##### 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 June 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)Bridge and Main Streets, Mifflintown, Pennsylvania
    
    17059(Address of principal executive offices)
    
    (Zip 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 August 9, 2010Common Stock ($1.00 par value)
    
    4,283,565 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Statements of Financial Condition
as of June 30, 2010 and December 31, 2009 (Unaudited)
    
    
    3Consolidated Statements of Income for the Three and Six
Months Ended June 30, 2010 and 2009 (Unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity
for the Six Months Ended June 30, 2010 and 2009 (Unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Six
Months Ended June 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
    
    
    30Item 4.
    
    (Removed and Reserved)
    
    
    30Item 5.
    
    Other Information
    
    
    30Item 6.
    
    Exhibits
    
    
    30Signatures
    
    
    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
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCash and due from banks
    
    $
    10,405
    
    
    $
    18,613Interest bearing deposits with banks
    
    
    1,860
    
    
    
    82Federal funds sold
    
    
    9,250
    
    
    
    1,200Cash and cash equivalents
    
    
    21,515
    
    
    
    19,895Interest bearing time deposits with banks
    
    
    1,345
    
    
    
    1,420Securities available for sale
    
    
    81,062
    
    
    
    77,356Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    2,197
    
    
    
    2,197Investment in unconsolidated subsidiary
    
    
    3,452
    
    
    
    3,338Total loans, net of unearned interest
    
    
    308,075
    
    
    
    311,630Less: Allowance for loan losses
    
    
    (2,980
    )
    
    
    (2,719
    )Total loans, net of allowance for loan losses
    
    
    305,095
    
    
    
    308,911Premises and equipment, net
    
    
    6,785
    
    
    
    6,878Other real estate owned
    
    
    296
    
    
    
    476Bank owned life insurance and annuities
    
    
    13,327
    
    
    
    13,066Core deposit intangible
    
    
    276
    
    
    
    299Goodwill
    
    
    2,046
    
    
    
    2,046Accrued interest receivable and other assets
    
    
    6,550
    
    
    
    6,227Total assets
    
    $
    443,946
    
    
    $
    442,109LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    55,091
    
    
    $
    55,030Interest bearing
    
    
    324,471
    
    
    
    322,367Total deposits
    
    
    379,562
    
    
    
    377,397Securities sold under agreements to repurchase
    
    
    3,168
    
    
    
    3,207Long-term debt
    
    
    5,000
    
    
    
    5,000Other interest bearing liabilities
    
    
    1,158
    
    
    
    1,146Accrued interest payable and other liabilities
    
    
    4,585
    
    
    
    4,756Total liabilities
    
    
    393,473
    
    
    
    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 4,283,565 shares at June 30, 2010;4,337,587 shares at December 31, 2009
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,320
    
    
    
    18,315Retained earnings
    
    
    37,077
    
    
    
    36,478Accumulated other comprehensive loss
    
    
    (593
    )
    
    
    (805
    )Cost of common stock in Treasury:462,261 shares at June 30, 2010;408,239 shares at December 31, 2009
    
    
    (9,077
    )
    
    
    (8,131
    )Total stockholders equity
    
    
    50,473
    
    
    
    50,603Total liabilities and stockholders equity
    
    $
    443,946
    
    
    $
    442,109
   3




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest income:Loans, including fees
    
    $
    4,896
    
    
    $
    5,256
    
    
    $
    9,932
    
    
    $
    10,545Taxable securities
    
    
    263
    
    
    
    320
    
    
    
    496
    
    
    
    628Tax-exempt securities
    
    
    264
    
    
    
    278
    
    
    
    539
    
    
    
    559Federal funds sold
    
    
    3
    
    
    
    58
    
    
    
    4
    
    
    
    114Other interest income
    
    
    10
    
    
    
    3
    
    
    
    19
    
    
    
    5Total interest income
    
    
    5,436
    
    
    
    5,915
    
    
    
    10,990
    
    
    
    11,851Interest expense:Deposits
    
    
    1,347
    
    
    
    1,821
    
    
    
    2,866
    
    
    
    3,699Securities sold under agreements to repurchase
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Long-term debt
    
