##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from
 _________ 
to
 _________
 Commission
File Number 000-13232
 Juniata Valley Financial Corp.
  Pennsylvania
    
    23-2235254(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 Bridge and Main Streets, Mifflintown, Pennsylvania
    
    17059(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
  Class
    
    Outstanding as of November 8, 2010Common Stock ($1.00 par value)
    
    4,275,265 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition 

as of September 30, 2010 and December 31, 2009 (Unaudited)
    
    
    3Consolidated Statements of Income for the Three and Nine

Months Ended September 30, 2010 and 2009 (Unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity 

for the Nine Months Ended September 30, 2010 and 2009 (Unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2010 and 2009 (Unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults upon Senior Securities
    
    
    31Item 4. (Removed and Reserved)
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    31Signatures
    
    
    31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Juniata Valley Financial Corp. and Subsidiary
 
 Consolidated Statements of Financial Condition
  September 30,
    
    
    December 31,2010
    
    
    2009ASSETSCash and due from banks
    
    $
    10,178
    
    
    $
    18,613Interest bearing deposits with banks
    
    
    355
    
    
    
    82Federal funds sold
    
    
    5,000
    
    
    
    1,200Cash and cash equivalents
    
    
    15,533
    
    
    
    19,895Interest bearing time deposits with banks
    
    
    1,345
    
    
    
    1,420Securities available for sale
    
    
    78,900
    
    
    
    77,356Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    2,197
    
    
    
    2,197Investment in unconsolidated subsidiary
    
    
    3,503
    
    
    
    3,338Total loans, net of unearned interest
    
    
    304,260
    
    
    
    311,630Less: Allowance for loan losses
    
    
    (2,811
    )
    
    
    (2,719
    )Total loans, net of allowance for loan losses
    
    
    301,449
    
    
    
    308,911Premises and equipment, net
    
    
    7,176
    
    
    
    6,878Other real estate owned
    
    
    494
    
    
    
    476Bank owned life insurance and annuities
    
    
    13,459
    
    
    
    13,066Core deposit intangible
    
    
    265
    
    
    
    299Goodwill
    
    
    2,046
    
    
    
    2,046Accrued interest receivable and other assets
    
    
    5,622
    
    
    
    6,227Total assets
    
    $
    431,989
    
    
    $
    442,109LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    53,886
    
    
    $
    55,030Interest bearing
    
    
    318,662
    
    
    
    322,367Total deposits
    
    
    372,548
    
    
    
    377,397Securities sold under agreements to repurchase
    
    
    2,875
    
    
    
    3,207Long-term debt
    
    
    
    
    
    
    5,000Other interest bearing liabilities
    
    
    1,178
    
    
    
    1,146Accrued interest payable and other liabilities
    
    
    4,634
    
    
    
    4,756Total liabilities
    
    
    381,235
    
    
    
    391,506Stockholders Equity:Preferred stock, no par value:Authorized  500,000 shares, none issued
    
    
    
    
    
    
    Common stock, par value $1.00 per share:Authorized  20,000,000 sharesIssued  4,745,826 sharesOutstanding 4,275,265 shares at September 30, 2010;4,337,587 shares at December 31, 2009
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,332
    
    
    
    18,315Retained earnings
    
    
    37,462
    
    
    
    36,478Accumulated other comprehensive loss
    
    
    (564
    )
    
    
    (805
    )Cost of common stock in Treasury:470,561 shares at September 30, 2010;408,239 shares at December 31, 2009
    
    
    (9,222
    )
    
    
    (8,131
    )Total stockholders equity
    
    
    50,754
    
    
    
    50,603Total liabilities and stockholders equity
    
    $
    431,989
    
    
    $
    442,109
   3




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
 
 Consolidated Statements of Income
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest income:Loans, including fees
    
    $
    4,824
    
    
    $
    5,126
    
    
    $
    14,756
    
    
    $
    15,671Taxable securities
    
    
    257
    
    
    
    281
    
    
    
    753
    
    
    
    909Tax-exempt securities
    
    
    245
    
    
    
    305
    
    
    
    784
    
    
    
    864Federal funds sold
    
    
    3
    
    
    
    33
    
    
    
    7
    
    
    
    147Other interest income
    
    
    10
    
    
    
    2
    
    
    
    29
    
    
    
    7Total interest income
    
    
    5,339
    
    
    
    5,747
    
    
    
    16,329
    
    
    
    17,598Interest expense:Deposits
    
    
    1,288
    
    
    
    1,770
    
    
    
    4,154
    
    
    
    5,469Securities sold under agreements to repurchase
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    2Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Long-term debt
    
    
    29
    
    
    
    36
    
    
    
    99
    
    
    
