<PAGE>
                                                                             2.
                 JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
                 ---------------------------------------------
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------


                                                   September 30,   December 31,
                                                        1997            1996
                                                   ------------    -----------
                                                            (In thousands)
                                                    (Unaudited)
ASSETS:
   Cash and due from banks                           $   6,275     $    5,857
   Interest-bearing deposits with banks                     52             65
   Federal funds sold                                      425          3,100
                                                     ---------     ----------
         Total cash and cash equivalents                 6,752          9,022

   Securities available for sale                        26,664         30,215
   Securities held to maturity, fair value of
      $45,097 and $40,309, respectively                 44,918         40,284
   Loans, receivable net of unearned discount of
      $4,671 and $4,279, respectively                  135,424        128,146
   Less:  Allowance for loan losses                      1,798          1,707
                                                     ---------     ----------
          Net Loans receivable                         133,626        126,439

   Bank premises and equipment, net                      1,742          1,766
   Accrued interest receivable and other assets          6,311          4,538
                                                     ---------     ----------
          TOTAL ASSETS                               $ 220,013     $  212,264
                                                     =========     ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
   Non-interest bearing deposits                     $  22,838     $   21,873
   Interest bearing deposits                           165,038        160,582
                                                     ---------     ----------
          Total deposits                               187,876        182,455

   Accrued interest and other liabilities                3,338          3,046
                                                     ---------     ----------
          Total liabilities                            191,214        185,501
                                                     ---------     ----------
   Stockholders' Equity:
      Preferred stock, no par value, authorized
         500,000 shares, no shares issued or outstanding  -            -
      Common stock, par value $1.00, per share;
         authorized 5,000,000 shares; issued and
         outstanding 1,400,389 and 1,117,088 shares
         respectively                                    1,401          1,117
      Capital surplus                                   14,709         14,879
      Retained earnings                                 12,286         10,549
   Net unrealized appreciation on securities
         available for sale, net of taxes                  403            218
                                                     ---------     ----------
          Total stockholders' equity                    28,799         26,763
                                                     ---------     ----------
          TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY  $ 220,013     $  212,264
                                                     =========     ==========

<PAGE>

                                                                             3.
                 JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)

                                   For the Quarter Ended  For Nine Months Ended
                                  ----------------------  --------------------
                                   Sept 30,     Sept 30,    Sept 30,   Sept 30,
                                     1997         1996        1997       1996
                                  ----------   ---------   --------- ---------
                                      (In thousands, except per share amount)
INTEREST INCOME:
  Loans receivable                $    3,156  $    2,900  $    9,165  $   8,611
  Taxable securities                     699         691       2,058      2,088
  Tax-exempt securities                  297         324         927        911
  Other                                   37          48         117        170
                                  ----------  ----------  ---------- ---------
    Total interest income              4,189       3,963      12,267     11,780

INTEREST EXPENSE ON DEPOSITS           1,968       1,922       5,799      5,661
                                  ----------  ----------  ---------- ---------
    Net interest income                2,221       2,041       6,468      6,119

PROVISION FOR LOAN LOSSES                 45          45         135        135
                                  ----------  ----------  ---------- ---------
    Net interest income, after
      provision for loan losses        2,176       1,996       6,333      5,984
                                  ----------  ----------  ---------- ---------
OTHER INCOME:
  Trust department                        45          58         130        161
  Customer service fees                   66          60         191        173
  Net realized gains on
   sales of securities                    -           -           65         -
  Other                                   54          39         218        100
                                  ----------  ----------  ---------- ---------
    Total other income                   165         157         604        434
                                  ----------  ----------  ---------- ---------
OTHER EXPENSES:
  Salaries and wages                     574         548       1,707      1,647
  Employee benefits                      141         153         442        468
  Occupancy                               90          76         237        236
  Equipment                               88          80         243        249
  Federal deposit insurance                6           1          17          2
  Director compensation                   65          94         195        271
  Taxes, other than income                64          61         190        177
  Other                                  333         279       1,024        810
                                  ----------  ----------  ---------- ---------
    Total other expenses               1,361       1,292       4,055      3,860
                                  ----------  ----------  ---------- ---------
INCOME BEFORE INCOME TAXES               980         861       2,882      2,558

