2002. This increase was less than the
increase of $11,218,000 or 5.28% in 2001 over 2000. If there is not enough
borrowers available to loan money to, then a bank needs to use the funds to
invest in interest bearing deposits with other banks, securities, or federal
funds sold. Interest bearing deposits with other banks increased $3,125,000 or
280.52% comparing 2001 to 2002. The increase in 2001 over 2000 was $442,000 or
65.77%. Securities increased $9,465,000 or 10.94% from 2001 to 2002. Securities
decreased in 2001 over 2000 by $12,276,000 or 12.43%. Funds sold declined in
2002 over 2001 by $4,132,000 or 40.35%. This was a decision by management
because of the low rates received on federal funds. Funds sold increased from
2000 to 2001 by $6,670,000 or 186.83%. Overall earning assets increased by
$18,151,000 or 5.69% from 2001 to 2002. The increase was smaller in 2001 over
2000 which was $6,054,000 or 1.94%. Other assets increased in 2001 because of a
$5,000,000 bank-owned life insurance purchase in the first quarter. The cash
surrender value of this instrument is included in non-earning assets and
revenues generated are included in non-interest income.

The Corporation's funding sources increase was due in part to customers exiting
the capital markets and being unsure of where to place their money. This
uncertainty caused core deposits to increase $13,953,000 or 5.21% in 2002 over
2001. The increase in core deposits from 2000 to 2001 was $5,190,000 or 1.98%.
The largest increase was in savings in 2002. This increase was $4,178,000 or
13.39%. Savings deposits increased by $171,000 from 2000 to 2001. Interest
bearing demand increased $3,840,000 or 7.67% in 2002. This increase was on pace
with the increase in 2001 of $3,835,000. Certificates of deposit under $100,000
increased $3,688,000 or 2.46% in 2002. These time deposits actually declined
$612,000 in 2001. In 2002 time deposits over $100,000 grew by $1,652,000 or
5.28%. This growth was much less than the growth experienced in 2001 which
amounted to $6,162,000.

-18-

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                             RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

                                                    [NET INCOME GRAPHIC OMITTED]
Juniata Valley Financial Corp. reported net income for 2002 of $5,015,000 which
was $373,000 or 8.04% more than the $4,642,000 reported in 2001 and $628,000 or
14.32% more than the $4,387,000 reported in 2000. Basic and diluted earnings per
share were $2.15 in 2002. This is an increase of $.19 from 2001 and an increase
of $.34 over 2000. This increase in earnings per share is a result of both
increased income but also a decline in weighted shares outstanding due to the
stock repurchase program.

                                      [RETURN ON AVERAGE EQUITY GRAPHIC OMITTED]
The two most widely recognized performance ratios within the financial services
industry are the return on average equity and return on average assets. The
return on average equity ratio presents the net income to average equity
maintained throughout the year. The return on average equity was 10.85% in 2002
compared to 10.47% in 2001 and 10.42% in 2000.

                                      [RETURN ON AVERAGE ASSETS GRAPHIC OMITTED]
Return on average assets presents the income for the year compared to the
average assets maintained throughout the year. The return on average assets was
1.37% in 2002 compared to 1.33% in 2001 and 1.31% in 2000.

                                      [CASH DIVIDENDS PER SHARE GRAPHIC OMITTED]
The Board of Directors continued to increase the cash dividends paid to
shareholders. On a per share basis $.88 was paid in 2002 up 10.00% from the $.80
paid in 2001 and down 27.27% from the $1.21 paid in 2000. The increase of cash
dividends in 2000 was to help increase the return on equity ratio by returning
cash value to stockholders. The Board of Directors declared a $.45 special
dividend to be paid in the spring of 1999 and 2000. In the spring of 2001 the
Board of Directors declared a 10% stock dividend. Per share data has been
adjusted in prior years to reflect this event.

                                                        [ASSETS GRAPHIC OMITTED]
The Corporation had an increase in total assets of $18,978,000 or 5.32% at
December 31, 2002. Assets for the year ended December 31, 2002, were
$375,735,000 compared to assets of $356,757,000 at December 31, 2001.


The Juniata Valley Bank's allowance for loan losses was $2,731,000 in 2002,
$2,526,000 in 2001 and $2,497,000 in 2000. The provision provided in each of
those years was $300,000 in 2002, $240,000 in 2001 and $230,000 in 2000. The
provision was increased in 2002 because of uncertain economic conditions locally
and the increase in the diversification of the loan portfolio. The provision for
loan losses exceeded net charge-offs by 215.79%, 13.74%, and 5.02%, in 2002,
2001 and 2000, respectively. In 2002 net charge-offs were .04% of average loans
outstanding. In 2001 and 2000 net charge-offs were .09% and .10%, respectively,
of average loans outstanding each year.

Other income decreased $180,000 or 8.20% from 2001 to 2002. From 2000 to 2001
the increase was $817,000 or 59.33%. The trust department income decreased
$96,000 in 2002 over 2001. This was a result of a decline in estate settlements.
From 2000 to 2001 the trust department had an increase of $48,000. Customer
service fees increased $61,000 for 2002 compared to 2001, and $76,000 for 2001
compared to 2000. The increases in customer service fees can be attributed to an
increase in volume and not as a result of increased fees. The net realized gains
on sales of securities was a result of a security called at a premium. This
resulted in an $8,000 increase in 2002 over 2001. There were no security sales
or calls of securities at a premium in 2001. Because there were no realized
gains on the sale of securities in 2001, this created a decrease of $5,000 in
2001 over 2000. Income on life insurance increased by $20,000 in 2002 over 2001.
The increase in 2001 over 2000 was $287,000. Income on life insurance is from a
new bank-owned life insurance plan put into place in 2001 that covers Directors'
retirement and key employees that are not covered by another plan. The plan also
offers life insurance for Directors' and key employees. The other income
decreased in 2002 over 2001 by $173,000. The increase in 2001 over 2000 was
$411,000. This increase in 2001 can be attributed to $266,000 in a settlement of
a long-standing litigation process in which the Bank was the plaintiff. If it
were not for this settlement the increase in 2002 over 2001 would have been
$93,000. The Bank experienced an increase of $17,000 in alternative investment
commissions. The increase in 2001 over 2000 was $107,000. ATM surcharge
accounted for a $10,000

                                                                            -19-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                       RESULTS OF OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------

increase in 2002 as compared to 2001. There was also an increase of $26,000 in
interchange fees on debit cards. Both increases in 2002 can be attributed to
increased usage as opposed to increased fees. The management of The Juniata
Valley Bank seeks product and service improvements that both strengthen existing
customer relationships and help attract new ones. During 1997, sales of mutual
funds were introduced through a third party joint marketing arrangement with
T.H.E. Financial for those customers desiring this type of alternative
investment. Fee income derived from the sale of this product in 2002 was
$204,000.

In 2002, other expenses increased $528,000 or 6.14% over 2001, compared to an
increase of $412,000 from 2000 to 2001. Salaries and wages increased $255,000
from 2001 to 2002. This compares to a decrease of $72,000 from 2000 to 2001. The
increase in 2002 can be attributed to regular salary increases as opposed to
additional employees. An early retirement option was given and six employees
took advantage of it in September 2000. Employee benefits increased $136,000
from 2001 to 2002. From 2000 to 2001 the Bank experienced a decrease of $67,000.
This was due to price changes of benefits provided as opposed to changed
benefits. Occupancy expense increased by $87,000 in 2002 over 2001. The increase
in 2001 over 2000 was $77,000. These increases can be attributed to the Bank's
new operations' center. Equipment expense decreased $24,000 in 2002. This was
preceded by an increase in 2001 of $229,000. The decline in 2002 is due to
negotiations with the third-party bank service provider of computer processing.
Directors' compensation remained virtually unchanged between 2001 and 2002. The
increase in 2001 over 2000 of $90,000 was a result of the new retirement plan
put in place in 2001. Taxes, other than income is an increase in the
Pennsylvania shares tax of $19,000 in 2002 over 2001 and $20,000 in 2001 over
2000. The $58,000 increase in 2002 over 2001 in other expenses can be attributed
to an increase in outside professional fees. The increase of $135,000 in 2001
over 2000 in other expenses can be attributed to $68,000 paid for outsourcing
the internal audit, compliance, and loan review function, $42,000 increase in
postage, and $25,000 for redesigning the wage and salary administration.

The provision for income taxes for 2002 was $1,746,000 compared to $1,428,000 in
2001 and $1,375,000 in 2000. The effective tax rate, which is the ratio of
income tax expense to income before income taxes, was 25.82% in 2002, an
increase from the 23.53% in 2001 and 23.86% in 2000. The tax rate for all
periods was less than the statutory rate of 34% due to tax exempt securities and
loan income and tax free earnings on the bank-owned life insurance. Please refer
to the Notes to the Consolidated Financial Statements "Income Taxes" for further
analysis of federal income tax expense.

On November 12, 1999, The Gramm-Leach-Bliley Act was signed into law. The Act
permits commercial banks to affiliate with investment banks. It permits bank
holding companies to engage in any type of financial activity which includes,
securities, insurance, merchant banking/equity investment, financial in nature,
and complimentary activities. The merchant banking provisions will allow a bank
holding company to make a controlling investment in any kind of company,
financial or commercial. These new powers allow a bank to engage in virtually
every type of activity currently recognized as financial or incidental or
complementary to a financial activity. The commercial bank has to be
well-capitalized, well-managed and CRA rated satisfactory or better. The Act
also allows subsidiaries of banks to engage in a broad range of financial
activities that are not permitted for banks themselves. In light of this new
legislation, The Corporation and The Juniata Valley Bank will evaluate new
financial activities that would complement the products already offered to
enhance non-interest income.

-20-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                              NET INTEREST INCOME
--------------------------------------------------------------------------------

Net interest income is the most significant contributor to the Corporation's net
income. During 2002, net interest income increased 11.48% to $14,171,000
compared to a decrease of .68% from 2000 to 2001. Table 3 shows the interest
income, interest expense and net interest income with the percentage change
between the years. While interest income earned declined due to lower rates,
interest expense declined more.

Table 2 presents average balances, interest income and expense and yields earned
or paid. This table summarizes the components of the net interest income growth.
Interest earning assets increased $18,233,000 or 5.67% in 2002. In 2001 over
2000 there was an increase of $6,053,000. The largest contributor to interest
income is loans. The yield on loans has declined for all three years presented.
From 2001 to 2002 by .81%. From 2000 to 2001 the rate declined .16%. The yield
on taxable securities decreased 1.08% and the yield on tax free securities
increased .12%. In 2001 the yield on taxable securities decreased .26% and tax
free securities decreased .12%. Federal funds sold had a decrease of 2.46% in
2002 over 2001 which was preceded by 4.24% decrease in 2001 over 2000. The
overall yield on these interest earning assets for 2002 was a decrease of .76%.
This followed a decrease of .16% from 2000 to 2001.

Interest bearing liabilities increased $13,474,000 or 5.14% for 2002. There was
an increase of $9,577,000 from 2000 to 2001. Time deposits increased by
$5,340,000 from 2001 to 2002, savings deposits increased by $4,178,000 and
demand deposits bearing interest increased $3,840,000. Rates paid decreased by
1.18% in 2002. There was also a decrease in rates paid from 2000 to 2001 of
..15%.

The Corporation's net spread was 3.54% in 2002 up from the 3.12% in 2001 and the
3.13% in 2000. Interest spread measures the absolute difference between average
rates earned and average rates paid while net interest margin reflects the
relationship of interest income to earning assets versus interest expense to
earning assets. The Corporation's net interest margin was 4.17% for 2002
compared to 3.96% in 2001 and 4.06% in 2000.

From Table 4 it can be seen that the increases in net interest income of
$1,459,000 during 2002 were affected by increases in volume of $925,000 and an
increase in rates of $534,000. Even though rates declined, the rates in interest
bearing assets declined less than the rates in interest bearing liabilities.
Volume increased while rates decreased on interest income which is the same
scenario with interest expense in 2002. Loans added $846,000 in volume but had a
$1,865,000 decrease in rates. Taxable securities had an increase in volume and a
decrease in rate. Interest expense experienced a small increase in volume in all
categories and a decline in rates. The most significant being time deposits.
Rate declines contributed $2,472,000 to the overall change. In 2001 an increase
in net interest income was also due to an increase in volume and a decrease in
rates. Interest income and interest expense had both an increase in volume and
rate.