    105Other interest bearing liabilities
    
    
    2
    
    
    
    5
    
    
    
    9
    
    
    
    16Total interest expense
    
    
    1,320
    
    
    
    1,812
    
    
    
    4,265
    
    
    
    5,593Net interest income
    
    
    4,019
    
    
    
    3,935
    
    
    
    12,064
    
    
    
    12,005Provision for loan losses
    
    
    70
    
    
    
    165
    
    
    
    637
    
    
    
    377Net interest income after provision for loan losses
    
    
    3,949
    
    
    
    3,770
    
    
    
    11,427
    
    
    
    11,628Noninterest income:Trust fees
    
    
    90
    
    
    
    83
    
    
    
    300
    
    
    
    253Customer service fees
    
    
    335
    
    
    
    437
    
    
    
    1,104
    
    
    
    1,235Earnings on bank-owned life insurance and annuities
    
    
    133
    
    
    
    130
    
    
    
    393
    
    
    
    348Commissions from sales of non-deposit products
    
    
    80
    
    
    
    66
    
    
    
    301
    
    
    
    324Income from unconsolidated subsidiary
    
    
    60
    
    
    
    50
    
    
    
    179
    
    
    
    146Securities impairment charge
    
    
    (40
    )
    
    
    
    
    
    
    (40
    )
    
    
    (226
    )Gain on sale or call of securities
    
    
    4
    
    
    
    
    
    
    
    31
    
    
    
    Gain (Loss) on sales of other assets
    
    
    30
    
    
    
    (33
    )
    
    
    36
    
    
    
    Prior period income from insurance sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323Other noninterest income
    
    
    244
    
    
    
    219
    
    
    
    679
    
    
    
    700Total noninterest income
    
    
    936
    
    
    
    952
    
    
    
    2,983
    
    
    
    3,103Noninterest expense:Employee compensation expense
    
    
    1,232
    
    
    
    1,199
    
    
    
    3,826
    
    
    
    3,699Employee benefits
    
    
    363
    
    
    
    391
    
    
    
    1,182
    
    
    
    1,246Occupancy
    
    
    243
    
    
    
    218
    
    
    
    692
    
    
    
    693Equipment
    
    
    148
    
    
    
    149
    
    
    
    403
    
    
    
    473Data processing expense
    
    
    366
    
    
    
    324
    
    
    
    1,077
    
    
    
    994Director compensation
    
    
    88
    
    
    
    100
    
    
    
    261
    
    
    
    318Professional fees
    
    
    128
    
    
    
    90
    
    
    
    357
    
    
    
    301Taxes, other than income
    
    
    124
    
    
    
    125
    
    
    
    379
    
    
    
    380FDIC Insurance premiums
    
    
    138
    
    
    
    121
    
    
    
    435
    
    
    
    526Amortization of intangibles
    
    
    11
    
    
    
    11
    
    
    
    34
    
    
    
    34Other noninterest expense
    
    
    317
    
    
    
    276
    
    
    
    956
    
    
    
    846Total noninterest expense
    
    
    3,158
    
    
    
    3,004
    
    
    
    9,602
    
    
    
    9,510Income before income taxes
    
    
    1,727
    
    
    
    1,718
    
    
    
    4,808
    
    
    
    5,221Provision for income taxes
    
    
    442
    
    
    
    430
    
    
    
    1,197
    
    
    
    1,358Net income
    
    $
    1,285
    
    
    $
    1,288
    
    
    $
    3,611
    
    
    $
    3,863Earnings per shareBasic
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.84
    
    
    $
    0.89Diluted
    
    $
    0.30
    
    
    $
    0.30
    
    
    $
    0.84
    
    
    $
    0.89Cash dividends declared per share
    
    $
    0.21
    
    
    $
    0.20
    
    
    $
    0.61
    
    
    $
    0.58Weighted average basic shares outstanding
    
    
    4,283,024
    
    
    
    4,342,587
    
    
    
    4,307,417
    
    
    
    4,340,595Weighted average diluted shares outstanding
    
    
    4,286,350
    
    
    
    4,346,353
    
    
    
    4,310,989
    
    
    
    4,344,720
   4




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
 
 Consolidated Statements of Changes in Stockholders Equity
   Nine Months Ended September 30, 2010Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    EquityBalance at December 31, 2009
    
    
    4,337,587
    
    
    $
    4,746
    
    
    $
    18,315
    
    
    $
    36,478
    
    
    $
    (805
    )
    
    $
    (8,131
    )
    
    $
    50,603Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,611
    
    
    
    
    
    
    
    
    
    
    
    3,611Change in unrealized gains on securities
available for sale, net of reclassification adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    178Defined benefit retirement plan adjustments, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    63Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,852Cash dividends at $0.61 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,627
    )
    