FEDERAL INCOME TAXES                     242         201         678        613
                                  ----------  ----------  ---------- ---------
    Net income                    $      738  $      660  $    2,204 $    1,945
                                  ==========  ==========  ========== ==========
PER SHARE DATA:

    Net income                    $      .53  $      .47  $     1.58 $     1.39
                                  ==========  ==========  ========== ==========
Weighted average number of
  shares outstanding               1,400,389   1,395,242   1,398,201  1,395,242
                                   =========   =========   =========  =========


<PAGE>

                                                                             4.
                 JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                  (Unaudited)



                                                     Net unrealized
                                                      Appreciation
                                                     (Depreciation) 
                                                      on Securities
                    Common     Capital    Retained     Available
                     Stock     Surplus    Earnings     For Sale       Total
                  ---------- ----------- ----------- ------------  -----------
                                       (In thousands)


BALANCE,
  DECEMBER 31,
  1996              $  1,117    $ 14,879    $ 10,549    $     218     $ 26,763

Net income for
  the nine
  months ended
  Sept 30, 1997          -           -         2,204          -          2,204

Cash dividend,
  $.32 per share         -           -          (447)         -           (447)

Stock issued,
  Employee stock
  purchase plan            4         110        -             -            114

5-for-4 stock split
  in the form of a
  25% stock dividend     280        (280)        (20)         -            (20)

Net unrealized
  depreciation on
  securities available
  for sale, net of
  taxes                  -           -          -             185          185
                    --------    --------    --------    ---------     --------
Balance September
  30, 1997          $  1,401    $ 14,709    $ 12,286    $     403     $ 28,799

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

<PAGE>

                                                                             5.
                 JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
               Increase (Decrease) in Cash and Cash Equivalents

                                                     For the Nine Months Ended
                                                     -------------------------
                                                       Sept 30,     Sept 30,
                                                         1997         1996
                                                     -------------------------
                                                           (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                        $      2,204  $     1,945
   Adjustments to reconcile net income to net
    cash provided by operating activities:
    Provision for loan losses                                 135          135
    Provision for depreciation                                139          145
    Net amortization on premiums of securities                113          182
    Deferred directors' fees and supplemental
     retirement plan expense                                  120          169
    Payment of deferred compensation                         (108)        (110)
    Net realized gain on sale of securities                   (65)         -
    Deferred income taxes                                     (47)         (62)
    Increase in accrued interest
     receivable and other assets                           (1,661)        (851)
    Increase in interest payable
     and other liabilities                                    189          108
                                                     ------------  -----------
        Net cash provided by operating activities           1,019        1,661
                                                     ------------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of available for sale securities              (1,258)      (8,275)
   Proceeds from sales of available for sale securities        93         -
   Proceeds from maturities of and principal
    repayments on available for sale securities             5,042        3,592
   Purchases of held to maturity securities               (13,356)      (7,532)
   Proceeds from maturities of and principal
    repayments on held to maturity securities               8,628        6,856
   Net increase in loans receivable                        (7,391)      (3,008)
   Purchases of bank premises and equipment                  (115)        (171)
                                                     ------------  -----------
        Net cash used in investing activities              (8,357)      (8,538)
                                                     ------------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits                                 5,421        4,249
   Cash dividends                                            (467)        (412)
   Dividend reinvestment plan                                 -             91
   Employee stock purchase plan                               114          -
                                                     ------------  -----------
        Net cash provided by financing activies             5,068        3,928
                                                     ------------  -----------
        Increase (decrease) in cash and
          cash equivalents                                 (2,270)      (2,949)

CASH AND CASH EQUIVALENTS
   Beginning                                                9,022       11,673
                                                     ------------  -----------
   Ending                                            $      6,752  $     8,724
                                                     ============= ===========

CASH PAYMENTS FOR
   Interest                                          $      5,784  $     5,631
                                                     ============  ===========
   Income Taxes                                      $        695  $       693
                                                     ============  ===========

<PAGE>

                                                                             6.


NOTE A - Basis of Presentation

The financial information includes the accounts of the Juniata Valley Financial
Corp. and its wholly owned subsidiary, The Juniata Valley Bank.  All
significant intercompany accounts and transactions have been eliminated.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments considered
necessary for fair presentation have been included.  Operating results for the
nine-month period ended September 30, 1997, are not necessarily indicative of
the results that may be expected for the year ended December 31, 1997.  For
further information, refer to the consolidated financial statements and
footnotes thereto included in Juniata Valley Financial Corp. annual report on
Form 10-K for the year ended December 31, 1996.