    
    36
    
    
    
    35
    
    
    
    70
    
    
    
    69Other interest bearing liabilities
    
    
    4
    
    
    
    6
    
    
    
    7
    
    
    
    11Total interest expense
    
    
    1,387
    
    
    
    1,862
    
    
    
    2,945
    
    
    
    3,781Net interest income
    
    
    4,049
    
    
    
    4,053
    
    
    
    8,045
    
    
    
    8,070Provision for loan losses
    
    
    282
    
    
    
    77
    
    
    
    567
    
    
    
    212Net interest income after provision for loan losses
    
    
    3,767
    
    
    
    3,976
    
    
    
    7,478
    
    
    
    7,858Noninterest income:Trust fees
    
    
    90
    
    
    
    86
    
    
    
    210
    
    
    
    170Customer service fees
    
    
    387
    
    
    
    426
    
    
    
    769
    
    
    
    798Earnings on bank-owned life insurance and annuities
    
    
    138
    
    
    
    112
    
    
    
    260
    
    
    
    218Commissions from sales of non-deposit products
    
    
    125
    
    
    
    150
    
    
    
    221
    
    
    
    258Income from unconsolidated subsidiary
    
    
    63
    
    
    
    48
    
    
    
    119
    
    
    
    96Securities impairment charge
    
    
    
    
    
    
    (226
    )
    
    
    
    
    
    
    (226
    )Gain on sale or call of securities
    
    
    15
    
    
    
    
    
    
    
    27
    
    
    
    Gain on sales of other assets
    
    
    7
    
    
    
    27
    
    
    
    6
    
    
    
    33Prior period income from insurance sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323Other noninterest income
    
    
    199
    
    
    
    286
    
    
    
    435
    
    
    
    481Total noninterest income
    
    
    1,024
    
    
    
    909
    
    
    
    2,047
    
    
    
    2,151Noninterest expense:Employee compensation expense
    
    
    1,308
    
    
    
    1,214
    
    
    
    2,594
    
    
    
    2,500Employee benefits
    
    
    403
    
    
    
    411
    
    
    
    819
    
    
    
    855Occupancy
    
    
    216
    
    
    
    236
    
    
    
    449
    
    
    
    475Equipment
    
    
    136
    
    
    
    162
    
    
    
    255
    
    
    
    324Data processing expense
    
    
    346
    
    
    
    337
    
    
    
    711
    
    
    
    670Director compensation
    
    
    86
    
    
    
    108
    
    
    
    173
    
    
    
    218Professional fees
    
    
    136
    
    
    
    90
    
    
    
    229
    
    
    
    211Taxes, other than income
    
    
    125
    
    
    
    127
    
    
    
    255
    
    
    
    255FDIC Insurance premiums
    
    
    150
    
    
    
    317
    
    
    
    297
    
    
    
    405Amortization of intangibles
    
    
    12
    
    
    
    12
    
    
    
    23
    
    
    
    23Other noninterest expense
    
    
    381
    
    
    
    301
    
    
    
    639
    
    
    
    570Total noninterest expense
    
    
    3,299
    
    
    
    3,315
    
    
    
    6,444
    
    
    
    6,506Income before income taxes
    
    
    1,492
    
    
    
    1,570
    
    
    
    3,081
    
    
    
    3,503Provision for income taxes
    
    
    354
    
    
    
    405
    
    
    
    755
    
    
    
    928Net income
    
    $
    1,138
    
    
    $
    1,165
    
    
    $
    2,326
    
    
    $
    2,575Earnings per shareBasic
    
    $
    0.26
    
    
    $
    0.27
    
    
    $
    0.54
    
    
    $
    0.59Diluted
    
    $
    0.26
    
    
    $
    0.27
    
    
    $
    0.54
    
    
    $
    0.59Cash dividends declared per share
    
    $
    0.20
    
    
    $
    0.19
    
    
    $
    0.40
    
    
    $
    0.38Weighted average basic shares outstanding
    
    
    4,309,610
    
    
    
    4,338,545
    
    
    
    4,319,816
    
    
    
    4,339,583Weighted average diluted shares outstanding
    
    
    4,312,778
    
    
    