    
    
    
    
    
    
    
    
    
    (2,627
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36Purchase of treasury stock, at cost
    
    
    (66,400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,171
    )
    
    
    (1,171
    )Treasury stock issued for stock option
and stock purchase plans
    
    
    4,078
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    61Balance at September 30, 2010
    
    
    4,275,265
    
    
    $
    4,746
    
    
    $
    18,332
    
    
    $
    37,462
    
    
    $
    (564
    )
    
    $
    (9,222
    )
    
    $
    50,754Nine Months Ended September 30, 2009Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    EquityBalance at December 31, 2008
    
    
    4,341,055
    
    
    $
    4,746
    
    
    $
    18,324
    
    
    $
    34,758
    
    
    $
    (1,247
    )
    
    $
    (8,096
    )
    
    $
    48,485Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,863
    
    
    
    
    
    
    
    
    
    
    
    3,863Change in unrealized gains on securities
available for sale, net of reclassification adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    
    
    
    
    305Defined benefit retirement plan
adjustments, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,163Cash dividends at $0.58 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,518
    )
    
    
    
    
    
    
    
    
    
    
    (2,518
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Purchase of treasury stock, at cost
    
    
    (7,600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    (128
    )Treasury stock issued for stock option
and stock purchase plans
    
    
    9,132
    
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    133Balance at September 30, 2009
    
    
    4,342,587
    
    
    $
    4,746
    
    
    $
    18,304
    
    
    $
    36,103
    
    
    $
    (947
    )
    
    $
    (8,042
    )
    
    $
    50,164
   5




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
 
 Consolidated Statements of Cash Flows
   Nine Months Ended September 30,2010
    
    
    2009Operating activities:Net income
    
    $
    3,611
    
    
    $
    3,863Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    637
    
    
    
    377Depreciation
    
    
    406
    
    
    
    457Net amortization of securities premiums
    
    
    216
    
    
    
    156Amortization of core deposit intangible
    
    
    34
    
    
    
    34Amortization of deferred net loan costs
    
    
    17
    
    
    
    35Deferral of net loan costs (fees)
    
    
    35
    
    
    
    (3
    )Securities impairment charge
    
    
    40
    
    
    
    226Net realized gains on sales or calls of securities
    
    
    (31
    )
    
    
    Net gains on sales of other assets
    
    
    (36
    )
    
    
    Earnings on bank owned life insurance and annuities
    
    
    (393
    )
    
    
    (348
    )Deferred income tax expense
    
    
    15
    
    
    
    94Equity in earnings of unconsolidated subsidiary, net of dividends of $28 and $34
    
    
    (151
    )
    
    
    (112
    )Stock-based compensation expense
    
    
    36
    
    
    
    29Decrease in accrued interest receivable and other assets
    
    
    559
    
    
    
    78Decrease in accrued interest payable and other liabilities
    
    
    (74
    )
    
    
    (1
    )Net cash provided by operating activities
    
    
    4,921
    
    
    
    4,885Investing activities:Purchases of:Securities available for sale
    
    
    (39,157
    )
    
    
    (43,026
    )Premises and equipment
    
    
    (704
    )
    
    
    (103
    )Bank owned life insurance and annuities
    
    
    (66
    )
    
    
    (94
    )Proceeds from:Maturities of and principal repayments on
securities available for sale
    
    
    37,636
    
    
    
    25,757Bank owned life insurance and annuities
    
    
    50
    
    
    
    52Sale of fixed assets
    
    
    
    
    
    
    33Sale of other real estate owned
    
    
    747
    
    
    
    435Sale of other assets
    
    
    11
    
    
    
    80Net decrease in interest-bearing time deposits
    
    
    75
    
    
    
    3,726Net decrease in loans receivable
    
    
    6,043
    
    
    
    3,169Net cash provided by (used in) investing activities
    
    
    4,635
    
    
    
    (9,971
    )Financing activities:Net (decrease) increase in deposits
    
    
    (4,849
    )
    
    
    15,002Net decrease in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (332
    )
    
    
    (8,644
    )Repayment of long-term debt
    
    
    (5,000
    )
    
    
    Cash dividends
    
    
    (2,627
    )
    
    
    (2,518
    )Purchase of treasury stock
    
    
    (1,171
    )
    
    
    (128
    )Treasury stock issued for employee stock plans
    
    
    61
    
    
    
    133Net cash (used in) provided by financing activities
    
    
    (13,918
    )
    
    
    3,845Net decrease in cash and cash equivalents
    
    
    (4,362
    )
    
    
    (1,241
    )Cash and cash equivalents at beginning of period
    
    
    19,895
    
    
    