NOTE B - Summary of Significant Accounting Policies

Stock repurchase program:

On October 21, 1997, the Board of Directors of the Corporation authorized the
repurchase of up to 140,000 shares of the Corporation's outstanding common
stock.  Pursuant to the authorization, appropriate senior officers of the
Corporation may direct the repurchases at times and in amounts determined by
them to be prudent.

Repurchases will be made from time to time on the open market or in privately
negotiated transactions.  The shares purchased are to be held as treasury stock
for various corporate programs, including the funding of existing employee
benefit plans and such other benefit plans as may be herein after adopted by
the Corporation.

Per share data:

Net income and dividends per share are based on the weighted average number of
shares outstanding adjusted for stock dividends.  The net income per share data
and weighted average number of shares outstanding have been adjusted to reflect
a 5-for-4 stock split declared on July 15, 1997.

<PAGE>
 
                                                                             7.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Financial Condition:

Total assets of Juniata Valley Financial Corp. reached $220,013,000 as of
September 30, an increase of $7,749,000 or 3.65% from December 31, 1996. The
cash provided by financing activities of $5,068,000 was a result of the net
increase in deposits of $5,421,000.  In addition, the cash provided by
operating activities of $1,019,000 and the decrease in cash and cash
equivalents of $2,270,000 for the period ended September 30, 1997, were used
for loan growth of $7,391,000.  The remaining cash was used to purchase
securities which exceeded proceeds by $851,000 and to purchase bank premise and
equipment of $115,000.

There are no material loans classified for regulatory purposes as loss,
doubtful, substandard or special mention which management expects to
significantly impact future operating results, liquidity or capital resources. 
Additionally, management is not aware of any information which would give
serious doubt as to the ability of its borrowers to substantially comply with
their loan repayment terms.  The Corporation's problem loans (i.e., 90 days
past due and restructured loans) were not material for all periods presented.

Management is not aware of any current recommendations of the regulatory
authorities which, if implemented, would have a material effect on the
Corporation's liquidity, capital resources or operations.

A dividend reinvestment plan for stockholders was instituted on January 1,
1996.  The Corporation pays dividends semi-annually on June 1 and December 1 of
every year.  Under the plan additional shares of Juniata Valley Financial Corp
may be purchased at market value with reinvested dividends and voluntary cash
payments.  The Corporation has reserved 100,000 shares of common stock for this
plan.  In 1996, 4,087 shares were issued and 95,913 remain unissued.  For the
June 1, 1997 dividend pay date all shares to satisfy the dividend reinvestment
plan were purchased on the open market.

An employee stock purchase plan was approved by stockholders on April 16, 1996.
The first plan year began on July 1, 1996, and ended June 30, 1997.  There were
58 out of 87 eligible employees that participated in the first plan year.  On
June 15, 1997, 3,600 shares were issued.  The corporation has reserved 100,000
shares of common stock for this plan.  After the issuance on June 15, 1997,
there are 96,400 shares remaining to be issued.

Results of operations:

Interest income increased $487,000 or 4.13% for the first nine months of 1997
compared to 1996 and $226,000 or 5.70% for the quarter.  Interest expense
increased $138,000 or 2.44% for the first nine months of 1997 and $46,000 or
2.39% for the quarter comparing 1997 to 1996.  These increases in interest
income and expense for the first nine months ended September 30, 1997, versus
1996, are reflective of an increase of both interest earning assets and
interest bearing liabilities and overall higher rates offered and paid in 1997
versus 1996.  This resulted in an increase in net interest income of $349,000
or 5.70% for the nine months ended September 30, 1997 and $180,000 or 8.82% for
the quarter ended.

Other income has increased $170,000 or 39.71% for the first nine months of 1997
and $8,000 for 5.10% for the quarter.  This was due to the gains on sales of
securities for $65,000.  There was also an increase of $118,000 in the other

<PAGE>

                                                                             8.
Results of operations continued:

category for the first nine months.  $51,000 was received in life insurance
proceeds due to the death of a former director; a fixed asset owned by the Bank
was sold which resulted in a $14,000 gain and a $42,000 increase in insurance
fees earned on consumer loans compared to the same period last year.  There was
an increase of $18,000 in customer service fees.  This was as a result of an
increase in the volume in accounts as opposed to an increase in fees.  The
decrease of $31,000 in trust department fees was due to the settlement of three
estates in 1996 over 1997.