    4,342,086
    
    
    
    4,323,423
    
    
    
    4,343,850
   4




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Changes in Stockholders Equity
 Six Months Ended June 30, 2010
 Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,326
    
    
    
    
    
    
    
    
    
    
    
    2,326Change in unrealized gains on
securities
available for sale, net of
reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    
    
    
    
    170Defined benefit retirement plan
adjustments, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,538Cash dividends at $0.40 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,727
    )
    
    
    
    
    
    
    
    
    
    
    (1,727
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24Purchase of treasury stock, at cost
    
    
    (58,100
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,026
    )
    
    
    (1,026
    )Treasury stock issued for stock option
and stock purchase plans
    
    
    4,078
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    61Balance at June 30, 2010
    
    
    4,283,565
    
    
    $
    4,746
    
    
    $
    18,320
    
    
    $
    37,077
    
    
    $
    (593
    )
    
    $
    (9,077
    )
    
    $
    50,473
 Six Months Ended June 30, 2009
 Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,575
    
    
    
    
    
    
    
    
    
    
    
    2,575Change in unrealized losses on
securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,558Cash dividends at $0.38 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,649
    )
    
    
    
    
    
    
    
    
    
    
    (1,649
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Purchase 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 June 30, 2009
    
    
    4,342,587
    
    
    $
    4,746
    
    
    $
    18,294
    
    
    $
    35,684
    
    
    $
    (1,264
    )
    
    $
    (8,042
    )
    
    $
    49,418
   5




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##### Table of Contents



Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
 Six Months EndedJune 30,2010
    
    
    2009Operating activities:Net income
    
    $
    2,326
    
    
    $
    2,575Adjustments to reconcile net income to net cash provided by operating
activities:Provision for loan losses
    
    
    567
    
    
    
    212Depreciation
    
    
    256
    
    
    
    309Net amortization of securities premiums
    
    
    143
    
    
    
    97Amortization of core deposit intangible
    
    
    23
    
    
    
    23Amortization of deferred net loan costs
    
    
    11
    
    
    
    18Deferral of net loan costs (fees)
    
    
    8
    
    
    
    (9
    )Securities impairment charge
    
    
    
    
    
    
    226Net realized gains on sales or calls of securities
    
    
    (27
    )
    
    
    Net gains on sales of other assets
    
    
    (6
    )
    
    
    (33
    )Earnings on bank owned life insurance and annuities
    
    
    (260
    )
    
    
    (218
    )Deferred income tax expense (credit)
    
    
    2
    
    
    
    (54
    )Equity in earnings of unconsolidated subsidiary, net of dividends of
$19 and $17
    
    
    (100
    )
    
    
    (79
    )Stock-based compensation expense
    
    
    24
    
    
    
    19Increase in accrued interest receivable and other assets
    
    
    (375
    )
    
    
    (163
    )(Decrease) increase in accrued interest payable and other liabilities
    
    
    (149
    )
    
    
    552Net cash provided by operating activities
    
    
    2,443
    
    
    
    3,475Investing activities:Purchases of:Securities available for sale
    
    
    (26,286
    )
    
    
    (31,937
    )Premises and equipment
    
    
    (163
    )
    
    
    (86
    )Bank owned life insurance and annuities
    
    
    (44
    )
    
    
    (68
    )Proceeds from:Maturities of and principal repayments on securities available for sale
    
    
    22,701
    
    
    
    21,568Bank owned life insurance and annuities
    
    
    33
    
    
    
    35Sale of other real estate owned
    
    
    570
    
    
    
    228Sale of other assets
    
    
    11
    
    
    
    113Net decrease in interest-bearing time deposits
    
    
    75
    
    
    
    Net decrease in loans receivable
    
    
    2,846
    
    
    
    6,528Net cash used in investing activities
    
    
    (257
    )
    
    
    (3,619
    )Financing activities:Net increase in deposits
    
    
    2,165
    
    
    
    15,226Net decrease in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (39
    )
    
    
    (8,861
    )Cash dividends
    
    
    (1,727
    )
    
    
    (1,649
    )Purchase of treasury stock
    
    
    (1,026
    )
    
