##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
 For the quarterly period ended June 30, 2006
 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)
  
  þ o
  o þ o
 o þ
  Class
    
    
    
    Outstanding as of August 4, 2006Common Stock ($1.00 par value)
    
    
    
    4,493,266 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Statements of Financial Condition
as of June 30, 2006 (Unaudited) and December 31, 2005 (Audited)
    
    
    2Consolidated Statements of Income for the Three
Months and Six Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the Six Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2006 and 2005 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4.
    
    Controls and Procedures
    
    
    17PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    18Item 1A.
    
    Risk Factors
    
    
    18Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    20Signatures
    
    
    20




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Juniata Valley Financial Corp. and Subsidiary
 
 
 June 30,
    
    
    December 31,2006
    
    
    2005Unaudited
    
    
    AuditedASSETSCash and due from banks
    
    $
    10,068
    
    
    $
    16,373Interest bearing deposits with banks
    
    
    79
    
    
    
    66Cash and cash equivalents
    
    
    10,147
    
    
    
    16,439Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,660Securities available for sale
    
    
    61,218
    
    
    
    66,699Securities held to maturity, fair value of $8,539 and $3,436, respectively
    
    
    8,597
    
    
    
    3,493Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    1,562
    
    
    
    1,356Total loans, net of unearned interest
    
    
    303,301
    
    
    
    298,063Less: Allowance for loan losses
    
    
    (2,764
    )
    
    
    (2,763
    )Total loans, net of allowance for loan losses
    
    
    300,537
    
    
    
    295,300Premises and equipment, net
    
    
    5,970
    
    
    
    6,211Bank owned life insurance
    
    
    10,779
    
    
    
    10,647Accrued interest receivable and other assets
    
    
    6,099
    
    
    
    4,997Total assets
    
    $
    410,569
    
    
    $
    410,802LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    40,541
    
    
    $
    46,041Interest bearing
    
    
    302,016
    
    
    
    297,426Total deposits
    
    
    342,557
    
    
    
    343,467Securities sold under agreements to repurchase
    
    
    5,583
    
    
    
    4,201Short-term borrowings
    
    
    2,000
    
    
    
    5,600Long-term debt
    
    
    5,000
    
    
    
    5,000Other interest bearing liabilities
    
    
    869
    
    
    
    819Accrued interest payable and other liabilities
    
    
    6,768
    
    
    
    4,596Total liabilities
    
    
    362,777
    
    
    
    363,683Stockholders Equity:Preferred stock, no par value:Authorized - 500,000 shares, none issuedCommon stock, par value $1.00 per share:Authorized - 20,000,000 shares;
Issued - 4,745,826 shares
Outstanding -4,493,266 shares at June 30, 2006;4,503,392 shares at December 31, 2005
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,243
    
    
    
    18,177Retained earnings
    
    
    30,475
    
    
    
    29,486Accumulated other comprehensive loss
    
    
    (776
    )
    
    
    (694
    )Cost of common stock in Treasury:252,560 shares at June 30, 2006;242,434 shares at December 31, 2005
    
    
    (4,896
    )
    
    
    (4,596
    )Total stockholders equity
    
    
    47,792
    
    
    
    47,119Total liabilities and stockholders equity
    
    $
    410,569
    
    
    $
    410,802
  2




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##### 



Juniata Valley Financial Corp. and Subsidiary
 
 
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest income:Loans, including fees
    
    $
    5,379
    
    
    $
    4,964
    
    
    $
    10,581
    
    
    $
    9,721Taxable securities
    
    
    488
    
    
    
    476
    
    
    
    986
    
    
    
    961Tax-exempt securities
    
    
    159
    
    
    
    168
    
    
    
    323
    
    
    
    335Other interest income
    
    
    60
    
    
    
    78
    
    
    
    120
    
    
    
    157Total interest income
    
    
    6,086
    
    
    
    5,686
    
    
    
    12,010
    
    
    
    11,174Interest expense:Deposits
    
    
    2,297
    
    
    
    1,861
    
    
    
    4,450
    
    
    
    3,547Securities sold under agreements to repurchase
    
    
    55
    
    
    
    25
    
    
    
    103
    
    
    
    50Short-term borrowings
    
    
    88
    
    
    
    2
    
    
    
    180
    
    
    