    12,457Cash and cash equivalents at end of period
    
    $
    15,533
    
    
    $
    11,216Supplemental information:Interest paid
    
    $
    4,358
    
    
    $
    5,668Income taxes paid
    
    $
    1,145
    
    
    $
    910Supplemental schedule of noncash investing and financing activities:Transfer of loans to other real estate owned and repossessed assets
    
    $
    730
    
    
    $
    609
   6




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
 
       ASU 2010-09
 Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure
Requirements
    ASU 2010-13
 CompensationStock Compensation (Topic 718): Effect of Denominating
the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the
Underlying Equity Security Trades
  7




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##### Table of Contents



ASU 2010-18
 Receivables (Topic 310): Effect of a Loan Modification When the Loan Is Part of a Pool
That Is Accounted for as a Single Asset,
  ASU 2010-20
 Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses
     8




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##### Table of Contents



Three Months Ended September 30, 2010
    
    
    Three Months Ended September 30, 2009Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    1,727
    
    
    $
    442
    
    
    $
    1,285
    
    
    $
    1,718
    
    
    $
    430
    
    
    $
    1,288Other comprehensive income:Unrealized gains (losses) on available for sale securities:Unrealized gains (losses) arising during the period
    
    
    (25
    )
    
    
    (9
    )
    
    
    (16
    )
    
    
    506
    
    
    
    172
    
    
    
    334Unrealized gains (losses) from unconsolidated subsidiary
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )Less reclassification adjustment for:gains included in net income
    
    
    (4
    )
    
    
    (1
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    securities impairment charge
    
    
    40
    
    
    
    14
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    Change in pension liability
    
    
    32
    
    
    
    11
    
    
    
    21
    
    
    
    (7
    )
    
    
    (2
    )
    
    
    (5
    )Other comprehensive income
    
    
    44
    
    
    
    15
    
    
    
    29
    
    
    
    487
    
    
    
    170
    
    
    
    317Total comprehensive income
    
    $
    1,771
    
    
    $
    457
    
    
    $
    1,314
    
    
    $
    2,205
    
    
    $
    600
    
    
    $
    1,605Nine Months Ended September 30, 2010
    
    
    Nine Months Ended September 30, 2009Before
    
    
    Tax Expense
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    4,808
    
    
    $
    1,197
    
    
    $
    3,611
    
    
    $
    5,221
    
    
    $
    1,358
    
    
    $
    3,863Other comprehensive income:Unrealized gains (losses) on available for sale securities:Unrealized gains arising during the period
    
    
    239
    
    
    
    81
    
    
    
    158
    
    
    
    236
    
    
    
    80
    
    
    
    156Unrealized gains (losses) from unconsolidated subsidiary
    
    
    14
    
    
    
    
    
    
    
    14
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Less reclassification adjustment for:gains included in net income
    
    
    (31
    )
    
    
    (11
    )
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    securities impairment charge
    
    
    40
    
    
    
    14
    
    
    
    26
    
    
    
    226
    
    
    
    77
    
    
    
    149Change in pension liability
    
    
    96
    
    
    
    33
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    
    358
    
    
    
    117
    
    
    
    241
    
    
    
    457
    
    
    
    157
    
    
    
    300Total comprehensive income
    
    $
    5,166
    
    
    $
    1,314
    
    
    $
    3,852
    
    
    $
    5,678
    
    
    $
    1,515
    
    
    $
    4,163
  9/30/2010
    
    
    12/31/2009Unrealized gains on available for sale securities
    
    $
    954
    
    
    $
    776Unrecognized expense for defined benefit pension
    
    
    (1,518
    )
    
    
    (1,581
    )Accumulated other comprehensive loss
    
    $
    (564
    )
    
    $
    (805
    )
  9




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##### Table of Contents



(Amounts, except earnings per share, in thousands)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30, 2010
    
    
    September 30, 2009Net income
    
    $
    1,285
    
    
    $
    1,288Weighted-average common shares outstanding
    
    
    4,283
    
    
    
    4,342Basic earnings per share
    
    $
    0.30
    
    
    $
    0.30Weighted-average common shares outstanding
    
    
    4,283
    
    
    
    4,342Common stock equivalents due to effect of stock options
    
    
    3
    
    
    
    4Total weighted-average common shares and equivalents
    
    
    4,286
    
    
    
    4,346Diluted earnings per share
    
    $
    0.30
    
    
    $
    0.30
 Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2010
    
    
    September 30, 2009Net income
    
    $
    3,611
    
    
    $
    3,863Weighted-average common shares outstanding
    
    
    4,307
    
    
    
    4,341Basic earnings per share
    
    $
    0.84
    
    
    $
    0.89Weighted-average common shares outstanding
    
    
    4,307
    
    
    
    4,341Common stock equivalents due to effect of stock options
    
    
    4
    
    
    