                                                                            -21-

<PAGE>

--------------------------------------------------------------------------------
                   TABLE 2 - ANALYSIS OF NET INTEREST INCOME
--------------------------------------------------------------------------------

Table 2 presents average balances, interest income and expense and the yields
earned or paid on these assets and liabilities. Yields on tax exempt securities
are not presented on a tax equivalent basis. Nonaccrual loans and unrealized
gains on securities are included in "Other assets" under "Noninterest earning
assets".

<TABLE>
<CAPTION>
                                                                    2002
                                                                  INTEREST
                                                     AVERAGE       INCOME        AVERAGE
                                                     BALANCES     (EXPENSE)     YIELD/RATE
                                                     --------     ---------     ----------

                                                               (IN THOUSANDS)

<S>                                                  <C>           <C>             <C>
INTEREST EARNING ASSETS
    Interest bearing deposits in other banks         $  4,239      $   145         3.42%
    Securities (taxable)                               57,762        2,851         4.94
    Securities (tax exempt)                            38,223        1,469         3.84
    Federal funds sold                                  6,108           95         1.56
    Loans                                             233,262       18,910         8.11
                                                     --------      -------

        Total interest earning assets                 339,594       23,470         6.91
                                                                                   ----
NON-INTEREST EARNING ASSETS
    Cash and due from banks                             9,791
    Other assets                                       20,068
    Less: allowance for loan losses                    (2,600)
                                                     --------

        Total assets                                 $366,853
                                                     ========

INTEREST BEARING LIABILITIES
    Demand deposits bearing interest                 $ 53,896         (855)        1.59%
    Savings deposits                                   35,382         (642)        1.81
    Time deposits                                     186,425       (7,799)        4.18
    Short-term borrowings                                 137           (3)        2.19
                                                     --------      -------

        Total interest bearing liabilities            275,840       (9,299)        3.37
                                                                   -------         ----

NON-INTEREST BEARING LIABILITIES
    Demand deposits                                    38,870
    Other liabilities                                   5,933
STOCKHOLDERS' EQUITY                                   46,210
                                                     --------

        Total liabilities and stockholders' equity   $366,853
                                                     ========

NET INTEREST INCOME/SPREAD                                         $14,171         3.54%
                                                                   =======         ====

MARGIN ANALYSIS
    Interest income/earning assets                                                 6.91%
    Interest expense/earning assets                                                2.74
                                                                                   ----

        Net interest margin                                                        4.17%
                                                                                   ====
</TABLE>

-22-

<PAGE>

--------------------------------------------------------------------------------
                              TABLE 2 (CONTINUED)
--------------------------------------------------------------------------------

               2001                                       2000
             INTEREST                                   INTEREST
 AVERAGE      INCOME         AVERAGE       AVERAGE       INCOME        AVERAGE
BALANCES     (EXPENSE)     YIELD/RATE     BALANCES      (EXPENSE)     YIELD/RATE
--------     ---------     ----------     --------      ---------     ----------

          (IN THOUSANDS)                             (IN THOUSANDS)

$  1,114      $    53         4.76%       $    672       $    48         7.14%
  44,691        2,692         6.02          52,339         3,287         6.28
  41,829        1,555         3.72          46,457         1,785         3.84
  10,240          412         4.02           3,570           295         8.26
 223,487       19,929         8.92         212,270        19,264         9.08
--------      -------                     --------       -------
 321,361       24,641         7.67         315,308        24,679         7.83
                              ----                                       ----
   9,596                                     9,243
  19,892                                    12,653
  (2,518)                                   (2,519)
--------                                  --------
$348,331                                  $334,685
========                                  ========

$ 50,056       (1,183)        2.36%       $ 46,221        (1,363)        2.95%
  31,204         (760)        2.44          31,033          (828)        2.67
 181,085       (9,985)        5.51         175,535        (9,689)        5.52
      21           (1)        4.76              --            --           --
--------      -------                     --------       -------
 262,366      (11,929)        4.55         252,789       (11,880)        4.70
              -------         ----                       -------         ----

  36,623                                    34,827
   4,994                                     4,963
  44,348                                    42,106
--------                                  --------

$348,331                                  $334,685
========                                  ========
              $12,712         3.12%                      $12,799         3.13%
              =======         ====                       =======         ====

                              7.67%                                      7.83%
                              3.71                                       3.77
                              ----                                       ----

                              3.96%                                      4.06%
                              ====                                       ====


                                                                            -23-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                         TABLE 3 -- NET INTEREST INCOME
--------------------------------------------------------------------------------

Net interest income, defined as interest income less interest expense, is shown
in the following table:


                            2002     % Change      2001    % Change     2000
                            ----     --------      ----    --------     ----
                                             (In Thousands)

Interest income           $23,470     (4.75)%    $24,641     (.15)%    $24,679
Interest expense            9,299    (22.05)      11,929      .41       11,880
                          -------                -------               -------
Net interest income       $14,171     11.48      $12,712     (.68)     $12,799
                          =======                =======               =======


--------------------------------------------------------------------------------
             TABLE 4 -- RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
--------------------------------------------------------------------------------

Table 4 attributes increases and decreases in components of net interest income
either to changes in average volume or to changes in average rates for interest
earning assets and interest bearing liabilities. Numerous and simultaneous
balance and rate changes occur during the year. The amount of change that is not
due solely to volume or rate is allocated proportionally to both.

<TABLE>
<CAPTION>
                                  2002/2001 Increase (Decrease)       2001/2000 Increase (Decrease)
                                         Due to Change in                   Due to Change in

                                  Volume        Rate        Net       Volume        Rate       Net
                                  ------        ----        ---       ------        ----       ---

<S>                               <C>         <C>         <C>         <C>          <C>        <C>
Interest bearing deposits
     in other banks               $  111      $   (19)    $    92     $   25       $ (20)     $   5
Securities (taxable)                 699         (540)        159       (465)       (130)      (595)
Securities (tax free)               (138)          52         (86)      (173)        (57)      (230)
Federal funds sold                  (126)        (191)       (317)       329        (212)       117
Loans                                846       (1,865)     (1,019)     1,005        (340)       665
                                  ------      -------     -------     ------       -----      -----
     Interest income               1,392       (2,563)     (1,171)       721        (759)       (38)
                                  ======      =======     =======     ======       =====      =====

Demand deposits
     bearing interest                 85         (413)       (328)       107        (287)      (180)
Savings deposits                      93         (211)       (118)         4         (72)       (68)
Time deposits                        286       (2,472)     (2,186)       306         (10)       296
Short-term borrowings                  3           (1)          2          1          --          1
                                  ------      -------     -------     ------       -----      -----
     Interest expense                467       (3,097)     (2,630)       418        (369)        49
                                  ------      -------     -------     ------       -----      -----

Increase (decrease)
     in net interest income       $  925      $   534     $ 1,459     $  303       $(390)     $ (87)
                                  ======      =======     =======     ======       =====      =====
</TABLE>

--------------------------------------------------------------------------------
                                 LOAN PORTFOLIO
--------------------------------------------------------------------------------

                                                     [NET LOANS GRAPHIC OMITTED]
At December 31, 2002, net loans increased $7,499,000 or 3.29% over 2001. This
follows an increase in 2001 over 2000 in net loans of $8,179,000 or 3.72%. The
loan to deposit ratio fluctuated throughout 2002; monthly averages were at a low
in October of 71.0% and a high in February of 73.3%.

Residential mortgages increased by $5,431,000 or 4.55% from 2001 to 2002.
Residential mortgages increased by $5,242,000 from 2000 to 2001. Real estate
loans still remain a very attractive option due to the tax deductibility of
mortgage interest. Commercial real estate loans grew by $809,000 or 2.54% in
2002 over 2001. Commercial real estate loans increased by $3,230,000 from 2000
to 2001. Consumer loans decreased $304,000 or .49% in 2002 over 2001. This
follows a year with a decrease of $1,517,000 in 2001 over 2000.

-24-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                           LOAN PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------

In spite of the slow economy and increasing credit problems nationwide, the
Corporation continued its excellent chargeoff record (charge-offs, net of
recoveries) during 2002. For the year, the net charge-offs were $95,000 or .04%
of average loans outstanding. This compares with $211,000 or .09% in 2001 and
$219,000 or .10% in 2000. The low net charge-offs in 2002 was due to a recovery
of over $100,000 on a loan previously charged-off. The increase in 2001 and 2000
was due to a growing loan portfolio and not as a result of relaxation of
underwriting standards.

The allowance for loan losses is based upon quarterly loan portfolio reviews by
management and a committee of the Board. The purpose of the review is to assess
loan quality, identify impaired loans, analyze delinquencies, ascertain loan
growth, evaluate potential charge-offs and recoveries and assess general
economic conditions in the market served.

Commercial and real estate loans are rated periodically by loan review
personnel. Consumer and residential real estate loans are generally reviewed in
the aggregate as they are of relative small dollar size and homogeneous in
nature.

In addition to economic conditions, loan portfolio diversification, delinquency,
and historic loss experience, consideration is also given to examinations
performed by the regulatory authorities.

To determine the allowance and corresponding provision, the amount required for
specific allocation is first determined. For all types of commercial and
construction loans, this amount is based upon specific borrower data determined
by reviewing non-performing, delinquent, or potentially troubled credits. In
addition, a general allocation is also determined using the same criteria
applied to the total commercial portfolio excluding those identified for
possible specific allocation. Consumer and residential real estate allowances,
generally are based upon recent chargeoff and delinquency history, other known
trends, and expected losses over the remaining lives of these loans, as well as
the condition of local, regional, and national economies.

As part of the evaluation process, management considers it appropriate to
maintain a portion of the allowance that is based on credit quality trends, loan
volume, current economic trends and other uncertainties. This portion of the
allowance for loan losses is reflected as the unallocated portion.

Determining the level of the allowance for possible loan losses at any given
period is difficult, particularly during deteriorating or uncertain economic
periods. Management must make estimates using assumptions and information which
is often subjective and changing rapidly. The review of the loan portfolio is a
continuing event in light of a changing economy and the dynamics of the banking
and regulatory environment. It is management's opinion that the allowance for
loan losses for 2002 of $2,731,000 or 1.15% of outstanding loans is adequate to
meet any foreseeable loan loss contingency. This is higher than the 1.11% for
2001 and the 1.14% for 2000.

At December 31, 2002 and 2001, total non-performing loans were $763,000 and
$1,745,000, respectively; nonperforming loans as a percentage of the allowance
for loan losses were 27.94% and 69.08%, respectively.

In addition, regulatory authorities, as an integral part of their examinations,
periodically review the allowance for possible loan losses. They may require
additions to allowances based upon their judgements about information available
to them at the time of their examination.

It is the policy of the Corporation not to renegotiate the terms of a loan
simply because of a delinquent status. Rather a loan is transferred to
non-accrual status if it is not well secured and in process of collection and is
delinquent in payment of either principal or interest beyond 90 days. Interest
income received on non-accruing loans was $0 in 2002 and 2001.

Real estate acquired through foreclosure is carried at the lower of the recorded
amount of the loan for which the foreclosed property served as collateral or the
fair market value of the property as determined by a current appraisal less
estimated costs to sell (fair value). Prior to foreclosure, the recorded amount
of the loan is reduced, if necessary, to fair value by charging the allowance
for loan losses. Subsequent to foreclosure, gains or losses on the sale of real
estate acquired through foreclosure are recorded in operating income and any
losses determined as a result of periodic valuations are charged to other
operating expense.

Loans with principal and/or interest delinquent 90 days or more which are still
accruing interest were $544,000 at December 31, 2002, down from the $811,000 at
December 31, 2001. Although the economy has stabilized since September 11, 2001,
there is still uncertainty locally for large employers. This may adversely
affect certain borrowers and may cause additional loans to become past due
beyond 89 days or to be placed on non-accrual status because of uncertainty of
receiving full payments of either principal or interest on these loans.