    7Long-term debt
    
    
    37
    
    
    
    36
    
    
    
    72
    
    
    
    72Other interest bearing liabilities
    
    
    6
    
    
    
    5
    
    
    
    11
    
    
    
    10Total interest expense
    
    
    2,483
    
    
    
    1,929
    
    
    
    4,816
    
    
    
    3,686Net interest income
    
    
    3,603
    
    
    
    3,757
    
    
    
    7,194
    
    
    
    7,488Provision for loan losses
    
    
    30
    
    
    
    
    
    
    
    60
    
    
    
    28Net interest income after provision for loan losses
    
    
    3,573
    
    
    
    3,757
    
    
    
    7,134
    
    
    
    7,460Noninterest income:Trust fees
    
    
    88
    
    
    
    93
    
    
    
    224
    
    
    
    190Customer service fees
    
    
    381
    
    
    
    349
    
    
    
    723
    
    
    
    683Earnings on bank-owned life insurance
    
    
    92
    
    
    
    73
    
    
    
    184
    
    
    
    178Commissions from sales of annuities and mutual funds
    
    
    180
    
    
    
    122
    
    
    
    263
    
    
    
    218Gain on sale of loans and other assets
    
    
    10
    
    
    
    1
    
    
    
    23
    
    
    
    5Gain on sale of securities
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    99Other noninterest income
    
    
    150
    
    
    
    120
    
    
    
    287
    
    
    
    237Total noninterest income
    
    
    901
    
    
    
    758
    
    
    
    1,771
    
    
    
    1,610Noninterest expense:Salaries and wages
    
    
    1,146
    
    
    
    1,125
    
    
    
    2,232
    
    
    
    2,175Employee severance expense
    
    
    
    
    
    
    284
    
    
    
    
    
    
    
    284Employee benefits
    
    
    360
    
    
    
    381
    
    
    
    738
    
    
    
    759Occupancy
    
    
    203
    
    
    
    209
    
    
    
    405
    
    
    
    416Equipment
    
    
    151
    
    
    
    150
    
    
    
    307
    
    
    
    290Data processing expense
    
    
    243
    
    
    
    298
    
    
    
    560
    
    
    
    610Director compensation
    
    
    124
    
    
    
    127
    
    
    
    249
    
    
    
    249Professional fees
    
    
    100
    
    
    
    224
    
    
    
    186
    
    
    
    318Taxes, other than income
    
    
    132
    
    
    
    129
    
    
    
    246
    
    
    
    259Other noninterest expense
    
    
    308
    
    
    
    285
    
    
    
    588
    
    
    
    511Total noninterest expense
    
    
    2,767
    
    
    
    3,212
    
    
    
    5,511
    
    
    
    5,871Income before income taxes
    
    
    1,707
    
    
    
    1,303
    
    
    
    3,394
    
    
    
    3,199Provision for income taxes
    
    
    487
    
    
    
    358
    
    
    
    970
    
    
    
    891Net income
    
    $
    1,220
    
    
    $
    945
    
    
    $
    2,424
    
    
    $
    2,308Earnings per shareBasic
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.54
    
    
    $
    0.50Diluted
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.54
    
    
    $
    0.50Cash dividends declared per share
    
    $
    0.16
    
    
    $
    0.30
    
    
    $
    0.32
    
    
    $
    0.80Weighted average shares outstanding
    
    
    4,491,423
    
    
    
    4,560,146
    
    
    
    4,490,836
    
    
    
    4,560,324Weighted average shares and share equivalents outstanding
    
    
    4,505,657
    
    
    
    4,578,508
    
    
    
    4,505,408
    
    
    
    4,577,510
  3




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##### 



Juniata Valley Financial Corp. and Subsidiary
 
 
 Six Months Ended June 30, 2006Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    TotalShares
    
    Common
    
    
    
    
    
    Retained
    
    Comprehensive
    
    Treasury
    
    StockholdersOutstanding
    
    Stock
    
    Surplus
    
    Earnings
    
    (Loss)
    
    Stock
    
    EquityBalance at December 31, 2005
    
    
    4,503,392
    
    
    $
    4,746
    
    
    $
    18,177
    
    
    $
    29,486
    
    
    $
    (694
    )
    
    $
    (4,596
    )
    
    $
    47,119Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,424
    
    
    