    4Total weighted-average common shares and equivalents
    
    
    4,311
    
    
    
    4,345Diluted earnings per share
    
    $
    0.84
    
    
    $
    0.89
     10




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##### Table of Contents



(Dollars in thousands)
 Three Months Ended
    
    
    Year-to-Date ThroughSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of net periodic
pension costService cost
    
    $
    47
    
    
    $
    47
    
    
    $
    140
    
    
    $
    141Interest cost
    
    
    118
    
    
    
    112
    
    
    
    354
    
    
    
    336Expected return on plan assets
    
    
    (144
    )
    
    
    (116
    )
    
    
    (431
    )
    
    
    (346
    )Additional recognized amounts
    
    
    32
    
    
    
    40
    
    
    
    96
    
    
    
    120Net periodic pension cost
    
    $
    53
    
    
    $
    83
    
    
    $
    159
    
    
    $
    251
       Investments  Debt and Equity Securities
  11




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##### Table of Contents



September 30, 2010Gross
    
    
    GrossSecurities Available for Sale
    
    Amortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsAfter one year but within five years
    
    $
    33,139
    
    
    $
    33,612
    
    
    $
    473
    
    
    $
    After five years but within ten years
    
    
    4,500
    
    
    
    4,513
    
    
    
    13
    
    
    
    37,639
    
    
    
    38,125
    
    
    
    486
    
    
    
    Obligations of state and political subdivisionsWithin one year
    
    
    5,312
    
    
    
    5,373
    
    
    
    70
    
    
    
    (9
    )After one year but within five years
    
    
    29,530
    
    
    
    30,367
    
    
    
    877
    
    
    
    (40
    )After five years but within ten years
    
    
    1,771
    
    
    
    1,787
    
    
    
    17
    
    
    
    (1
    )36,613
    
    
    
    37,527
    
    
    
    964
    
    
    
    (50
    )Corporate notesAfter one year but within five years
    
    
    1,000
    
    
    
    1,033
    
    
    
    33
    
    
    
    1,000
    
    
    
    1,033
    
    
    
    33
    
    
    
    Mortgage-backed securities
    
    
    1,291
    
    
    
    1,380
    
    
    
    89
    
    
    
    Equity securities
    
    
    935
    
    
    
    835
    
    
    
    67
    
    
    
    (167
    )Total
    
    $
    77,478
    
    
    $
    78,900
    
    
    $
    1,639
    
    
    $
    (217
    )
 December 31, 2009Gross
    
    
    GrossSecurities Available for Sale
    
    Amortized
    
    
    Fair
    
    
    Unrealized
    
    
    UnrealizedType and maturity
    
    Cost
    
    
    Value
    
    
    Gains
    
    
    LossesU.S. Treasury securities and obligations of U.S.
Government agencies and corporationsAfter one year but within five years
    
    $
    32,503
    
    
    $
    32,620
    
    
    $
    194
    
    
    $
    (77
    )After five years but within ten years
    
    
    940
    
    
    
    933
    
    
    
    
    
    
    
    (7
    )33,443
    
    
    
    33,553
    
    
    
    194
    
    
    
    (84
    )Obligations of state and political subdivisionsWithin one year
    
    
    6,775
    
    
    
    6,863
    
    
    
    88
    
    
    
    After one year but within five years
    
    
    32,022
    
    
    
    32,972
    
    
    
    958
    
    
    
    (8
    )After five years but within ten years
    
    
    544
    
    
    
    562
    
    
    
    18
    
    
    
    39,341
    
    
    
    40,397
    
    
    
    1,064
    
    
    
    (8
    )Corporate notesAfter one year but within five years
    
    
    1,000
    
    
    
    1,026
    
    
    
    26
    
    
    
    1,000
    
    
    
    1,026
    
    
    
    26
    
    
    
    Mortgage-backed securities
    
    
    1,425
    
    
    
    1,515
    
    
    
    90
    
    
    
    Equity securities
    
    
    975
    
    
    
    865
    
    
    
    58
    
    
    
    (168
    )Total
    
    $
    76,184
    
    
    $
    77,356
    
    
    $
    1,432
    
    
    $
    (260
    )
  12




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##### Table of Contents



Unrealized Losses at September 30, 2010Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesObligations of state and political
subdivisions
    
    $
    5,251
    
    
    $
    (45
    )
    
    $
    880
    
    
    $
    (5
    )
    
    $
    6,131
    
    
    $
    (50
    )Debt securities
    
    
    5,251
    
    
    
    (45
    )
    
    
    880
    
    
    
    (5
    )
    
    
    6,131
    
    
    
    (50
    )Equity securities
    
    
    370
    
    
    
    (67
    )
    