                                                                            -25-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                  LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
--------------------------------------------------------------------------------

The goals of the Corporation's asset/liability management function, are to
ensure adequate liquidity and to maintain an appropriate balance between the
relative rate sensitivity of interest earning assets and interest bearing
liabilities. Liquidity management encompasses the ability to meet ongoing cash
flow requirements of customers, who, as depositors, may want to withdraw funds
or who, as borrowers, need credit availability. Interest rate sensitivity
management attempts to prove stable net interest margins through changing
interest rate environments and thereby achieve consistent growth in net interest
income.

Liquidity management is influenced by several key elements, including asset
quality and the maturity structure of assets and liabilities. The single most
important source of liquidity for the Corporation is a strong, stable core
deposit base. This funding source has exhibited steady growth over the years and
consists of deposits from customers with longstanding relationships. In 2002 the
Corporation funded approximately 76% of its assets with core deposits acquired
in local communities. This core deposit base, combined with stockholders'
equity, funded over 90% of average assets in 2002 and provides a substantial and
highly stable source of liquidity.

Principal sources of asset liquidity are provided by held to maturity securities
maturing in one year or less, available for sale securities, interest bearing
time deposits with banks maturing within one year, and other short term
investments such as federal funds sold and cash and due from banks. At December
31, 2002, these liquid assets amounted to $104,338,000 compared to liquid assets
at December 31, 2001, of $76,472,000. Liquidity is also provided by scheduled
and unscheduled principal repayments of loans.

The financial statements do not reflect various commitments that are made in the
normal course of business, which may involve some liquidity risk. These
commitments consist mainly of unfunded loans and letters of credit made under
the same standards as on-balance sheet instruments. Unused commitments, at
December 31, 2002 totaled $33,719,000. Because these instruments have fixed
maturity dates, and because many of them will expire without being drawn upon,
they do not generally present any significant liquidity risk.

The Corporation joined the Federal Home Loan Bank (FHLB) of Pittsburgh in August
of 1993 for the purpose of providing short term liquidity when other sources are
unable to fill these needs. The Corporation has a short term line of credit of
$10,000,000. Outstanding balances under this agreement were $0 at December 31,
2002. At December 31, 2001, the amount borrowed was $1,275,000. The Bank has a
maximum borrowing capacity of $127,807,000 with the FHLB which is collateralized
by qualifying assets of the Bank. No amounts were outstanding at December 31,
2002 and 2001.

Liability liquidity, which is more difficult to measure, can be met by
attracting deposits and maintaining the core deposit base. The Corporation's
ability to attract deposits depends primarily on several factors including sales
effort, competitive interest rates, and other conditions which help maintain
consumer confidence in the stability of the financial institution. This
confidence is evaluated by such factors as profitability, capitalization and
overall financial condition.

The Corporation's primary funding requirement is loan demand. From the statement
of cash flows in 2002 loan demand increased by $7,799,000. This was easily
funded by the deposit growth of $17,151,000.

--------------------------------------------------------------------------------
                       TABLE 5 -- CONTRACTUAL OBLIGATIONS
--------------------------------------------------------------------------------

CONTRACTUAL OBLIGATIONS

                                             December 31, 2002
                                             -----------------
                      Less than                               Over
                       1 Year    1 - 3 Years   4 - 5 Years   5 Years    Total
                       ------    -----------   -----------   -------    ------
                                              (In Thousands)

Time deposits         $110,307     $58,508       $20,558     $    --   $189,373
Long term debt              --          --            --          --         --
Operating leases           275         552           303          --      1,130
                      --------     -------       -------     -------   --------
Total                 $110,582     $59,060       $20,861     $    --   $190,503
                      ========     =======       =======     =======   ========


-26-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                               REGULATORY MATTERS
--------------------------------------------------------------------------------

The Juniata Valley Bank is subject to periodic examinations by one or more of
the various regulatory agencies. During 2002 an examination was conducted by the
Federal Deposit Insurance Corporation. This examination included, but was not
limited to, procedures designed to review lending practices, credit quality,
liquidity, operations and capital adequacy. No comments were received from this
regulatory body which would have a material effect on the Corporation's
liquidity, capital resources, or operations.

In June of 2001, the Financial Accounting Standards Board issued Statement 143,
"Accounting for Asset Retirement Obligations," which addresses the financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. This
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived asset. This
statement will become effective for the Bank on January 1, 2003.

Adoption of this statement is not expected to have a material impact on the
Corporation's financial condition or results of operations.

In July of 2002, the Financial Accounting Standards Board issued Statement No.
146, "Accounting for Costs Associated with Exit or Disposal Activities", which
nullifies EITF Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)". This statement delays recognition of these
costs until liabilities are incurred, rather than at the date of commitment to
the plan, and requires fair value measurement. It does not impact the
recognition of liabilities incurred in connection with a business combination or
the disposal of long-lived assets. The provisions of this statement are
effective for exit or disposal activities initiated after December 31, 2002, and
are not expected to have a significant impact on the Corporation's financial
condition or results of operations.

--------------------------------------------------------------------------------
                                MARKET RATE RISK
--------------------------------------------------------------------------------

The operations of the Corporation are subject to risk resulting from interest
rate fluctuations to the extent that there is a difference between the amount of
the Corporation's interest earning assets and the amount of interest bearing
liabilities that are prepaid/withdrawn, mature or re-price in specified periods.
The principal objective of the Bank's asset/liability management activities is
to provide consistently higher levels of net interest income while maintaining
acceptable levels of interest rate and liquidity risk and facilitating the
funding needs of the Corporation. The Corporation utilizes an interest rate
sensitivity model as the primary quantitative tool in measuring the amount of
interest rate risk that is present.

The operations of the Corporation do not subject it to foreign currency exchange
or commodity price risk. Also the Corporation does not utilize interest rate
swaps, caps or other hedging transactions.

The Corporation uses several tools to measure and evaluate interest rate risk.
Table 6 provides information about the Corporation's financial instruments that
are sensitive to changes in interest rates. For securities, loans and deposits,
the table presents principal cash flows and related weighted average interest
rates by maturity dates. The Corporation has no market risk sensitive
instruments entered into for trading purposes.

Another tool for analyzing interest rate risk is financial simulation modeling
which captures the impact of not only changing interest rates but also other
sources of cash flow variability including loan and securities prepayments, loan
repricing, and deposit pricing. Financial simulation modeling forecasts both net
interest income and the economic value of equity. The Corporation regularly
measures the effects of an up or down 200-basis point "rate shock" which is
deemed to represent the outside limits of any reasonably probable movement in
market interest rates during a one-year time frame. As indicated in Table 7, the
financial simulation analysis revealed that projected net interest income over a
one-year time period is positively affected by higher market interest rates,
while the economic value of equity is adversely affected by higher interest
rates. In a lower interest rate environment the opposite is presented. Projected
net interest income is adversely affected by the lower rates and economic value
of equity is favorably affected.

Computations of the projected effects of hypothetical interest rate changes are
based on many assumptions, including relative levels of market interest rates
and loan prepayments. Certain shortcomings are inherent in the computation of
discounted present value and, if key relationships do not unfold as assumed,
actual values may differ from those presented. Further, the computations do not
contemplate certain actions management could undertake in response to changes in
market interest rates.

                                                                            -27-

<PAGE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------
                               TABLE 6 - INTEREST RATE SENSITIVITY
                   PRINCIPAL AMOUNT BY EXPECTED MATURITY/AVERAGE INTEREST RATE
-------------------------------------------------------------------------------------------------

                                                  2003                2004              2005
                                                  ----                ----              ----
DECEMBER 31, 2002                                           (Dollars in Thousands)
                                            Amount    Rate      Amount    Rate    Amount     Rate
                                            ------    ----      ------    ----    ------     ----
<S>                                        <C>        <C>      <C>        <C>
ASSETS

    Interest bearing and time deposits     $ 3,565    3.25%    $ 1,915    2.95%        --      --
    Federal funds sold                       3,700    1.56          --      --         --      --
    Available for sale securities            6,081    5.84       6,991    6.01    $23,512    4.12%
    Held to maturity securities             15,466    4.75      12,474    4.28         --      --

    Loans
        Commercial                          26,815    7.63          --      --         --      --
        Consumer                            11,752    8.66       9,178    9.14      6,772    8.92
        Real estate mortgage               140,987    7.62       1,786    7.53      1,894    7.53


LIABILITIES

    Interest bearing demand deposits        58,160    1.59          --      --         --      --
    Savings deposits                        36,194    1.82          --      --         --      --
    Certificates of deposit                110,307    3.48      36,039    3.91     22,469    4.15


=================================================================================================


                                                  2002                2003              2004
                                                  ----                ----              ----
DECEMBER 31, 2001                                           (Dollars in Thousands)
                                            Amount    Rate      Amount    Rate    Amount     Rate
                                            ------    ----      ------    ----    ------     ----

ASSETS

    Interest bearing and time deposits    $  2,217    2.96%    $ 1,400    3.66%   $    60    4.41%
    Federal funds sold                          --      --          --      --         --      --
    Available for sale securities            7,519    5.21      10,284    5.92      9,112    5.18
    Held to maturity securities              8,351    4.74      10,624    5.12     17,409    4.53

    Loans
        Commercial                          24,548    8.56          --      --         --      --
        Consumer                            11,799    8.72       9,435    9.33      7,387    9.03
        Real estate mortgage               135,815    7.87         876    7.79        922    7.78


LIABILITIES

    Interest bearing demand deposits        51,769    2.36          --      --         --      --
    Savings deposits                        32,281    2.44          --      --         --      --
    Certificates of deposit                112,800    4.73      47,917    5.18     11,163    4.83
</TABLE>


-28-

<PAGE>

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
                              TABLE 6 (CONTINUED)
--------------------------------------------------------------------------------

                                                                       Fair Value
        2006              2007           Thereafter        Total   December 31, 2002
        ----              ----           ----------        -----   -----------------
                                (Dollars in Thousands)
  Amount   Rate     Amount   Rate     Amount   Rate
  ------   ----     ------   ----     ------   ----
 <S>       <C>     <C>       <C>     <C>       <C>       <C>           <C>
      --     --         --     --         --     --      $  5,480      $  5,480
      --     --         --     --         --     --         3,700         3,700
 $ 8,100   5.37%   $16,393   5.77%   $ 6,700   5.26%       67,777        70,495
     969   3.50        498   4.38        500   5.84        29,907        30,698


      --     --         --     --         --     --        26,815        26,815
   4,441   8.64      3,202   8.61     18,459   8.57        53,804        51,571
   1,982   7.53      2,006   7.50      8,954   7.46       157,609       157,825


      --     --         --     --         --     --        58,160        58,160
      --     --         --     --         --     --        36,194        36,194
  10,506   4.88     10,052   4.58         --     --       189,373       186,366


================================================================================



                                                                       Fair Value
        2005              2006           Thereafter        Total   December 31, 2001
        ----              ----           ----------        -----   -----------------
                                (Dollars in Thousands)
  Amount   Rate     Amount   Rate     Amount   Rate
  ------   ----     ------   ----     ------   ----

      --     --         --     --         --     --       $ 3,677       $ 3,677
      --     --         --     --         --     --            --            --
 $ 8,476   5.67%   $ 6,932   6.01%  $ 11,315   5.39%       53,638        54,663
     500   6.00        961   3.50        767   5.33        38,612        39,435


      --     --         --     --         --     --        24,548        24,548
   4,949   8.79      3,271   8.78     15,240   8.89        52,081        52,283
     983   7.77      1,045   7.76     11,728   7.59       151,369       151,620


      --     --         --     --         --     --        51,769        51,769
      --     --         --     --         --     --        32,281        32,281
   5,050   5.82      6,399   5.14         --     --       183,329       186,842
</TABLE>

                                                                            -29-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
            TABLE 7 - SENSITIVITY TO CHANGE IN MARKET INTEREST RATES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        Interest Rate Scenarios
                                                        -----------------------
                                               -200 bps   -100 bps   +100 bps   +200 bps
                                               --------   --------   --------   --------
DECEMBER 31, 2002                                            (In Thousands)

<S>                                            <C>        <C>        <C>        <C>
Prospective one-year net interest income:
    Projected                                  $14,137    $14,154    $14,271    $14,371
    Percent change                                (.24)%     (.12)%      .71%      1.41%

Economic value of portfolio equity:
    Projected                                  $49,393    $48,860    $47,499    $46,671
    Percent change                                2.21%      1.10%     (1.71)%    (3.42)%



                                                        Interest Rate Scenarios
                                                        -----------------------
                                               -200 bps   -100 bps   +100 bps   +200 bps
                                               --------   --------   --------   --------
DECEMBER 31, 2001                                            (In Thousands)

Prospective one-year net interest income:
    Projected                                  $12,390    $12,551    $12,804    $12,896
    Percent change                               (2.53)%    (1.27)%      .72%      1.45%

Economic value of portfolio equity:
    Projected                                  $47,820    $46,573    $43,544    $41,763
    Percent change                                5.50%      2.75%     (3.93)%    (7.86)%
</TABLE>

Key assumptions:

    1. Residential mortgage loans and mortgage-backed securities prepay at
       rate-sensitive speeds consistent with observed historical prepayment
       speeds for pools of residential mortgages.
    2. Variable rate loans and variable rate liabilities reprice in
       accordance with their contractual terms, if any. Rate changes for
       adjustable rate mortgages are constrained by their contractual caps
       and floors.
    3. Interest-bearing nonmaturity deposits reprice in response to different
       interest rate scenarios consistent with the Corporation's historical
       rate relationships to market interest rates.
    4. Interest rate scenarios assume a three month ramp in the term
       structure of interest rates.