    
    
    
    
    
    
    
    
    2,424Change in unrealized losses on securities
available for sale, net of reclassification adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (82
    )
    
    
    
    
    
    
    (82
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,342Cash dividends at $0.32 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,435
    )
    
    
    
    
    
    
    
    
    
    
    (1,435
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18Purchase of treasury stock, at cost
    
    
    (22,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (531
    )
    
    
    (531
    )Treasury stock issued for dividend
reinvestment plan and employee stock
purchase plan
    
    
    11,874
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    279Balance at June 30, 2006
    
    
    4,493,266
    
    
    $
    4,746
    
    
    $
    18,243
    
    
    $
    30,475
    
    
    $
    (776
    )
    
    $
    (4,896
    )
    
    $
    47,792
 Six Months Ended June 30, 2005Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    TotalShares
    
    Common
    
    
    
    
    
    Retained
    
    Comprehensive
    
    Treasury
    
    StockholdersOutstanding
    
    Stock
    
    Surplus
    
    Earnings
    
    Income (Loss)
    
    Stock
    
    EquityBalance at December 31, 2004
    
    
    2,280,629
    
    
    $
    2,373
    
    
    $
    20,386
    
    
    $
    29,966
    
    
    $
    414
    
    
    $
    (2,986
    )
    
    $
    50,153Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,308
    
    
    
    
    
    
    
    
    
    
    
    2,308Minimum pension liability
adjustment net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (631
    )
    
    
    
    
    
    
    (631
    )Change in unrealized losses on securities
available for sale, net of reclassification adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (438
    )
    
    
    
    
    
    
    (438
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,239Cash dividends at $.80 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,645
    )
    
    
    
    
    
    
    
    
    
    
    (3,645
    )Treasury stock issued for dividend
reinvestment plan and employee
stock purchase plan
    
    
    9,286
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    306
    
    
    
    408Purchase of treasury stock, at cost
    
    
    (6,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (270
    )
    
    
    (270
    )Balance at June 30, 2005
    
    
    2,283,915
    
    
    $
    2,373
    
    
    $
    20,488
    
    
    $
    28,629
    
    
    $
    (655
    )
    
    $
    (2,950
    )
    
    $
    47,885
  4




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##### 



Juniata Valley Financial Corp. and Subsidiary
 
 
 Six Months Ended June 30,2006
    
    
    2005Operating activities:Net income
    
    $
    2,424
    
    
    $
    2,308Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    60
    
    
    
    28Provision for depreciation
    
    
    290
    
    
    
    303Net amortization of security premiums
    
    
    62
    
    
    
    68Gains on sales of securities
    
    
    (67
    )
    
    
    (99
    )Gains on sales of loans and other assets
    
    
    (23
    )
    
    
    (5
    )Earnings on investment in life insurance
    
    
    (184
    )
    
    
    (178
    )Deferred income tax credit
    
    
    (86
    )
    
    
    Increase in accrued interest receivable and other assets
    
    
    (998
    )
    
    
    (1,231
    )Increase in accrued interest payable and other liabilities
    
    
    251
    
    
    
    762Net cash provided by operating activities
    
    
    1,729
    
    
    
    1,956Investing activities:Purchases of:Securities available for sale
    
    
    (235
    )
    
    
    (3,094
    )Securities held to maturity
    
    
    (5,100
    )
    
    
    (4,400
    )FHLB stock
    
    
    (503
    )
    
    
    (506
    )Premises and equipment
    
    
    (49
    )
    
    
    (97
    )Bank owned life insurance
    
    
    (78
    )
    
    
    Proceeds from:Sales of available for sale securities
    
    
    137
    
    
    
    125Maturities of and principal repayments on:Securities available for sale
    
    
    7,445
    
    
    
    6,438Securities held to maturity
    
    
    
    
    
    
    1,000Redemption of FHLB stock
    
    
    297
    
    
    
    786Bank owned life insurance
    
    
    130
    
    
    
    Sale of other real estate owned
    
    
    572
    
    
    
    Net decrease in interest-bearing time deposits
    
    
    
    
    
    
    500Net increase in loans receivable
    
    
    (5,822
    )
    
    
    (12,269
    )Net cash used in investing activities
    
    
    (3,206
    )
    