    
    245
    
    
    
    (100
    )
    
    
    615
    
    
    
    (167
    )Total temporarily impaired securities
    
    $
    5,621
    
    
    $
    (112
    )
    
    $
    1,125
    
    
    $
    (105
    )
    
    $
    6,746
    
    
    $
    (217
    )
 Unrealized Losses at December 31, 2009Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S. Government
agencies and corporations
    
    $
    10,897
    
    
    $
    (84
    )
    
    $
    
    
    
    $
    
    
    
    $
    10,897
    
    
    $
    (84
    )Obligations of state and political
subdivisions
    
    
    2,532
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    2,532
    
    
    
    (8
    )Debt securities
    
    
    13,429
    
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    13,429
    
    
    
    (92
    )Equity securities
    
    
    140
    
    
    
    (23
    )
    
    
    496
    
    
    
    (145
    )
    
    
    636
    
    
    
    (168
    )Total temporarily impaired securities
    
    $
    13,569
    
    
    $
    (115
    )
    
    $
    496
    
    
    $
    (145
    )
    
    $
    14,065
    
    
    $
    (260
    )
    13




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross proceeds from sales of securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Securities available for sale:Gross realized gains from called securities
    
    $
    4
    
    
    $
    
    
    
    $
    31
    
    
    $
    Gross realized losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Fair Value Measurements and Disclosures
      14




---



##### Table of Contents



Securities Available for Sale.
  15




---



##### Table of Contents



Impaired Loans
 Other Real Estate Owned.
  (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Significant
    
    
    SignificantQuoted Prices in
    
    
    Other
    
    
    OtherSeptember 30,
    
    
    Active Markets for
    
    
    Observable
    
    
    Unobservable2010
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsMeasured at fair value on a
recurring
basis:Equity securities available-for-sale
    
    $
    835
    
    
    $
    835
    
    
    $
    
    
    
    $
    Debt securities available-for-sale
    
    
    78,065
    
    
    
    
    
    
    
    78,065
    
    
    
    Measured at fair value on a
non-recurring
basis:Impaired loans
    
    
    1,568
    
    
    
    
    
    
    
    
    
    
    
    1,568Other real estate owned
    
    
    494
    
    
    
    
    
    
    
    
    
    
    
    494
 (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Significant
    
    
    SignificantQuoted Prices in
    
    
    Other
    
    
    OtherDecember 31,
    
    
    Active Markets for
    
    
    Observable
    
    
    Unobservable2009
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsMeasured at fair value on a recurring
basis:Equity securities available-for-sale
    
    $
    865
    
    
    $
    865
    
    
    $
    
    
    
    $
    Debt securities available-for-sale
    
    
    76,491
    
    
    
    
    
    
    
    76,491
    
    
    
    Measured at fair value on a
non-recurring basis:Impaired loans
    
    
    1,167
    
    
    
    
    
    
    
    
    
    
    
    1,167Other real estate owned
    
    
    476
    
    
    
    
    
    
    
    
    
    
    
    476
   16




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##### Table of Contents



Fair Value of Financial Instruments
 Financial Instruments
  Financial Instruments
 September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and due from banks
    
    $
    10,178
    
    
    $
    10,178
    
    
    $
    18,613
    
    
    $
    18,613Interest bearing deposits with banks
    
    
    355
    
    
    
    355
    
    
    
    82
    
    
    
    82Federal funds sold
    
    
    5,000
    
    
    
    5,000
    
    
    
    1,200
    
    
    
    1,200Interest bearing time deposits with banks
    
    
    1,345
    
    
    
    1,341
    
    
    
    1,420
    
    
    
    1,447Securities
    
    
    78,900
    
    
    
    78,900
    
    
    
    77,356
    
    
    
    77,356Restricted investment in FHLB stock
    
    
    2,197
    
    
    
    2,197
    
    
    
    2,197
    
    
    
    2,197Total loans, net of unearned interest
    
    
    304,260
    
    
    
    321,788
    
    
    
    311,630
    
    
    
    324,061Accrued interest receivable
    
    
    1,897
    
    
    
    1,897
    
    
    
    2,284
    
    
    
    2,284Financial liabilities:Non-interest bearing deposits
    
    
    53,886
    
    
    
    53,886
    
    
    
    55,030
    
    
    
    55,030Interest bearing deposits
    
    
    318,662
    
    
    
    325,510
    
    
    
    322,367
    
    
    
    327,724Securities sold under agreements to
repurchase
    
    
    2,875
    
    
    
    2,875
    
    
    
    3,207
    
    
    
    3,207Long-term debt
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    5,077Other interest bearing liabilities
    
    
    1,178
    
    
    
    1,180
    
    
    
    1,146
    
    
    