-30-

<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                                     CAPITAL
--------------------------------------------------------------------------------

                                         [STOCKHOLDERS'S EQUITY GRAPHIC OMITTED]
On March 20, 2001, the Board of Directors of the Juniata Valley Financial Corp.
declared a 10% stock dividend to shareholders payable on April 27, 2001. 182,210
shares were issued from treasury stock and 32,320 shares were issued from
authorized and unissued. At this same meeting the Board of Directors authorized
the repurchase of 100,000 shares outstanding of common stock. As of December 31,
2002, 63,312 shares were repurchased with 36,688 shares remaining. Shares are
also reissued for the dividend reinvestment plan as well as the employee stock
purchase plan. At December 31, 2002 and 2001, treasury stock was 59,445 and
21,934 shares, respectively, at a cost of $1,705,000 and $623,000.

The Corporation maintains a strong capital base to take advantage of business
opportunities while ensuring that it has resources to absorb the risks inherent
in the business. The federal banking regulators have established capital
adequacy requirements for banks and bank holding companies by using risk-based
capital framework and by monitoring compliance with minimum leverage guidelines.
These guidelines are based on "risk adjusted" factors, which means assets with
potentially higher credit risk will require more capital backing than assets
with lower credit risk.

The FDIC classified capital into two tiers, referred to as Tier I and Tier II.
Tier I capital consists of common stockholders' equity (excluding the net
unrealized appreciation on securities available for sale), noncumulative and
cumulative (bank holding companies only) perpetual stock, and minority interests
less goodwill. Tier II capital consists of allowance for loan and lease losses,
perpetual preferred stock (not included in Tier I), hybrid capital instruments,
term subordinated debt, and intermediate-term preferred stock. Since December
31, 1992, all banks have been required to meet a minimum ratio of 8.00% and
qualifying total capital to risk adjusted total assets with at least 4% Tier I
capital and 8% of risk-adjusted assets in total capital. As indicated on the
schedule following this discussion, the Tier I risk-based capital ratio was
18.76% and Tier II risk-based capital ratio was 19.93% at December 31, 2002. The
Bank's capital ratios are well above the current minimum ratio requirement set
forth by federal banking regulators.

In addition to risk-based requirements, the Federal Reserve Board has
established minimum leverage guidelines for bank holding companies. For most
banks, the minimum leverage rate is 3% plus an additional cushion of 100 to 200
basis points depending on risk profiles and other factors. As of December 31,
2002, the leverage ratio was 12.04%.

<TABLE>
<CAPTION>

CAPITAL ANALYSIS                                                            December 31,
                                                                            ------------
                                                                  2002         2001         2000
                                                                  ----         ----         ----
                                                                       (Thousands of Dollars)
<S>                                                             <C>          <C>          <C>
Tier I
    Common stockholders' equity (excluding unrealized
        gains/losses on securities)                             $ 43,899     $ 42,515     $ 40,999

Tier II
    Allowable portion of allowance for loan losses                 2,731        2,526        2,497
                                                                --------     --------     --------

    Risk-based capital                                          $ 46,630     $ 45,041     $ 43,496
                                                                ========     ========     ========

Risk adjusted assets (including off-balance-sheet exposures)    $234,004     $230,325     $222,052
                                                                ========     ========     ========

Tier I risk-based capital ratio                                    18.76%       18.46%       18.46%
Total risk-based capital ratio                                     19.93%       19.56%       19.59%
Leverage ratio                                                     12.04%       11.98%       12.30%
</TABLE>

                                                                            -31-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

--------------------------------------------------------------------------------
                              EFFECTS OF INFLATION
--------------------------------------------------------------------------------

The performance of a bank is affected more by changes in interest rates than by
inflation; therefore, the effect of inflation is normally not as significant as
it is on other businesses and industries. During periods of high inflation, the
money supply usually increases and banks normally experience above average
growth in assets, loans, and deposits. A bank's operating expenses will usually
increase during inflationary times as the price of goods and services increase.

A bank's performance is also affected during recessionary periods. In times of
recession, a bank usually experiences a tightening on its earning assets and on
its profits. A recession is usually an indicator of higher unemployment rates,
which could mean an increase in the number of nonperforming loans because of
continued layoffs and other deterioration of consumers' financial conditions.

It is difficult to predict what will happen in 2003 because of many
uncertainties surrounding the economy. However, The Juniata Valley Bank's
management and Board of Directors are looking forward to meeting the challenges
a changing economy can present. The Juniata Valley Bank's commitment to
providing quality banking services for the communities it serves will continue
through 2003. This community-based strategy gives management the opportunity to
recognize steady growth in our consumer, mortgage, and commercial loans as well
as in our core deposit base. The Bank's strong capital and earnings potential
provide the solid foundation needed to excel in the ever-changing banking
industry. Management feels it is positioned to handle changes in the economic
environment in 2003 through effective asset/liability management. Juniata Valley
Financial Corp. is committed to providing stockholders with an attractive return
on their investment.

-32-

<PAGE>


[BEARD MILLER COMPANY LLP LOGO OMITTED]





                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
Juniata Valley Financial Corp.
Mifflintown, Pennsylvania


     We have audited the accompanying consolidated balance sheets of Juniata
Valley Financial Corp. and its wholly-owned subsidiary, The Juniata Valley Bank,
as of December 31, 2002 and 2001, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 2002. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Juniata
Valley Financial Corp. and its wholly-owned subsidiary, The Juniata Valley Bank,
as of December 31, 2002 and 2001, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States of
America.



                                               /s/Beard Miller Company LLP
                                               --------------------------------


Harrisburg, Pennsylvania
January 17, 2003

                                                                            -33-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS
                                    ------
                                                         December 31,
                                                         ------------
                                                       2002          2001
                                                       ----          ----
                                               (In Thousands, Except Share Data)
Assets:
    Cash and due from banks                          $ 11,111      $ 11,571
    Interest bearing deposits with banks                   90            87
    Federal funds sold                                  3,700            --
                                                     --------      --------

            Cash and cash equivalents                  14,901        11,658
    Interest bearing time deposits with banks           5,390         3,590
    Securities available for sale                      70,495        54,663
    Securities held to maturity, fair value
        2002 $30,698; 2001 $39,435                     29,907        38,612
    Federal Home Loan Bank stock                          639         1,208
    Loans receivable, net of allowance for
        loan losses 2002 $2,731; 2001 $2,526          235,497       227,998
    Bank premises and equipment, net                    5,767         6,068
    Accrued interest receivable and other assets       13,139        12,960
                                                     --------      --------

            Total assets                             $375,735      $356,757
                                                     ========      ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Liabilities:
    Deposits:
        Non-interest bearing                         $ 38,892      $ 38,089
        Interest bearing                              283,727       267,379
                                                     --------      --------

            Total deposits                            322,619       305,468

    Short-term borrowings                                  --         1,275
    Accrued interest payable and other liabilities      4,789         4,688
                                                     --------      --------

            Total liabilities                         327,408       311,431
                                                     --------      --------

Stockholders' equity:
    Preferred stock, no par value; 500,000 shares
        authorized; no shares issued or outstanding        --            --
    Common stock, par value $1.00 per share;
        authorized 20,000,000 shares; issued 2002
        2,372,930 shares; 2001 2,372,934 shares         2,373         2,373
    Surplus                                            20,212        20,221
    Retained earnings                                  25,652        22,679
    Accumulated other comprehensive income              1,795           676
    Treasury stock, at cost 2002 59,445 shares;
        2001 21,934 shares                             (1,705)         (623)
                                                     --------      --------

          Total stockholders' equity                   48,327        45,326
                                                     --------      --------

          Total liabilities and stockholders' equity $375,735      $356,757
                                                     ========      ========

                 See Notes to Consolidated Financial Statements.

-34-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                       CONSOLIDATED STATEMENTS OF INCOME

                                                   Years Ended December 31,
                                                   ------------------------
                                                 2002       2001       2000
                                                 ----       ----       ----
                                           (In Thousands, Except Per Share Data)
Interest income:
    Loans receivable, including fees           $18,910    $19,929    $19,264
    Taxable securities                           2,851      2,692      3,287
    Tax-exempt securities                        1,469      1,555      1,785
    Other                                          240        465        343
                                               -------    -------    -------

        Total interest income                   23,470     24,641     24,679
                                               -------    -------    -------
Interest expense:
    Deposits                                     9,299     11,928     11,880
    Short-term borrowings                           --          1         --
                                               -------    -------    -------

        Total interest expense                   9,299     11,929     11,880
                                               -------    -------    -------

        Net interest income                     14,171     12,712     12,799

Provision for loan losses                          300        240        230
                                               -------    -------    -------
        Net interest income after provision
            for loan losses                     13,871     12,472     12,569
                                               -------    -------    -------

Other income:
    Trust department                               339        435        387
    Customer service fees                          688        627        551
    Net realized gains on sales of securities        8         --          5
    Income on life insurance                       382        362         75
    Other                                          597        770        359
                                               -------    -------    -------

        Total other income                       2,014      2,194      1,377
                                               -------    -------    -------

Other expenses:
    Salaries and wages                           3,751      3,496      3,568
    Employee benefits                            1,245      1,109      1,176
    Occupancy                                      662        575        498
    Equipment                                    1,180      1,204        975
    Director compensation                          358        361        271
    Taxes, other than income                       504        485        465
    Other                                        1,424      1,366      1,231
                                               -------    -------    -------

        Total other expenses                     9,124      8,596      8,184
                                               -------    -------    -------

        Income before income taxes               6,761      6,070      5,762

Federal income taxes                             1,746      1,428      1,375
                                               -------    -------    -------

        Net income                             $ 5,015    $ 4,642    $ 4,387
                                               =======    =======    =======
Per share data:
    Basic and diluted                          $  2.15    $  1.96    $  1.81
                                               =======    =======    =======
    Cash dividends                             $  0.88    $  0.80    $  1.21
                                               =======    =======    =======

                See Notes to Consolidated Financial Statements.