    
    (11,517
    )Financing activities:Net (decrease) increase in deposits
    
    
    (910
    )
    
    
    8,496Net (decrease) increase in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (2,218
    )
    
    
    1,348Cash dividends
    
    
    (1,435
    )
    
    
    (3,645
    )Purchase of treasury stock
    
    
    (531
    )
    
    
    (270
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plan
    
    
    279
    
    
    
    408Net cash (used in) provided by financing activities
    
    
    (4,815
    )
    
    
    6,337Net decrease in cash and cash equivalents
    
    
    (6,292
    )
    
    
    (3,224
    )Cash and cash equivalents at beginning of period
    
    
    16,439
    
    
    
    14,800Cash and cash equivalents at end of period
    
    $
    10,147
    
    
    $
    11,576Supplemental information:Interest paid
    
    $
    4,777
    
    
    $
    3,608Income taxes paid
    
    $
    1,005
    
    
    $
    1,151Supplemental schedule of noncash investing and financing activitiesTransfer of loans to other real estate owned
    
    $
    548
    
    
    $
    
  5




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##### 



Juniata Valley Financial Corp. and Subsidiary
 
           6




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##### 



Three Months Ended June 30, 2006
    
    
    Three Months Ended June 30, 2005Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    1,707
    
    
    $
    487
    
    
    $
    1,220
    
    
    $
    1,303
    
    
    $
    358
    
    
    $
    945Other comprehensive income (loss):Unrealized gains (losses) on available for sale
securities :Unrealized gains (losses) arising during the period
    
    
    (14
    )
    
    
    (5
    )
    
    
    (9
    )
    
    
    328
    
    
    
    112
    
    
    
    216Less reclassification adjustment for
gains included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (956
    )
    
    
    (325
    )
    
    
    (631
    )Other comprehensive loss
    
    
    (14
    )
    
    
    (5
    )
    
    
    (9
    )
    
    
    (628
    )
    
    
    (214
    )
    
    
    (415
    )Total comprehensive income
    
    $
    1,693
    
    
    $
    482
    
    
    $
    1,211
    
    
    $
    675
    
    
    $
    144
    
    
    $
    530
 Six Months Ended June 30, 2006
    
    
    Six Months Ended June 30, 2005Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    3,394
    
    
    $
    970
    
    
    $
    2,424
    
    
    $
    3,199
    
    
    $
    891
    
    
    $
    2,308Other comprehensive income (loss):Unrealized gains (losses) on available for sale
securities :Unrealized gains (losses) arising during the period
    
    
    (57
    )
    
    
    (19
    )
    
    
    (38
    )
    
    
    (565
    )
    
    
    (192
    )
    
    
    (373
    )Less reclassification adjustment for
gains included in net income
    
    
    (67
    )
    
    
    (23
    )
    
    
    (44
    )
    
    
    (99
    )
    
    
    (34
    )
    
    
    (65
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (956
    )
    
    
    (325
    )
    
    
    (631
    )Other comprehensive loss
    
    
    (124
    )
    
    
    (42
    )
    
    
    (82
    )
    
    
    (1,620
    )
    
    
    (551
    )
    
    
    (1,069
    )Total comprehensive income
    
    $
    3,270
    
    
    $
    928
    
    
    $
    2,342
    
    
    $
    1,579
    
    
    $
    340
    
    
    $
    1,239
   7




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##### 



Three Months
    
    
    Six MonthsEnded
    
    
    Ended(Dollar amounts in thousands, except share data)
    
    June 30, 2005Net income, as reported
    
    $
    945
    
    
    $
    2,308Total stock-based employee compensation
expense determined under fair value
based method for all awards, net of
related tax effects
    
    
    (5
    )
    
    
    (10
    )Pro forma net income
    
    $
    940
    
    
    $
    2,298Basic net income per share, as reported
    
    $
    0.21
    
    
    $
    0.50Pro forma basic net income per share
    
    $
    0.21
    
    
    $
    0.50Diluted net income per share, as reported
    
    $
    0.21
    
    
    $
    0.50Pro forma diluted net income per share
    
    $
    0.21
    
    
    $
    0.50
  2005
    
    2004
    
    2003Expected life of options
    
    7 years
    
    7 years
    
    7 yearsRisk-free interest rate
    
    
    4.40
    %
    
    
    4.19
    %
    
    
    3.65
    %Expected volatility
    
    
    21.13
    %
    
    
    20.02
    %
    
    
    16.81
    %Expected dividend yield
    
    
    3.20
    %
    
    
    5.10
    %
    
    
    2.90
    %
 8




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##### 



Three Months
    
    
    Three MonthsEnded
    
    
    Ended(Amounts, except earnings per share, in thousands)
    