    1,148Accrued interest payable
    
    
    588
    
    
    
    588
    
    
    
    681
    
    
    
    681Off-balance sheet financial instruments:Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
      17




---



##### Table of Contents



Interest bearing time deposits with banks
 Securities Available for Sale
 Loans
 Impaired Loans
 Fixed rate time deposits
 Long-term debt and other interest bearing liabilities
 Commitments to extend credit and letters of credit
    18




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
            19




---



##### Table of Contents



September 30,
    
    
    December 31,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %Deposits:Demand, non-interest bearing
    
    $
    53,886
    
    
    $
    55,030
    
    
    $
    (1,144
    )
    
    
    (2.1
    %)NOW and money market
    
    
    78,452
    
    
    
    75,766
    
    
    
    2,686
    
    
    
    3.5
    %Savings
    
    
    47,631
    
    
    
    42,536
    
    
    
    5,095
    
    
    
    12.0
    %Time deposits, $100,000 and more
    
    
    37,020
    
    
    
    38,453
    
    
    
    (1,433
    )
    
    
    (3.7
    %)Other time deposits
    
    
    155,559
    
    
    
    165,612
    
    
    
    (10,053
    )
    
    
    (6.1
    %)Total deposits
    
    $
    372,548
    
    
    $
    377,397
    
    
    $
    (4,849
    )
    
    
    (1.3
    %)
  September 30,
    
    
    December 31,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %Loans:Commercial, financial and agricultural
    
    $
    35,203
    
    
    $
    33,783
    
    
    $
    1,420
    
    
    
    4.2
    %Real estate  commercial
    
    
    42,533
    
    
    
    39,299
    
    
    
    3,234
    
    
    
    8.2
    %Real estate  construction
    
    
    10,777
    
    
    
    24,578
    
    
    
    (13,801
    )
    
    
    (56.2
    %)Real estate  mortgage
    
    
    144,969
    
    
    
    135,854
    
    
    
    9,115
    
    
    
    6.7
    %Home equity
    
    
    48,169
    
    
    
    52,893
    
    
    
    (4,724
    )
    
    
    (8.9
    %)Obligations
of states and political subdivisions
    
    
    12,910
    
    
    
    13,553
    
    
    
    (643
    )
    
    
    (4.7
    %)Personal
    
    
    9,699
    
    
    
    11,670
    
    
    
    (1,971
    )
    
    
    (16.9
    %)Total loans
    
    $
    304,260
    
    
    $
    311,630
    
    
    $
    (7,370
    )
    
    
    (2.4
    %)
  Periods Ended September 30,2010
    
    
    2009Balance of allowance  January 1
    
    $
    2,719
    
    
    $
    2,610Loans charged off
    
    
    (556
    )
    
    
    (391
    )Recoveries of loans previously charged off
    
    
    11
    
    
    
    9Net charge-offs
    
    
    (545
    )
    
    
    (382
    )Provision for loan losses
    
    
    637
    
    
    
    377Balance of allowance  end of period
    
    $
    2,811
    
    
    $
    2,605Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.18
    %
    
    
    0.12
    %
   20




---



##### Table of Contents



(Dollar amounts in thousands)
    
    September 30, 2010
    
    
    December 31, 2009Non-performing loansNonaccrual loans
    
    $
    5,650
    
    
    $
    2,629Accruing loans past due 90 days or more
    
    
    682
    
    
    
    1,369Restructured loans
    
    
    
    
    
    
    Total
    
    $
    6,332
    
    
    $
    3,998Average loans outstanding
    
    $
    309,257
    
    
    $
    310,813Ratio of
non-performing loans to average loans outstanding
    
    
    2.05
    %
    
    
    1.29
    %
     Comparison of the Three Months Ended September 30, 2010 and 2009
    21




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##### Table of Contents



Three Months EndedSeptember 30,2010
    
    
    2009Return on average assets (annualized)
    
    
    1.16
    %
    
    
    1.17
    %Return on average equity (annualized)
    
    
    10.15
    %
    
    
    10.39
    %Average equity to average assets
    
    
    11.48
    %
    
    
    11.24
    %Non-interest income, excluding securities gains
and impairment charges, as a percentage of
average assets (annualized)
    
    
    0.88
    %
    
    
    0.86
    %Non-interest expense as a percentage of average
assets (annualized)
    
    
    2.86
    %
    
    
    2.72
    %
           22




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##### Table of Contents



Comparison of the Nine Months Ended September 30, 2010 and 2009
    23




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##### Table of Contents



Nine Months EndedSeptember 30,2010
    
    
    2009Return on average assets (annualized)
    
    
    1.10
    %
    
    
    1.18
    %Return on average equity (annualized)
    