                                                                            -35-

<PAGE>

<TABLE>
<CAPTION>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                         Years Ended December 31, 2002, 2001 and 2000
                                                         --------------------------------------------
                                                                                       Accumulated
                                                                                         Other
                                               Common                    Retained     Comprehensive  Treasury
                                               Stock     Surplus         Earnings        Income        Stock      Total
                                               -----     -------         --------        ------        -----      -----
                                                                      (In Thousands)

<S>                                            <C>       <C>              <C>            <C>         <C>        <C>
Balance, December 31, 1999                     $2,332    $20,559          $23,665        $  102      $(3,403)   $43,255
                                                                                                                -------
Comprehensive income:
    Net income                                     --         --            4,387            --           --      4,387
    Change in unrealized gains
        on securities available for sale,
        net of reclassification adjustment
        and tax effects                            --         --               --           265           --        265
                                                                                                                -------
    Total comprehensive income                                                                                    4,652
                                                                                                                -------
    Cash dividends declared                        --         --           (2,935)           --           --     (2,935)
    Treasury stock issued under dividend
        reinvestment plan                          --       (161)              --            --          546        385
    Treasury stock issued under
        employee stock purchase plan               --         --               --            --            1          1
    Treasury stock acquired                        --         --               --            --       (2,276)    (2,276)
                                               ------    -------          -------        ------      -------    -------
Balance, December 31, 2000                      2,332     20,398           25,117           367       (5,132)    43,082
                                                                                                                -------
Comprehensive income:
    Net income                                     --         --            4,642            --           --      4,642
    Change in unrealized gains
        on securities available for sale,
        net of reclassification adjustment
        and tax effects                            --         --               --           309           --        309
                                                                                                                -------
    Total comprehensive income                                                                                    4,951
                                                                                                                -------
    Stock issued under dividend
        reinvestment plan                           7        166               --            --           --        173
    Cash dividends declared                        --         --           (1,893)           --           --     (1,893)
    10% common stock dividend                      32       (373)          (5,187)           --        5,517        (11)
    Stock issued under employee stock
        purchase plan                               2         30               --            --           --         32
    Treasury stock issued under dividend
        reinvestment plan                          --         --               --            --          181        181
    Treasury stock acquired                        --         --               --            --       (1,189)    (1,189)
                                               ------    -------          -------        ------      -------    -------
Balance, December 31, 2001                      2,373     20,221           22,679           676         (623)    45,326
                                                                                                                -------
Comprehensive income:
    Net income                                     --         --            5,015            --           --      5,015
    Change in unrealized gains
        on securities available for sale,
        net of reclassification adjustment
        and tax effects                            --         --               --         1,119           --      1,119
                                                                                                                -------
    Total comprehensive income                                                                                    6,134
                                                                                                                -------
    Cash dividends declared                        --         --           (2,042)           --           --     (2,042)
    Treasury stock issued under dividend
        reinvestment plan                          --          1               --            --          413        414
    Treasury stock issued under employee
        stock purchase plan                        --        (10)              --            --           65         55
    Treasury stock acquired                        --         --               --            --       (1,560)    (1,560)
                                               ------    -------          -------        ------      -------    -------
BALANCE, DECEMBER 31, 2002                     $2,373    $20,212          $25,652        $1,795      $(1,705)   $48,327
                                               ======    =======          =======        ======      =======    =======
</TABLE>

                See Notes to Consolidated Financial Statements.
-36-

<PAGE>

<TABLE>
<CAPTION>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                      Years Ended December 31,
                                                                                      ------------------------
                                                                                    2002        2001       2000
                                                                                    ----        ----       ----
                                                                                           (In Thousands)
<S>                                                                               <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                    $ 5,015     $ 4,642     $ 4,387
    Adjustments to reconcile net income to net cash
      provided by operating activities:
        Provision for loan losses                                                     300         240         230
        Provision for depreciation                                                    442         396         323
        Net amortization of securities' premiums                                      170         177         158
        Net realized gains on sales of securities                                      (8)         --          (5)
        Deferred compensation expense                                                 545         528         378
        Payment of deferred compensation                                             (267)       (252)       (199)
        Deferred income taxes                                                        (146)       (103)       (110)
        (Increase) decrease in accrued interest receivable and other assets          (200)        196         (11)
        Increase (decrease) in accrued interest payable and other liabilities        (177)       (199)        158
        Earnings on investment life insurance                                        (410)       (377)       (119)
                                                                                  -------     -------     -------

            Net cash provided by operating activities                               5,264       5,248       5,190
                                                                                  -------     -------     -------

CASH FLOWS FROM INVESTING ACTIVITIES
    Net increase in interest bearing time deposits                                 (1,800)     (3,590)         --
    Purchases of available for sale securities                                    (41,526)    (40,760)     (1,141)
    Proceeds from sales of available for sale securities                              258          --          10
    Purchase of FHLB stock                                                            (28)        (23)        (10)
    Proceeds from sale of FHLB stock                                                  597          --          --
    Proceeds from maturities of and principal repayments
        on available for sale securities                                           27,032      19,629      12,274
    Purchases of held to maturity securities                                         (498)       (961)       (701)
    Proceeds from maturities of and principal repayments
        on held to maturity securities                                              9,141      13,494       8,895
    Net increase in loans receivable                                               (7,799)     (8,419)    (15,712)
    Purchase of investment in life insurance                                           --      (5,000)         --
    Net purchases of bank premises and equipment                                     (141)       (473)     (2,887)
                                                                                  -------     -------     -------

    Net cash provided by (used in) investing activities                           (14,764)    (26,103)        728
                                                                                  -------     -------     -------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase in deposits                                                       17,151      18,248       3,870
    Net increase (decrease) in short-term borrowings                               (1,275)      1,275      (5,300)
    Cash dividends and cash paid for fractional shares                             (2,042)     (1,904)     (2,935)
    Purchase of treasury stock                                                     (1,560)     (1,189)     (2,276)
    Treasury stock issued                                                             469         181         386
    Stock issued for dividend reinvestment
        and employee stock purchase plan                                               --         205          --
                                                                                  -------     -------     -------

            Net cash provided by (used in) financing activities                    12,743      16,816      (6,255)
                                                                                  -------     -------     -------
            Increase (decrease) in cash and cash equivalents                        3,243      (4,039)       (337)

Cash and cash equivalents:
    Beginning                                                                      11,658      15,697      16,034
                                                                                  -------     -------     -------

    Ending                                                                        $14,901     $11,658     $15,697
                                                                                  =======     =======     =======

Supplementary cash flows information:
    Interest paid                                                                 $ 8,935     $11,967     $11,843
                                                                                  =======     =======     =======
    Income taxes paid                                                             $ 1,925     $ 1,470     $ 1,520
                                                                                  =======     =======     =======
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                                                            -37-


<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation:
     The accompanying consolidated financial statements include the accounts of
     Juniata Valley Financial Corp. (the Corporation), a bank holding company,
     and its wholly-owned subsidiary, The Juniata Valley Bank (the Bank). All
     significant intercompany accounts and transactions have been eliminated.

Nature of operations:
     The Bank operates under a state bank charter and provides full banking
     services, including trust services. As a state bank, the Bank is subject to
     regulation of the Pennsylvania Department of Banking and the Federal
     Deposit Insurance Corporation. The bank holding company (parent company) is
     subject to regulation of the Federal Reserve Bank. The area served by the
     Bank is principally the counties of Juniata, Mifflin, Perry, Huntingdon,
     Centre, Franklin and Snyder, Pennsylvania.

Estimates:
     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from those estimates.

Presentation of cash flows:
     For purposes of reporting cash flows, cash and cash equivalents include
     cash on hand, amounts due from banks, interest bearing demand deposits with
     banks and federal funds sold.

Interest bearing time deposits with banks:
     Interest bearing deposits with banks consists of certificates of deposits
     in other banks with maturities within one year to three years.

Securities:
     Securities classified as available for sale are those debt securities that
     the Corporation intends to hold for an indefinite period of time, but not
     necessarily to maturity. Any decision to sell a security classified as
     available for sale would be based on various factors, including significant
     movements in interest rates, changes in the maturity mix of the Bank's
     assets and liabilities, liquidity needs, regulatory capital considerations
     and other similar factors. Securities available for sale are carried at
     fair value. Unrealized gains and losses are reported in other comprehensive
     income, net of the related deferred tax effect. Realized gains or losses,
     determined on the basis of the cost of specific securities sold, are
     included in earnings. Premiums and discounts are recognized in interest
     income using the interest method over the terms of the securities.

     Securities classified as held to maturity are those debt securities the
     Corporation has both the intent and ability to hold to maturity regardless
     of changes in market conditions, liquidity needs or changes in general
     economic conditions. These securities are carried at cost adjusted for
     amortization of premium and accretion of discount, computed by the interest
     method over their contractual lives.

     Management determines the appropriate classification of debt securities at
     the time of purchase and reevaluates such designation as of each balance
     sheet date.

     Federal law requires a member institution of the Federal Home Loan Bank
     system to hold stock of its district Federal Home Loan Bank according to a
     predetermined formula. The stock is carried at cost.

Loans receivable:
     Loans receivable that management has the intent and ability to hold for the
     foreseeable future or until maturity or payoff are stated at their
     outstanding unpaid principal balances, net of unearned discount and an
     allowance for loan losses. Interest income is accrued on the unpaid
     principal balance. Unearned discount on discounted loans is amortized to
     income over the life of the loans, using the interest method.

-38-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loans receivable (continued):
     The accrual of interest is generally discontinued when the contractual
     payment of principal or interest has become 90 days past due or management
     has serious doubts about further collectibility of principal or interest,
     even though the loan is currently performing. A loan may remain on accrual
     status if it is in the process of collection and is either guaranteed or
     well secured. When a loan is placed on nonaccrual status, unpaid interest
     credited to income in the current year is reversed and unpaid interest
     accrued in prior years is charged against the allowance for loan losses.
     Interest received on nonaccrual loans generally is either applied against
     principal or reported as interest income, according to management's
     judgment as to the collectibility of principal. Generally, loans are
     restored to accrual status when the obligation is brought current, has
     performed in accordance with the contractual terms for a reasonable period
     of time and the ultimate collectibility of the total contractual principal
     and interest is no longer in doubt.

Allowance for loan losses:
     The allowance for loan losses is established through provisions for loan
     losses charged against income. Loans deemed to be uncollectible are charged
     against the allowance for loan losses, and subsequent recoveries, if any,
     are credited to the allowance.

     The allowance for loan losses is maintained at a level considered adequate
     to provide for losses that can be reasonably anticipated. Management's
     periodic evaluation of the adequacy of the allowance is based on the Bank's
     past loan loss experience, known and inherent risks in the portfolio,
     adverse situations that may affect the borrower's ability to repay, the
     estimated value of any underlying collateral, composition of the loan
     portfolio, current economic conditions, and other relevant factors. This
     evaluation is inherently subjective as it requires material estimates that
     may be susceptible to significant change, including the amounts and timing
     of future cash flows expected to be received on impaired loans.

     A loan is considered impaired when, based on current information and
     events, it is probable that the Bank will be unable to collect the
     scheduled payments of principal or interest when due according to the
     contractual terms of the loan agreement. Factors considered by management
     in determining impairment include payment status, collateral value and the
     probability of collecting scheduled principal and interest payments when
     due. Loans that experience insignificant payment delays and payment
     shortfalls generally are not classified as impaired. Management determines
     the significance of payment delays and payment shortfalls on a case-by-case
     basis, taking into consideration all of the circumstances surrounding the
     loan and the borrower, including the length of the delay, the reasons for
     the delay, the borrower's prior payment record and the amount of the
     shortfall in relation to the principal and interest owed. Impairment is
     measured on a loan by loan basis for commercial and construction loans by
     either the present value of expected future cash flows discounted at the
     loan's effective interest rate, the loan's obtainable market price or the
     fair value of the collateral if the loan is collateral dependent.

     Large groups of smaller balance homogeneous loans are collectively
     evaluated for impairment. Accordingly, the Bank does not separately
     identify individual consumer and residential loans for impairment
     disclosures.

Bank premises and equipment:
     Bank premises and equipment are stated at cost less accumulated
     depreciation. Depreciation is computed principally on the straight-line
     method over the estimated useful lives of the related assets.

Trust assets:
     Assets held in a fiduciary capacity are not assets of the Bank or Trust and
     are, therefore, not included in the financial statements.

Foreclosed assets:
     Foreclosed assets, which are recorded in other assets, include properties
     acquired through foreclosure or in full or partial satisfaction of the
     related loan. Foreclosed assets are initially recorded at fair value, net
     of estimated selling costs, at the date of foreclosure. After foreclosure,
     valuations are periodically performed by management and the real estate is
     carried at the lower of carrying amount or fair value, less estimated costs
     to sell. Revenue and expenses from operations and changes in the valuation
     allowance are included in other expenses.