    June 30, 2006
    
    
    June 30, 2005Net income
    
    $
    1,220
    
    
    $
    945Weighted-average common shares outstanding
    
    
    4,491
    
    
    
    4,560Basic earnings per share
    
    $
    0.27
    
    
    $
    0.21Weighted-average common shares outstanding
    
    
    4,491
    
    
    
    4,560Common stock equivalents due to effect of stock options
    
    
    15
    
    
    
    18Total weighted-average common shares and equivalents
    
    
    4,506
    
    
    
    4,578Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.21
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2006
    
    
    June 30, 2005Net income
    
    $
    2,424
    
    
    $
    2,308Weighted-average common shares outstanding
    
    
    4,491
    
    
    
    4,560Basic earnings per share
    
    $
    0.54
    
    
    $
    0.50Weighted-average common shares outstanding
    
    
    4,491
    
    
    
    4,560Common stock equivalents due to effect of stock options
    
    
    15
    
    
    
    18Total weighted-average common shares and equivalents
    
    
    4,506
    
    
    
    4,578Diluted earnings per share
    
    $
    0.54
    
    
    $
    0.50
    9




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##### 



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(Dollar amounts in thousands)
    
    2006
    
    2005
    
    2006
    
    2005Components of net periodic pension costService cost
    
    $
    74
    
    
    $
    70
    
    
    $
    148
    
    
    $
    140Interest cost
    
    
    92
    
    
    
    87
    
    
    
    184
    
    
    
    173Expected return on plan assets
    
    
    (90
    )
    
    
    (83
    )
    
    
    (180
    )
    
    
    (166
    )Additional recognized amounts
    
    
    18
    
    
    
    18
    
    
    
    36
    
    
    
    37Net periodic pension cost
    
    $
    94
    
    
    $
    92
    
    
    $
    188
    
    
    $
    184
   10




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##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
            11




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##### 



(Dollar amounts in thousands)
    
    June 30, 2006
    
    December 31, 2005Non-performing loansNonaccrual loans
    
    $
    1,416
    
    
    $
    1,515Accruing loans past due 90 days or more
    
    
    736
    
    
    
    724Restructured loans
    
    
    
    
    
    
    Total
    
    $
    2,152
    
    
    $
    2,239Average loans outstanding
    
    $
    301,921
    
    
    $
    290,327Ratio of non-performing loans to
average loans outstanding
    
    
    0.71
    %
    
    
    0.77
    %
    12




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##### 



Comparison of the Three Months ended June 30, 2006 and 2005
    Three Months EndedJune 30,2006
    
    2005Return on average assets (annualized)
    
    
    1.18
    %
    
    
    0.93
    %Return on average equity (annualized)
    
    
    10.29
    %
    
    
    7.82
    %Average equity to average assets
    
    
    11.51
    %
    
    
    11.90
    %
       13




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##### 



Comparison of the Six Months ended June 30, 2006 and 2005
    Six Months EndedJune 30,2006
    
    2005Return on average assets (annualized)
    
    
    1.18
    %
    
    
    1.15
    %Return on average equity (annualized)
    
    
    10.27
    %
    
    
    9.50
    %Average equity to average assets
    
    
    11.47
    %
    
    
    12.08
    %
  14




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##### 



15




---



##### 



16




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##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  17




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##### 



PART II  OTHER INFORMATION
 
 Item 1.
    
    LEGAL PROCEEDINGS
 In the opinion of management of the Corporation, there are no legal
proceedings pending to which the Corporation or its subsidiary is a party or
to which their property is subject, which, if determined adversely to the
Corporation or its subsidiary, would be material in relation to the
Corporations or its subsidiarys financial condition. There are no
proceedings pending other than ordinary routine litigation incident to the
business of the Corporation or its subsidiary. In addition, no material
proceedings are pending or are known to be threatened or contemplated against
the Corporation or its subsidiary by government authorities.
 