    
    9.50
    %
    
    
    10.48
    %Average equity to average assets
    
    
    11.53
    %
    
    
    11.30
    %Non-interest income, excluding securities gains
and impairment charges, as a percentage of
average assets (annualized)
    
    
    0.91
    %
    
    
    1.02
    %Non-interest expense as a percentage of average
assets (annualized)
    
    
    2.91
    %
    
    
    2.91
    %
            24




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##### Table of Contents



Year-to-date through September 30,Non-interest income (in thousands)
    
    2010
    
    
    2009Securities other-than-temporary impairment charge
    
    $
    (40
    )
    
    $
    (226
    )Gains on the sale of securities
    
    
    31
    
    
    
    Gains on the sale of OREO
    
    
    36
    
    
    
    Refund of overcharged PA sales tax from years 2004-2006
    
    
    
    
    
    
    40Prior period income from credit-life insurance sales
    
    
    
    
    
    
    323Total positive impact on non-interest income
    
    $
    27
    
    
    $
    137
       25




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##### Table of Contents



26




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
         27




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##### Table of Contents



Change in Net
    
    
    Change in NetChange in
    
    Interest Income
    
    
    Interest Income
    
    
    Total Change inInterest Rates
    
    Due to Interest
    
    
    Due to Imbedded
    
    
    Net Interest(Basis Points)
    
    Rate Risk (Static)
    
    
    Options
    
    
    Income400
    
    $
    (516
    )
    
    $
    671
    
    
    $
    155300
    
    
    (386
    )
    
    
    451
    
    
    
    65200
    
    
    (257
    )
    
    
    234
    
    
    
    (23
    )100
    
    
    (129
    )
    
    
    62
    
    
    
    (67
    )0
    
    
    
    
    
    
    
    
    
    
    -25
    
    
    33
    
    
    
    (35
    )
    
    
    (2
    )
   
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
    28




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
   
   Recently enacted financial reform legislation may have a significant impact on the
Corporation and results of its Operation.
   29




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##### Table of Contents



Mortgage foreclosure practices and procedures in our industry have come under public
and regulatory scrutiny.
   
   Total Number ofShares Purchased as
    
    
    Maximum Number ofTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    Shares that May Yet Beof Shares
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    per Share
    
    
    Programs
    
    
    Plans or Programs (1)July 131, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    147,836August 131, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,836September 130, 2010
    
    
    8,300
    
    
    
    17.50
    
    
    
    8,300
    
    
    
    139,536Totals
    
    
    8,300
    
    
    
    
    
    
    
    8,300
    
    
    
    139,536
 (1)
    
    On March 23, 2001, the Corporation announced plans to buy back 100,000 (200,000
on a post-split basis) shares of its common stock. There is no expiration date to
this buyback plan, but subsequent to the initial plan, the Board of Directors
authorized the repurchase of 400,000 additional shares in 2005 and then authorized
200,000 additional shares in September of 2008. As of November 8, 2010, the number
of shares that may yet be purchased under the program was 139,536. No repurchase
plan or program expired during the period covered by the table. The Corporation has
no stock repurchase plan or program that it has determined to terminate prior to
expiration or under which it does not intend to make further purchases.  30




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##### Table of Contents



3.1
    
    
    Amended and Restated Articles of Incorporation (incorporated
by reference to Exhibit 4.1 to the Corporations Form S-3 Registration
Statement No. 333-129023 filed with the SEC on October 14, 2005)3.2
    
    
    Bylaws (incorporated by reference to Exhibit 3.2 to the
Corporations report on Form 8-K filed with the SEC on December 21, 2007)10.1
    
    
    2004 Executive Annual Incentive Plan
(incorporated by reference to Exhibit 10.15 to the
Corporations report on Form 10-K filed with the SEC
on March 16, 2005)10.2
    
    
    Exhibits A-B to 2004 Executive Annual
Incentive Plan (incorporated by reference to Exhibit
10.1 to the Corporations report on Form 8-K filed
with the SEC on March 19, 2010)31.1
    
    
    Rule 13a  14(a)/15d  14(a) Certification of President and
Chief Executive Officer31.2
    
    
    Rule 13a  14(a)/15d  14(a) Certification of Chief
Financial Officer32.1
    
    
    Section 1350 Certification of President and Chief Executive
Officer32.2
    
    
    Section 1350 Certification of Chief Financial Officer
 
  Juniata Valley Financial Corp.

(Registrant)Date 11-08-2010
    By:
    /s/ Marcie A. BarberMarcie A. Barber, President andChief Executive OfficerDate 11-08-2010
    By:
    /s/ JoAnn N. McMinnJoAnn N. McMinn, Chief Financial Officer,Principal Accounting
Officer and 
Principal Financial Officer  31