Other expenses for the first nine months increased $195,000 or 5.05% and
$69,000 or 5.34% for the quarter comparing 1997 to 1996.  The $60,000 increase
in salary and wages for the nine months ended September 30, 1997, compared to
1996, can be attributed to annual merit increases and promotions of employees.
The $26,000 decrease in employee benefits is a result of lower benefit costs as
opposed to less benefits being provided.  The $15,000 increase in federal
deposit insurance reflects the increased FICO debt service assessments. The
$76,000 decrease in directors compensation is due to fully funded retirement
plans.  The $214,000 increase in the other category is due to $15,000 increase
in the Pennsylvania Bank Shares tax; $11,000 increase in branch advisory board
fees and $157,000 increase in repossession and loan collection expenses.

All of these factors combined have contributed to an increase in net income of
$259,000 or 13.32% for the nine months and $78,000 or 11.82% for the quarter
ended September 30, 1997.

Liquidity:

The objective of liquidity management is to ensure that sufficient funding is
available, at a reasonable cost, to meet the ongoing operational cash needs of
the Corporation and to take advantage of income producing opportunities as they
arise.  While the desired level of liquidity will vary depending upon a variety
of factors, it is the primary goal of the Corporation to maintain a high level
of liquidity in all economic environments.

Principal sources of asset liquidity are provided by securities maturing in one
year or less, other short-term investments such as Federal Funds sold and cash
and due from banks.  Liability liquidity, which is more difficult to measure,
can be met by attracting deposits and maintaining the core deposit base.  The
Corporation joined the Federal Home Loan Bank of Pittsburgh in August of 1993
for the purpose of providing short term liquidity when other sources are unable
to fill these needs.

In view of the primary and secondary sources previously mentioned, Management
believes that the Corporation's liquidity is capable of providing the funds
needed to meet loan demand.

Interest rate sensitivity:

Interest rate sensitivity management is the responsibility of the
Asset/Liability Management Committee.  This process involves the development
and implementation of strategies to maximize net interest margin, while
minimizing the earnings risk associated with changing interest rates.  The
traditional gap analysis identifies the maturity and repricing terms of all
assets and liabilities.


<PAGE>

                                                                             9.

As of September 30, 1997, the Corporation had a six-month negative gap of
$12,863,000.  Generally a liability sensitive position indicates that more
liabilities than assets are expected to re-price within the time period and
that falling interest rates could positively affect net interest income while
rising interest rates could negatively affect net interest income.  However,
the traditional analysis does not accurately reflect the Bank's interest rate
sensitivity since the rates on core deposits generally do not change as quickly
as market rates.  Historically net interest income has, in fact, not been
subject to the degree of sensitivity indicated by the traditional analysis at
The Juniata Valley Bank.

Capital Adequacy:

The Bank's regulatory capital ratios for the periods presented are as follows: 


     Risk Weighted Assets Ratio:
                               Actual                      Required
                               ------                      --------
                   September 30,   December 31,   September 30,  December 31,
                       1997            1996           1997           1996
                   -------------   ------------   -------------  ------------

     TIER I           18.90%          18.73%          4.0%           4.0%
     TIER I & II      20.10%          19.94%          8.0%           8.0%


     Total Assets Leverage Ratio:

     TIER I           13.13%          12.66%          4.0%           4.0%

At September 30, 1997, the Corporation exceeds the regulatory requirements to
be considered a "well capitalized" financial institution.

<PAGE>


                                                                            10.
Part II.  Other Information

     Item 1.   Legal Proceedings
               None

     Item 2.   Changes in Securities
               None

     Item 3.   Defaults Upon Senior Securities
               Not applicable

     Item 4.   Submission of Matters to a Vote of Security Holders
               Not applicable

     Item 5.   Other Information
               None

     Item 6.   Exhibits and Reports on Form 8-K
               
               (27) Financial Data Schedule


Pursuant to the requirements 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_______________________________       By_______________________________
                                              A. Jerome Cook, President


Date_______________________________       By_______________________________
                                              Linda L. Engle, Treasurer

<PAGE>