 Item 1A.
    
    RISK FACTORS
 Branch AcquisitionAs previously reported in a Current Report on Form 8-K filed on May 12, 2006,
the Corporation announced that the Bank had agreed to purchase the Richfield,
Pennsylvania community office of the Mifflinburg Bank and Trust Company, a
subsidiary of Mifflinburg Bancorp. The transaction includes approximately
$22.0 million in deposits and $4.4 million in loans outstanding as of March
31, 2006. Pending regulatory approvals and other customary conditions, the
transaction is expected to be consummated during the third quarter of 2006.The branch transaction is intended to further expand the Banks presence in
Juniata County, Pennsylvania. However, there are risks in branch
acquisitions. While the Bank will seek to retain the deposits assumed in the
transaction, the deposit premium paid by the Bank in the transaction will
apply to all of the deposits assumed in the transaction, even if some of the
deposits run off after the transaction. In addition, the excess of the
deposits assumed over the earning assets purchased will result in the Bank
receiving cash in the amount of such excess. The Bank will initially utilize
the excess cash to repay debt and to invest in assets, which may include
loans, that will be beneficial to the Corporation over time. While the Bank
believes that it can deploy the excess funds into higher yielding earning
assets over time, this imbalance could result in a temporary negative impact
on net interest margin.Otherwise, there have been no material changes in risk factors that were
disclosed in the Annual Report on Form 10-K as of December 31, 2005.
 18




---



##### 



Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 The following table provides information on repurchases by the Corporation of its
common stock in each month of the quarter ended June 30, 2006:
 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)April 1-30, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    178,748May 1-31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,748June 1-30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,748Totals
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    178,748
 (1)
    
    On March 23, 2001, Juniata Valley Financial Corp. announced plans to buy back 100,000
(200,000 on a post-split basis) shares of their stock. There is no expiration date to this buyback
plan, but subsequent to the initial plan, 400,000 additional shares were authorized by the Board of
Directors. As of August 4, 2006, the number of shares that may yet be purchased under the Program
is 178,748. No Juniata Valley Financial Corp. 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.
 
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
 Not applicable
 
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 The Annual Meeting of Shareholders of Juniata Valley Financial Corp. was held
on May 16, 2006. At the Annual Meeting, the shareholders elected 5 Class A
directors to serve until the 2009 Annual Meeting, as described below:
 Withhold
    
    Abstentions /Name
    
    For
    
    Authority
    
    Broker Non-votesA. Jerome Cook
    
    
    2,843,695
    
    
    
    142,991
    
    
    
    0Martin L. Dreibelbis
    
    
    2,958,172
    
    
    
    28,515
    
    
    
    0Marshall L. Hartman
    
    
    2,952,359
    
    
    
    34,327
    
    
    
    0Robert K. Metz
    
    
    2,947,281
    
    
    
    39,405
    
    
    
    0Richard M. Scanlon, DMD
    
    
    2,951,193
    
    
    
    35,493
    
    
    
    0
 The terms of the following directors continued after the annual meeting:Don E. Haubert, Timothy I. Havice, Charles E. Hershberger, John A. Renninger,
Ronald H. Witherite, Joe E. Benner, Francis J. Evanitsky, Philip E.
Gingerich, Jr., Dale G. Nace, Harold B. Shearer and Jan G. Snedeker.There were no other matters submitted at the meeting.
 
 Item 5.
    
    OTHER INFORMATION
 None
 
 19




---



##### 



Item 6.
    
    EXHIBITS
 Exhibit 31.1  Rule 13a  14(a)/15d  14(a) Certification of President and
Chief Executive OfficerExhibit 31.2  Rule 13a  14(a)/15d  14(a) Certification of Chief Financial
OfficerExhibit 32.1  Section 1350 Certification of President and Chief Executive
Officer (furnished, not filed)Exhibit 32.2  Section 1350 Certification of Chief Financial Officer
(furnished, not filed)
  Juniata Valley Financial Corp.
              (Registrant)Date    08-04-2006
    By

/s/ Francis J. EvanitskyFrancis J. Evanitsky, President and Chief Executive Officer Date    08-04-2006
    By
    /s/ JoAnn N. McMinnJoAnn N. McMinn, Chief Financial Officer 20