                                                                            -39-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income taxes:
     Deferred taxes are provided on the liability method whereby deferred tax
     assets are recognized for deductible temporary differences and deferred tax
     liabilities are recognized for taxable temporary differences. Temporary
     differences are the differences between the reported amounts of assets and
     liabilities in the financial statements and their tax basis. Deferred tax
     assets are reduced by a valuation allowance when, in the opinion of
     management, it is more likely than not that some portion or all of the
     deferred tax assets will not be realized. Deferred tax assets and
     liabilities are adjusted through the provision for income taxes for the
     effects of changes in tax laws and rates on the date of enactment.

     The Corporation and its subsidiary file a consolidated federal income tax
     return.

Advertising:
     Advertising costs are expensed as incurred.

Off-balance sheet financial instruments:
     In the ordinary course of business, the Bank has entered into off-balance
     sheet financial instruments consisting of commitments to extend credit and
     letters of credit. Such financial instruments are recorded in the balance
     sheet when they are funded.

Earnings per common share:
     Basic earnings per share represents income available to common shareholders
     divided by the weighted average number of common shares outstanding during
     the period, as adjusted for the stock dividend in 2001. Diluted earnings
     per share reflects additional common shares that would have been
     outstanding if dilutive potential common shares had been issued, as well as
     any adjustment to income that would result from the assumed issuance.
     Potential common shares that may be issued by the Corporation relate solely
     to outstanding stock options and are determined using the treasury method.
     For the years ended December 31, 2002, 2001 and 2000, outstanding options
     did not have a dilutive impact on earnings per share.

     The weighted average number of common shares outstanding was 2,330,390,
     2,368,923 and 2,420,966 in 2002, 2001 and 2000, respectively.

Comprehensive income:
     Accounting principles generally require that recognized revenue, expenses,
     and gains and losses be included in net income. Although certain changes in
     assets and liabilities, such as unrealized gains and losses on available
     for sale securities, are reported as a separate component of the equity
     section of the balance sheet, such items, along with net income, are
     components of comprehensive income.


     The components of other comprehensive income and related tax effects are as
     follows:

<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                                                      ------------------------
                                                                        2002    2001   2000
                                                                        ----    ----   ----
                                                                          (In Thousands)
         <S>                                                           <C>      <C>    <C>
         Unrealized holding gains on available for sale securities     $1,704   $470   $405
         Reclassification adjustment for gains realized in income          (8)    --     (5)
                                                                       ------   ----   ----

                                                                        1,696    470    400

         Tax effect                                                       577    161    135
                                                                       ------   ----   ----

              Net of tax amount                                        $1,119   $309   $265
                                                                       ======   ====   ====
</TABLE>

-40-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reclassifications:
     Certain amounts in the 2001 financial statements have been reclassified to
     conform with the 2002 presentation format. Such reclassifications had no
     impact on the Corporation's net income.

Segment reporting:
     The Bank acts as an independent community financial services provider, and
     offers traditional banking and related financial services to individual,
     business and government customers. Through its branch and automated teller
     machine network, the Bank offers a full array of commercial and retail
     financial services, including the taking of time, savings and demand
     deposits; the making of commercial, consumer and mortgage loans; trust
     services and the providing of other financial services.

     Management does not separately allocate expenses, including the cost of
     funding loan demand, between the commercial, retail and trust operations of
     the Bank. As such, discrete financial information is not available and
     segment reporting would not be meaningful.

New accounting standards:
     In June of 2001, the Financial Accounting Standards Board issued Statement
     143, "Accounting for Asset Retirement Obligations." which addresses the
     financial accounting and reporting for obligations associated with the
     retirement of tangible long-lived assets and the associated asset
     retirement costs. This statement requires that the fair value of a
     liability for an asset retirement obligation be recognized in the period in
     which it is incurred if a reasonable estimate of the fair value can be
     made. The associated asset retirement costs are capitalized as part of the
     carrying amount of the long-lived asset. This statement will become
     effective for the Corporation on January 1, 2003. Adoption of this
     statement is not expected to have a material impact on the Corporation's
     financial condition or results of operations.

     In July of 2002, the Financial Accounting Standards Board issued Statement
     No. 146, "Accounting for Costs Associated with Exit or Disposal
     Activities," which nullifies EITF Issue 94-3, "Liability Recognition for
     Certain Employee Termination Benefits and Other Costs to Exit an Activity
     (including Certain Costs Incurred in a Restructuring)." This statement
     delays recognition of these costs until liabilities are incurred, rather
     than at the date of commitment to the plan, and requires fair value
     measurement. It does not impact the recognition of liabilities incurred in
     connection with a business combination or the disposal of long-lived
     assets. The provisions of this statement are effective for exit or disposal
     activities initiated after December 31, 2002 and are not expected to have a
     significant impact on the Corporation's financial condition or results of
     operations.

RESTRICTIONS ON CASH AND DUE FROM BANK BALANCES

The Bank is required to maintain reserve balances with the Federal Reserve Bank.
The average reserve balances for 2002 and 2001 approximated $4,091,000 and
$3,468,000, respectively.

                                                                            -41-

<PAGE>

<TABLE>
<CAPTION>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SECURITIES

     The amortized cost and fair value of securities at December 31 were as
follows:

                                                                                Gross           Gross
                                                                  Amortized  Unrealized      Unrealized      Fair
                                                                     Cost       Gains          Losses        Value
                                                                     ----       -----          ------        -----
                                                                                   (In Thousands)
     <S>                                                           <C>         <C>              <C>         <C>
     AVAILABLE FOR SALE SECURITIES:
        DECEMBER 31, 2002:
           U.S. Treasury securities                                $ 1,001     $    3           $  --       $ 1,004
           U.S. Government agency obligations                       44,082      1,507              --        45,589
           Obligations of states and political subdivisions         15,627        675              (3)       16,299
           Corporate and other debt securities                       1,960         44              --         2,004
           Mortgage-backed securities                                4,526        102              --         4,628
           Equity securities                                           578        427             (34)          971
                                                                   -------     ------           -----       -------

                                                                   $67,774     $2,758           $ (37)      $70,495
                                                                   =======     ======           =====       =======
        DECEMBER 31, 2001:
           U.S. Treasury securities                                $ 1,508     $   37           $  --       $ 1,545
           U.S. Government agency obligations                       29,153        353             (91)       29,415
           Obligations of states and political subdivisions         15,603        134             (46)       15,691
           Corporate and other debt securities                       2,992        124              --         3,116
           Mortgage-backed securities                                3,846        105              --         3,951
           Equity securities                                           536        409              --           945
                                                                   -------     ------           -----       -------

                                                                   $53,638     $1,162           $(137)      $54,663
                                                                   =======     ======           =====       =======
     HELD TO MATURITY SECURITIES:
        DECEMBER 31, 2002:
           U.S. Treasury securities                                $ 1,467     $  110           $  --       $ 1,577
           U.S. Government agency obligations                        2,000         62              --         2,062
           Obligations of states and political subdivisions         20,626        535              --        21,161
           Corporate and other debt securities                       5,814         84              --         5,898
                                                                   -------     ------           -----       -------

                                                                   $29,907     $  791           $  --       $30,698
                                                                   =======     ======           =====       =======
        DECEMBER 31, 2001:
           U.S. Treasury securities                                $   961     $   --           $  (2)      $   959
           U.S. Government agency obligations                        2,500         76              --         2,576
           Obligations of states and political subdivisions         26,742        500              (2)       27,240
           Corporate and other debt securities                       8,409        251              --         8,660
                                                                   -------     ------           -----       -------

                                                                   $38,612     $  827           $  (4)      $39,435
                                                                   =======     ======           =====       =======
</TABLE>


-42-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SECURITIES (CONTINUED)

The amortized cost and fair value of securities as of December 31, 2002, by
contractual maturity are shown below. Expected maturities may differ from
contractual maturities because the securities may be called or prepaid with or
without prepayment penalties.

                                          AVAILABLE FOR SALE   HELD TO MATURITY
                                          ------------------   ----------------
                                           AMORTIZED   FAIR    AMORTIZED   FAIR
                                              COST     VALUE      COST     VALUE
                                              ----     -----      ----     -----
                                                       (IN THOUSANDS)

  Due in one year or less                  $ 6,081   $ 6,197   $15,466  $15,713
  Due after one year through five years     54,996    57,109    13,941   14,481
  Due after five years through ten years     1,568     1,565       500      504
  Due after ten years                           25        25        --       --
  Mortgage-backed securities                 4,526     4,628        --       --
  Equity securities                            578       971        --       --
                                           -------   -------   -------  -------

                                           $67,774   $70,495   $29,907  $30,698
                                           =======   =======   =======  =======

Gross gains of $8,000, $-0- and $5,000 were realized on sales of securities
available for sale in 2002, 2001 and 2000, respectively.

Securities with a fair value of $18,349,000 and $14,813,000 at December 31, 2002
and 2001, respectively, were pledged to secure public deposits and for other
purposes as required or permitted by law.

                                                                            -43-


<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans are comprised of the following:

                                                          December 31,
                                                          ------------
                                                        2002        2001
                                                        ----        ----
                                                         (In Thousands)
   Commercial, agricultural and financial             $ 26,815    $ 24,548
   Real estate mortgages:
      Residential                                      124,907     119,476
      Commercial                                        32,702      31,893
   Consumer                                             61,176      61,480
   Other                                                 2,452       2,874
                                                      --------    --------

                                                       248,052     240,271
   Unearned discount on loans                           (9,824)     (9,747)
   Allowance for loan losses                            (2,731)     (2,526)
                                                      --------    --------

                                                      $235,497    $227,998
                                                      ========    ========

The following table presents changes in the allowance for loan losses:

                                                     Years Ended December 31,
                                                     ------------------------
                                                    2002       2001      2000
                                                    ----       ----      ----
                                                         (In Thousands)

   Balance, beginning                             $ 2,526    $ 2,497    $2,486
      Provision for loan losses                       300        240       230
      Recoveries                                      112         26        25
      Loans charged off                              (207)      (237)     (244)
                                                  -------    -------    ------

   Balance, ending                                $ 2,731    $ 2,526    $2,497
                                                  =======    =======    ======

The recorded investment in impaired loans not requiring an allowance for loan
losses was $-0- and $582,000 at December 31, 2002 and 2001, respectively. The
recorded investment in impaired loans requiring an allowance for loan losses at
December 31, 2002 and 2001 was $2,080,000 and $-0-, respectively. The related
allowance for loan losses associated with these loans was $175,000 and $-0-,
respectively. For the years ended December 31, 2002, 2001 and 2000, the average
recorded investment in these impaired loans was $2,433,000, $582,000 and $-0-,
respectively. Interest income recognized on these impaired loans was $189,000,
$-0- and $-0-, respectively.

The recorded investment in nonaccrual loans at December 31, 2002 and 2001
totaled $219,000 and $934,000, respectively. The recorded investment in loans
greater than 90 days past due and still accruing at December 31, 2002 and 2001
totaled $544,000 and $811,000, respectively.

-44-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BANK PREMISES AND EQUIPMENT

The major components of bank premises and equipment are as follows:

                                                            December 31,
                                                            ------------
                                                        2002          2001
                                                        ----          ----
                                                          (In Thousands)

   Land and improvements                              $   686       $   686
   Buildings and improvements                           6,405         6,354
   Furniture and equipment                              3,065         3,000
                                                      -------       -------
                                                       10,156        10,040
   Accumulated depreciation                            (4,389)       (3,972)
                                                      -------       -------

                                                      $ 5,767       $ 6,068
                                                      =======       =======

As of December 31, 2002, the Corporation has committed to purchasing
approximately $600,000 of equipment in 2003.