    
    (128
    )Treasury stock issued for employee stock plans
    
    
    61
    
    
    
    133Net cash (used in) provided by financing activities
    
    
    (566
    )
    
    
    4,721Net increase in cash and cash equivalents
    
    
    1,620
    
    
    
    4,577Cash and cash equivalents at beginning of period
    
    
    19,895
    
    
    
    12,457Cash and cash equivalents at end of period
    
    $
    21,515
    
    
    $
    17,034Supplemental information:Interest paid
    
    $
    3,044
    
    
    $
    3,841Income taxes paid
    
    $
    770
    
    
    $
    700Supplemental schedule of noncash investing and financing activities:Transfer of loans to other real estate owned and repossessed assets
    
    $
    384
    
    
    $
    524
   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 June 30, 2010
    
    
    Three Months Ended June 30, 2009Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    1,492
    
    
    $
    354
    
    
    $
    1,138
    
    
    $
    1,570
    
    
    $
    405
    
    
    $
    1,165Other comprehensive income:Unrealized gains (losses) on available for sale
securities:Unrealized gains (losses) arising during the period
    
    
    49
    
    
    
    17
    
    
    
    32
    
    
    
    (33
    )
    
    
    (11
    )
    
    
    (22
    )Unrealized gains from unconsolidated subsidiary
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    7
    
    
    
    
    
    
    
    7Less reclassification adjustment for:gains included in net income
    
    
    (15
    )
    
    
    (5
    )
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    securities impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226
    
    
    
    77
    
    
    
    149Change in pension liability
    
    
    32
    
    
    
    11
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    
    74
    
    
    
    23
    
    
    
    51
    
    
    
    200
    
    
    
    66
    
    
    
    134Total comprehensive income
    
    $
    1,566
    
    
    $
    377
    
    
    $
    1,189
    
    
    $
    1,770
    
    
    $
    471
    
    
    $
    1,299
 Six Months Ended June 30, 2010
    
    
    Six Months Ended June 30, 2009Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    3,081
    
    
    $
    755
    
    
    $
    2,326
    
    
    $
    3,503
    
    
    $
    928
    
    
    $
    2,575Other comprehensive income (loss):Unrealized gains (losses) on available for sale
securities:Unrealized gains (losses) arising during the period
    
    
    264
    
    
    
    90
    
    
    
    174
    
    
    
    (262
    )
    
    
    (89
    )
    
    
    (173
    )Unrealized gains from unconsolidated subsidiary
    
    
    14
    
    
    
    
    
    
    
    14
    
    
    
    7
    
    
    
    
    
    
    
    7Less reclassification adjustment for:gains included in net income
    
    
    (27
    )
    
    
    (9
    )
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    securities impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226
    
    
    
    77
    
    
    
    149Change in pension liability
    
    
    64
    
    
    
    22
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income (loss)
    
    
    315
    
    
    
    103
    
    
    
    212
    
    
    
    (29
    )
    
    
    (12
    )
    
    
    (17
    )Total comprehensive income
    
    $
    3,396
    
    
    $
    858
    
    
    $
    2,538
    
    
    $
    3,474
    
    
    $
    916
    
    
    $
    2,558
  6/30/2010
    
    
    12/31/2009Unrealized gains on available for sale securities
    
    $
    946
    
    
    $
    776Unrecognized expense for defined benefit pension
    
    
    (1,539
    )
    
    
    (1,581
    )Accumulated other comprehensive loss
    
    $
    (593
    )
    
    $
    (805
    )
  9




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##### Table of Contents



Three Months
    
    
    Three MonthsEnded
    
    
    Ended(Amounts, except earnings per share, in thousands)
    
    June 30, 2010
    
    
    June 30, 2009Net income
    
    $
    1,138
    
    
    $
    1,165Weighted-average common shares outstanding
    
    
    4,310
    
    
    
    4,338Basic earnings per share
    
    $
    0.26
    
    
    $
    0.27Weighted-average common shares outstanding
    
    
    4,310
    
    
    
    4,338Common stock equivalents due to effect of stock options
    
    
    3
    
    
    