DEPOSITS

The composition of deposits is as follows:

                                                            December 31,
                                                            ------------
                                                        2002          2001
                                                        ----          ----
                                                          (In Thousands)

   Demand, non-interest bearing                      $ 38,892      $ 38,089
   NOW and Money Market                                58,160        51,769
   Savings                                             36,194        32,281
   Time, $100,000 or more                              35,167        31,271
   Other time                                         154,206       152,058
                                                     --------      --------

                                                     $322,619      $305,468
                                                     ========      ========

At December 31, 2002, the scheduled maturities of time deposits are as follows
(in thousands):

   2003                                                            $110,307
   2004                                                              36,039
   2005                                                              22,469
   2006                                                              10,506
   2007                                                              10,052
                                                                   --------

                                                                   $189,373
                                                                   ========

BORROWINGS

The Bank has entered into an agreement whereby it can borrow up to $10,000,000
from the Federal Home Loan Bank (FHLB). Outstanding balances under this
agreement were $-0- and $1,275,000 as of December 31, 2002 and 2001,
respectively. The agreement expires in March 2003 and the interest rate was
0.96% and 1.88% at December 31, 2002 and 2001, respectively.

The Bank has a maximum borrowing capacity of $127,807,000 with the FHLB which is
collateralized by qualifying assets of the Bank. No amounts were outstanding at
December 31, 2002.

                                                                            -45-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


REGULATORY MATTERS AND STOCKHOLDERS' EQUITY

The Corporation and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet the
minimum capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Corporation's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Corporation and the Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities and certain off-balance sheet
items as calculated under regulatory accounting practices. The capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the maintenance of minimum amounts and ratios (set forth below) of total
and Tier l capital (as defined in the regulations) to risk-weighted assets and
of Tier l capital to average assets. Management believes, as of December 31,
2002, that the Corporation and the Bank meet all capital adequacy requirements
to which they are subject.

As of December 31, 2002, the most recent notification from the Commonwealth of
Pennsylvania, Department of Banking categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. There are no
conditions or events since that notification that management believes have
changed the Bank's category.

The Bank's actual capital ratios and the minimum ratios required for capital
adequacy purposes and to be well capitalized under the prompt corrective action
provisions are presented below. The Corporation's ratios were not materially
different from those of the Bank.

<TABLE>
<CAPTION>
                                                                                               To Be Well
                                                                        For Capital        Capitalized Under
                                                                          Adequacy         Prompt Corrective
                                                      Actual              Purposes         Action Provisions
                                                      ------              --------         -----------------
                                                  Amount   Ratio      Amount     Ratio     Amount      Ratio
                                                  ------   -----      ------     -----     ------      -----
                                                                   (Dollar Amounts In Thousands)
   <S>                                           <C>       <C>        <C>         <C>       <C>         <C>
   AS OF DECEMBER 31, 2002:
      Total capital (to risk-weighted assets)    $46,630   19.93%   =>$18,720   =>8.00%   =>$23,401   =>10.00%
      Tier I capital (to risk-weighted assets)    43,899   18.76    =>  9,360   =>4.00    => 14,040   => 6.00
      Tier I capital (to average assets)          43,899   12.04    => 14,580   =>4.00    => 18,226   => 5.00

   AS OF DECEMBER 31, 2001:
      Total capital (to risk-weighted assets)    $45,041   19.56%   =>$18,426   =>8.00%   =>$23,033   =>10.00%
      Tier I capital (to risk-weighted assets)    42,515   18.46    =>  9,213   =>4.00    => 13,820   => 6.00
      Tier I capital (to average assets)          42,515   11.98    => 14,190   =>4.00    => 17,738   => 5.00
</TABLE>


Certain restrictions exist regarding the ability of the Bank to transfer funds
to the Corporation in the form of cash dividends, loans or advances. At December
31, 2002, $31,980,000 of undistributed earnings of the Bank, included in the
consolidated stockholders' equity, was available for distribution to the
Corporation as dividends without prior regulatory approval.

In August 2000, the Board of Directors adopted a Shareholder Rights Plan and
declared a dividend distribution of one right to purchase a share of the
Corporation's common stock at $23.86 for each share issued and outstanding, upon
the occurrence of certain events, as defined in the Plan. These rights are fully
transferable and expire on August 31, 2010. The rights are not considered
potential common shares for earnings per share purposes because there is no
indication that any event will occur which would cause them to become
exercisable.

The Corporation has a dividend reinvestment and stock purchase plan. Under the
Plan, additional shares of Juniata Valley Financial Corp. may be purchased at
the prevailing market prices with reinvested dividends and voluntary cash
payments. To the extent that shares are not available in the open market, the
Corporation has reserved 100,000 shares of common stock to be issued under the
plan. At December 31, 2002, 59,445 shares were available for issuance under the
Dividend Reinvestment Plan.

-46-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMPLOYEE BENEFITS

Stock option plan:
     Under the 2000 Incentive Stock Option Plan, 220,000 shares of common stock,
     as adjusted for the 2001 stock dividend, were reserved for issuance upon
     the exercise of options granted or available for grant to officers and key
     employees of the Corporation. The plan provides that the option price per
     share shall not be less than the fair market value of the stock on the day
     the option is granted, but in no event less than the par value of such
     stock. Options granted are exercisable no earlier than one year after the
     grant and expire ten years after the date of the grant.

     Stock option transactions under the Plan were as follows:

                                                                   Weighted-
                                                                    Average
                                                      Options    Exercise Price
                                                      -------    --------------
         Outstanding at December 31, 2000                 --             --
            Granted                                    7,982         $28.20
                                                      ------         ------

         Outstanding at December 31, 2001              7,982          28.20
            Granted                                    8,582          28.50
                                                      ------         ------

         Outstanding at December 31, 2002             16,584         $28.36
                                                      ======         ======

         Exercisable at December 31, 2002              2,133         $28.20
                                                      ======         ======

     Options outstanding at December 31, 2002 are exercisable at prices of
     $28.20 to $28.50. The weighted-average remaining contractual life of these
     options is approximately nine years.

     The Corporation accounts for the above stock option plan under the
     recognition and measurement principles of APB Opinion No. 25, "Accounting
     for Stock Issued to Employees," and related interpretations. No stock-based
     employee compensation cost is reflected in net income, as all options
     granted under those plans had an exercise price equal to the market value
     of the underlying common stock on the date of grant. The following table
     illustrates the effect on net income and earnings per share if the
     Corporation had applied the fair value recognition provisions of FASB
     Statement No. 123, "Accounting for Stock-Based Compensation," to
     stock-based compensation for the years ended December 31, 2002 and 2001:

                                                               2002      2001
                                                               ----      ----
                                                               (In Thousands)

         Net income, as reported                              $5,015    $4,642
            Total stock-based employee compensation expense
               determined under fair value based method for
               all awards                                        (12)       (1)
                                                              ------    ------

         Pro forma net income                                 $5,003    $4,641
                                                              ======    ======

         Basic and diluted earnings per share:
            As reported                                       $ 2.15    $ 1.96
            Pro forma                                         $ 2.15    $ 1.96

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option-pricing model, with the following assumptions for
     2002 and 2001, respectively: risk-free interest rate of 3.8% and 4.7%,
     volatility of 0.18 and 0.22, dividend yield of 3.0% and 4.0% and an
     expected life of seven years. The fair value of options granted in 2002 and
     2001 was $4.81 and $5.16, respectively.

                                                                            -47-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMPLOYEE BENEFITS (CONTINUED)

Defined benefit retirement plan:
     The Corporation has a defined benefit retirement plan covering
     substantially all of its employees. The benefits are based on years of
     service and the employees' compensation. The Corporation's funding policy
     is to contribute annually the maximum amount that can be deducted for
     federal income tax purposes. Contributions are intended to provide not only
     for benefits attributed to service to date but also for those expected to
     be earned in the future.

     Information pertaining to the activity in the Plan is as follows:

                                                        Years ended December 31,
                                                             2002       2001
                                                             ----       ----
                                                              (In Thousands)
         Change in benefit obligation:
            Benefit obligation at beginning of year         $3,657     $3,561
            Service cost                                       174        167
            Interest cost                                      274        253
            Actuarial (gain) loss                              247       (192)
            Benefits paid                                     (149)      (132)
                                                            ------     ------

               Benefit obligation at end of year             4,203      3,657
                                                            ------     ------

         Change in plan assets:
            Fair value of plan assets at beginning of year   3,437      3,189
            Actual return on plan assets                        72        176
            Employer contribution                              263        204
            Benefits paid                                     (149)      (132)
                                                            ------     ------

               Fair value of plan assets at end of year      3,623      3,437
                                                            ------     ------

         Funded status                                        (580)      (220)

         Unrecognized net actuarial gain (loss)                368        (49)
         Unrecognized net transition asset                     (19)       (21)
                                                            ------     ------

               Accrued benefit cost                         $ (231)    $ (290)
                                                            ======     ======

     Pension expense included the following components for the years ended
     December 31:

                                                          2002    2001   2000
                                                          ----    ----   ----
                                                              (In Thousands)

         Service cost, benefits earned during the year   $ 174   $ 167   $ 177
         Interest cost on projected benefit obligation     268     248     239
         Expected return on plan assets                   (237)   (239)   (219)
         Net amortization                                   (2)     (2)     (2)
                                                         -----   -----   -----

                                                         $ 203   $ 174   $ 195
                                                         =====   =====   =====
     Assumptions used in the accounting were:
                                                          2002    2001   2000
                                                          ----    ----   ----
         Discount rates                                    7.0%    7.5%    7.5%
         Rates of increase in compensation levels          4.0     4.0     4.0
         Expected long-term rate of return on assets       7.0     7.5     7.5

-48-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMPLOYEE BENEFITS (CONTINUED)

Supplemental retirement plans:
     The Corporation has non-qualified supplemental retirement and split-dollar
     life insurance plans for directors and key employees. At December 31, 2002
     and 2001, the present value of the future liability was $1,173,000 and
     $1,123,000, respectively. The Corporation has funded these plans through
     the purchase of annuities and life insurance policies, which have an
     aggregate cash surrender value of $2,681,000 and $2,733,000 at December 31,
     2002 and 2001, respectively. For the years ended December 31, 2002, 2001
     and 2000, $192,000, $188,000 and $147,000, respectively, was charged to
     expense in connection with this plan.

Deferred compensation plan:
     The Corporation has entered into deferred compensation agreements with
     certain directors to provide each director an additional retirement
     benefit, or to provide their beneficiary a benefit in the event of
     pre-retirement death. At December 31, 2002 and 2001, the present value of
     the future liability was $1,846,000 and $1,769,000, respectively. To fund
     the benefits under these agreements, the Corporation is the owner and
     beneficiary of life insurance policies on the lives of certain directors.
     The policies had an aggregate cash surrender value of $1,481,000 and
     $1,376,000 at December 31, 2002 and 2001, respectively. For the years ended
     December 31, 2002, 2001 and 2000, $205,000, $213,000 and $157,000,
     respectively, was charged to expense in connection with this plan.

Employee Stock Purchase Plan:
     The Corporation has an Employee Stock Purchase Plan under which employees,
     through payroll deductions, are able to purchase shares of stock annually.
     The option price of the stock purchases shall be between 85% and 100% of
     the fair market value of the stock on the commencement date as determined
     annually by the Board of Directors. The maximum number of shares which
     employees may purchase under the Plan is 100,000; however, the annual
     issuance of shares shall not exceed 5,000 shares plus any unissued shares
     from prior offerings. In 2002, 2001 and 2000, 2,296, 1,500 and 39 shares,
     respectively, were issued under the Plan. At December 31, 2002, 92,604
     shares were reserved for issuance under the Plan.

Salary continuation plans:
     The Corporation has non-qualified Salary Continuation Plans for key
     employees. At December 31, 2002 and 2001, the present value of the future
     liability was $490,000 and $342,000, respectively. The Corporation has
     funded the Plan through the purchase of life insurance policies which have
     an aggregate cash surrender value of $7,151,000 and $6,796,000 at December
     31, 2002 and 2001, respectively. For the years ended December 31, 2002,
     2001 and 2000, $152,000, $127,000 and $74,000, respectively, was charged to
     expense in connection with the Plan.