    4Total weighted-average common shares and equivalents
    
    
    4,313
    
    
    
    4,342Diluted earnings per share
    
    $
    0.26
    
    
    $
    0.27
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009Net income
    
    $
    2,326
    
    
    $
    2,575Weighted-average common shares outstanding
    
    
    4,320
    
    
    
    4,340Basic earnings per share
    
    $
    0.54
    
    
    $
    0.59Weighted-average common shares outstanding
    
    
    4,320
    
    
    
    4,340Common stock equivalents due to effect of stock options
    
    
    4
    
    
    
    4Total weighted-average common shares and equivalents
    
    
    4,324
    
    
    
    4,344Diluted earnings per share
    
    $
    0.54
    
    
    $
    0.59
     10




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##### Table of Contents



Three Months Ended
    
    
    Year-to-Date ThroughJune 30,
    
    
    June 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Components of net periodic pension
costService cost
    
    $
    47
    
    
    $
    47
    
    
    $
    93
    
    
    $
    94Interest cost
    
    
    118
    
    
    
    112
    
    
    
    236
    
    
    
    224Expected return on plan assets
    
    
    (144
    )
    
    
    (115
    )
    
    
    (287
    )
    
    
    (230
    )Additional recognized amounts
    
    
    32
    
    
    
    39
    
    
    
    64
    
    
    
    79Net periodic pension cost
    
    $
    53
    
    
    $
    83
    
    
    $
    106
    
    
    $
    167
         11




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##### Table of Contents



June 30, 2010Gross
    
    
    GrossAmortized
    
    
    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
    
    $
    32,035
    
    
    $
    32,471
    
    
    $
    436
    
    
    $
    After five years but within ten years
    
    
    5,499
    
    
    
    5,524
    
    
    
    25
    
    
    
    37,534
    
    
    
    37,995
    
    
    
    461
    
    
    
    Obligations of state and political subdivisionsWithin one year
    
    
    6,402
    
    
    
    6,450
    
    
    
    48After one year but within five years
    
    
    30,289
    
    
    
    31,159
    
    
    
    897
    
    
    
    (27
    )After five years but within ten years
    
    
    2,116
    
    
    
    2,141
    
    
    
    36
    
    
    
    (11
    )38,807
    
    
    
    39,750
    
    
    
    981
    
    
    
    (38
    )Corporate notesAfter one year but within five years
    
    
    1,000
    
    
    
    1,030
    
    
    
    30
    
    
    
    1,000
    
    
    
    1,030
    
    
    
    30
    
    
    
    Mortgage-backed securities
    
    
    1,337
    
    
    
    1,429
    
    
    
    92
    
    
    
    Equity securities
    
    
    975
    
    
    
    858
    
    
    
    67
    
    
    
    (184
    )Total
    
    $
    79,653
    
    
    $
    81,062
    
    
    $
    1,631
    
    
    $
    (222
    )
  December 31, 2009Gross
    
    
    GrossAmortized
    
    
    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 June 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
    
    $
    3,498
    
    
    $
    (38
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,498
    
    
    $
    (38
    )Debt securities
    
    
    3,498
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    3,498
    
    
    
    (38
    )Equity securities
    
    
    363
    
    
    
    (45
    )
    
    
    256
    
    
    
    (139
    )
    
    
    619
    
    
    
    (184
    )Total temporarily impaired securities
    
    $
    3,861
    
    
    $
    (83
    )
    
    $
    256
    
    
    $
    (139
    )
    
    $
    4,117
    
    
    $
    (222
    )
 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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Gross proceeds from sales of securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Securities available for sale:Gross realized gains
    
    $
    15
    
    
    $
    
    
    
    $
    27
    
    
    $
    Gross realized losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Fair Value Measurements and Disclosures
      14




---



##### Table of Contents



Securities Available for Sale.
 Impaired Loans
 Other Real Estate Owned.
  15




---



##### Table of Contents



(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)SignificantQuoted Prices in
    
    
    Other
    
    
    Significant OtherActive Markets for
    
    
    Observable
    
    
    UnobservableJune 30, 2010
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsMeasured at fair value on a recurring basis:Equity securities available-for-sale
    