                                                                            -49-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES

The provision for federal income taxes consists of the following:

                                                      Years Ended December 31,
                                                      ------------------------
                                                       2002     2001     2000
                                                       ----     ----     ----
                                                          (In Thousands)

    Current                                           $1,892   $1,531   $1,485
    Deferred                                            (146)    (103)    (110)
                                                      ------   ------   ------

                                                      $1,746   $1,428   $1,375
                                                      ======   ======   ======

A reconciliation of the statutory income tax expense computed at 34% to the
income tax expense included in the statements of income is as follows:

                                                      Years Ended December 31,
                                                      ------------------------
                                                       2002     2001     2000
                                                       ----     ----     ----
                                                          (In Thousands)

    Federal income tax at statutory rate              $2,299   $2,064   $1,959
    Tax-exempt interest                                 (544)    (583)    (656)
    Disallowance of interest expense                      69       96      110
    Income on life insurance                            (148)    (128)     (41)
    Other                                                 70      (21)       3
                                                      ------   ------   ------

                                                      $1,746   $1,428   $1,375
                                                      ======   ======   ======

The income tax provision includes $3,000, $-0-, and $2,000 in 2002, 2001 and
2000, respectively, of income tax related to realized gains on sales of
securities.

The net deferred tax asset in the accompanying balance sheets includes the
following amounts of deferred tax assets and liabilities:

                                                             December 31,
                                                            2002     2001
                                                            ----     ----
                                                            (In Thousands)

    Deferred tax assets:
       Allowance for loan losses                           $  802   $  732
       Deferred directors' fees                               628      601
       Pension liabilities                                    636      588
                                                           ------   ------

          Total deferred tax assets                         2,066    1,921
                                                           ------   ------

    Deferred tax liabilities:
       Bank premises and equipment                           (111)    (104)
       Securities accretion                                    (9)     (17)
       Unrealized gains on securities available for sale     (925)    (348)
                                                           ------   ------
          Total deferred tax liabilities                   (1,045)    (469)
                                                           ------   ------
          Net deferred tax asset                           $1,021   $1,452
                                                           ======   ======

TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS

The Bank has had banking transactions in the ordinary course of business with
its executive officers, directors, and their related interests on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others. At December 31, 2002 and 2001, these
persons were indebted to the Bank for loans totaling $2,230,000 and $1,887,000
respectively. During 2002, loans totaling $1,923,000 were disbursed and loan
repayments totaled $1,580,000.

-50-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS

The Bank rents equipment and branch offices under operating leases that expire
through 2007. Equipment and servicing fees were $582,000, $654,000 and $484,000
for the years ended December 31, 2002, 2001 and 2000, respectively. Rent
expense, including the license fee for the branch offices was $67,000, $55,000
and $53,000 in 2002, 2001 and 2000, respectively.

Minimum future payments under all noncancellable lease and service agreements as
of December 31, 2002 are as follows

    2003                                                                 $  275
    2004                                                                    276
    2005                                                                    276
    2006                                                                    270
    2007                                                                     33
    Thereafter                                                               --
                                                                         ------

                                                                         $1,130
                                                                         ======

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and letters of
credit. Those instruments involve, to varying degrees, elements of credit risk
in excess of the amount recognized in the balance sheet.

The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and letters
of credit is represented by the contractual amount of those instruments. The
Bank uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments.

A summary of the Bank's financial instrument commitments is as follows:

                                                                  December 31,
                                                                 2002     2001
                                                                 ----     ----
                                                                 (In Thousands)

    Commitments to grant loans                                 $ 2,897  $ 2,915
    Unfunded commitments under lines of credit                  30,822   31,230
    Outstanding letters of credit                                  735      765

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Since many
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's credit
evaluation. Collateral held varies but may include personal or commercial real
estate, accounts receivable, inventory and equipment.

Outstanding letters of credit written are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.

CONCENTRATION OF CREDIT RISK

The Bank grants commercial, residential and consumer loans to customers
primarily located in the counties of Juniata, Mifflin, Perry, Huntingdon,
Centre, Franklin and Snyder, Pennsylvania. The concentrations of credit by type
of loan are set forth in the note, "Loans Receivable and Allowance for Loan
Losses". Although the Bank has a diversified loan portfolio, its debtors'
ability to honor their contracts is influenced by the region's economy.

                                                                            -51-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of the
Corporation's financial instruments; however, there are inherent weaknesses in
any estimation technique. Therefore, the fair value estimates herein are not
necessarily indicative of the amounts the Corporation could have realized in a
sales transaction on the dates indicated. The estimated fair value amounts have
been measured as of their respective year ends and have not been re-evaluated or
updated for purposes of these consolidated financial statements subsequent to
those respective dates. As such, the estimated fair values of these financial
instruments subsequent to the respective reporting dates may be different than
the amounts reported at each year end.

The following information should not be interpreted as an estimate of the fair
value of the entire Corporation since a fair value calculation is only provided
for a limited portion of the Corporation's assets and liabilities. Due to a wide
range of valuation techniques and the degree of subjectivity used in making the
estimates, comparisons between the Corporation's disclosures and those of other
companies may not be meaningful. The following methods and assumptions were used
to estimate the fair values of the Corporation's financial instruments at
December 31, 2002 and 2001:

o  For cash and due from banks, interest bearing demand deposits in other
   banks and federal funds sold, the carrying amount is a reasonable estimate
   of fair value.

o  For interest bearing time deposits with banks, the carrying amount is a
   reasonable estimate of fair value.

o  For securities, fair values are based on quoted market prices, where
   available. If quoted market prices are not available, fair values are based
   on quoted market prices of comparable securities.

o  For Federal Home Loan Bank stock, the carrying amount is a reasonable
   estimate of fair value.

o  For variable-rate loans that reprice frequently and which entail no
   significant changes in credit risk, fair values are based on carrying
   values. All commercial loans and substantially all real estate mortgages
   are variable rate loans. The fair value of other loans (i.e., consumer
   loans and fixed-rate real estate mortgages) are estimated using discounted
   cash flow analyses, at interest rates currently offered for loans with
   similar terms to borrowers of similar credit quality.

o  Fair values for demand deposits, savings accounts and certain money market
   deposits are, by definition, equal to the amount payable on demand at the
   reporting date (i.e., their carrying amounts). Fair values of
   fixed-maturity certificates of deposit are estimated using a discounted
   cash flow calculation that applies interest rates currently being offered
   on certificates to a schedule of aggregated expected monthly maturity of
   deposits.

o  For short-term borrowings, the carrying amount is a reasonable estimate of
   fair value.

o  For accrued interest receivable and accrued interest payable, the carrying
   amount is a reasonable estimate of fair value.

o  Fair value of commitments to extend credit is estimated using the fees
   currently charged to enter into similar agreements, taking into account
   market interest rates, the remaining terms and present credit worthiness of
   the counterparties. The fair value of guarantees and letters of credit is
   based on fees currently charged for similar agreements.

-52-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The estimated fair values of the Corporation's financial instruments are as
follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                          2002                  2001
                                                          ----                  ----
                                                  CARRYING     FAIR     Carrying    Fair
                                                   AMOUNT      VALUE     Amount     Value
                                                   ------      -----     ------     -----
                                                                 (In Thousands)
   <S>                                            <C>        <C>        <C>        <C>
   Financial assets:
      Cash and due from banks                     $ 11,111   $ 11,111   $ 11,571   $ 11,571
      Interest bearing deposits with banks              90         90         87         87
      Interest bearing time deposits with banks      5,390      5,390      3,590      3,590
      Federal funds sold                             3,700      3,700         --         --
      Securities                                   100,402    101,193     93,275     94,098
      Federal Home Loan Bank stock                     639        639      1,208      1,208
      Loans receivable, net of allowance           235,497    236,211    227,998    228,451
      Accrued interest receivable                    2,011      2,011      2,047      2,047

   Financial liabilities:
      Deposits                                     322,619    325,626    305,468    308,981
      Short-term borrowings                             --         --      1,275      1,275
      Accrued interest payable                       1,314      1,314        950        950

   Off-balance sheet financial instruments:
      Commitments to extend credit                      --         --         --         --
      Standby letters of credit                         --         --         --         --
</TABLE>


                                                                            -53-


<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARENT COMPANY ONLY FINANCIAL INFORMATION

                                 BALANCE SHEETS
                                                               December 31,
                                                               ------------
                                                             2002       2001
                                                             ----       ----
                                                              (In Thousands)

      ASSETS
Cash                                                       $     4    $     7
Interest bearing deposits with banks                           490        490
                                                           -------    -------

      Cash and cash equivalents                                494        497

Investment in Bank subsidiary                               45,615     43,138
Securities available for sale                                2,233      1,692
Other                                                           26         26
                                                           -------    -------

                                                           $48,368    $45,353
                                                           =======    =======
      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities, other                                         $    41    $    27

Stockholders' equity                                        48,327     45,326
                                                           -------    -------

                                                           $48,368    $45,353
                                                           =======    =======

<TABLE>
<CAPTION>

                              STATEMENTS OF INCOME

                                                                        Years Ended December 31,
                                                                        ------------------------
                                                                       2002       2001       2000
                                                                       ----       ----       ----
                                                                             (In Thousands)
<S>                                                                   <C>        <C>        <C>
Dividends from Bank subsidiary                                        $ 3,603    $ 3,090    $5,212
Interest income                                                           109        102        74
Other expenses                                                            (77)       (66)      (72)
                                                                      -------    -------    ------

      Income before equity in undistributed net income of subsidiary    3,635      3,126     5,214

Equity in (excess of) undistributed net income of Bank subsidiary       1,380      1,516      (827)
                                                                      -------    -------    ------

           Net income                                                 $ 5,015    $ 4,642    $4,387
                                                                      =======    =======    ======
</TABLE>

-54-

<PAGE>

        JUNIATA VALLEY FINANCIAL CORP. AND ITS WHOLLY-OWNED SUBSIDIARY,
                            THE JUNIATA VALLEY BANK
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARENT COMPANY ONLY FINANCIAL INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

                            STATEMENTS OF CASH FLOWS

                                                               Years Ended December 31,
                                                               ------------------------
                                                                2002      2001      2000
                                                                ----      ----      ----
                                                                      (In Thousands)

<S>                                                           <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                 $ 5,015   $ 4,642   $ 4,387
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Distributions in excess of (undistributed) net income
         of Bank subsidiary                                    (1,380)   (1,516)      827
      (Increase) decrease in other assets                          --       (10)       42
      Increase (decrease) in other liabilities                     14        18         7
                                                              -------   -------   -------

         Net cash provided by operating activities              3,649     3,134     5,263
                                                              -------   -------   -------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of available for sale securities                  (1,159)     (622)     (640)
   Proceeds from maturities of available for sale securities      640       200       200
                                                              -------   -------   -------

         Net cash used in investing activities                   (519)     (422)     (440)
                                                              -------   -------   -------

CASH FLOWS FROM FINANCING ACTIVITIES
   Dividends paid and cash paid in lieu of fractional shares   (2,042)   (1,904)   (2,935)
   Purchase of treasury stock                                  (1,560)   (1,189)   (2,276)
   Treasury stock issued                                          414       181       386
   Stock issued under employee stock purchase plan                 55        32        --
   Stock issued under dividend reinvestment plan                   --       173        --
                                                              -------   -------   -------

         Net cash used in financing activities                 (3,133)   (2,707)   (4,825)
                                                              -------   -------   -------

         Increase (decrease) in cash and cash equivalents          (3)        5        (2)

Cash and cash equivalents:
   Beginning                                                      497       492       494
                                                              -------   -------   -------

   Ending                                                     $   494   $   497   $   492
                                                              =======   =======   =======
</TABLE>

                                                                            -55-


<PAGE>

                           AVAILABILITY OF FORM 10-K

                    A copy of the Corporation's Annual Report on
               Form 10-K as filed with the Securities and Exchange
               Commission will be available without charge upon
               written request. This request should be addressed to:

                                Ms. Linda Engle
                         Juniata Valley Financial Corp.
                                  P.O. Box 66
                             Mifflintown, PA 17059

               Pursuant to Part 350 to FDIC's Annual Disclosure
               Regulation, Juniata Valley Financial Corp. will make
               available to you upon request, financial information
               about this Bank. The purpose of this regulation is to
               facilitate more informed decision making by you, our
               shareholders, by providing statements containing
               financial information for the last two years.

                    Please contact:

                                Ms. Judy Robinson
                             The Juniata Valley Bank
                                   P.O. Box 66
                              Mifflintown, PA 17059