    $
    858
    
    
    $
    858
    
    
    $
    
    
    
    $
    Debt securities available-for-sale
    
    
    80,204
    
    
    
    
    
    
    
    80,204
    
    
    
    Measured at fair value on a non-recurring basis:Impaired loans
    
    
    1,805
    
    
    
    
    
    
    
    
    
    
    
    1,805Other real estate owned
    
    
    296
    
    
    
    
    
    
    
    
    
    
    
    296
 (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)SignificantQuoted Prices in
    
    
    Other
    
    
    Significant 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
  Fair Value of Financial Instruments
 Financial Instruments
   16




---



##### Table of Contents



Financial Instruments
 June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and due from banks
    
    $
    10,405
    
    
    $
    10,405
    
    
    $
    18,613
    
    
    $
    18,613Interest bearing deposits with banks
    
    
    1,860
    
    
    
    1,860
    
    
    
    82
    
    
    
    82Federal funds sold
    
    
    9,250
    
    
    
    9,250
    
    
    
    1,200
    
    
    
    1,200Interest bearing time deposits with banks
    
    
    1,345
    
    
    
    1,404
    
    
    
    1,420
    
    
    
    1,447Securities
    
    
    81,062
    
    
    
    81,062
    
    
    
    77,356
    
    
    
    77,356Restricted investment in FHLB stock
    
    
    2,197
    
    
    
    2,197
    
    
    
    2,197
    
    
    
    2,197Total loans, net of unearned interest
    
    
    308,075
    
    
    
    325,297
    
    
    
    311,630
    
    
    
    324,061Accrued interest receivable
    
    
    2,171
    
    
    
    2,171
    
    
    
    2,284
    
    
    
    2,284Financial liabilities:Non-interest bearing deposits
    
    
    55,091
    
    
    
    55,091
    
    
    
    55,030
    
    
    
    55,030Interest bearing deposits
    
    
    324,471
    
    
    
    330,984
    
    
    
    322,367
    
    
    
    327,724Securities sold under agreements to repurchase
    
    
    3,168
    
    
    
    3,168
    
    
    
    3,207
    
    
    
    3,207Long-term debt
    
    
    5,000
    
    
    
    5,030
    
    
    
    5,000
    
    
    
    5,077Other interest bearing liabilities
    
    
    1,158
    
    
    
    1,160
    
    
    
    1,146
    
    
    
    1,148Accrued interest payable
    
    
    582
    
    
    
    582
    
    
    
    681
    
    
    
    681Off-balance sheet financial instruments:Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
     Interest bearing time deposits with banks
 Securities Available for Sale
  17




---



##### Table of Contents



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



June 30,
    
    
    December 31,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %Deposits:Demand, non-interest bearing
    
    $
    55,091
    
    
    $
    55,030
    
    
    $
    61
    
    
    
    0.1
    %NOW and money market
    
    
    80,343
    
    
    
    75,766
    
    
    
    4,577
    
    
    
    6.0
    %Savings
    
    
    47,797
    
    
    
    42,536
    
    
    
    5,261
    
    
    
    12.4
    %Time deposits, $100,000 and more
    
    
    38,510
    
    
    
    38,453
    
    
    
    57
    
    
    
    0.1
    %Other time deposits
    
    
    157,821
    
    
    
    165,612
    
    
    
    (7,791
    )
    
    
    (4.7
    %)Total deposits
    
    $
    379,562
    
    
    $
    377,397
    
    
    $
    2,165
    
    
    
    0.6
    %
  June 30,
    
    
    December 31,
    
    
    Change2010
    
    
    2009
    
    
    $
    
    
    %Loans:Commercial, financial and agricultural
    
    $
    20,911
    
    
    $
    33,783
    
    
    $
    (12,872
    )
    
    
    (38.1
    %)Real estate  commercial
    
    
    34,242
    
    
    
    39,299
    
    
    
    (5,057
    )
    
    
    (12.9
    %)Real estate  construction
    
    
    23,546
    
    
    
    24,578
    
    
    
    (1,032
    )
    
    
    (4.2
    %)Real estate  mortgage
    
    
    157,062
    
    
    
    135,854
    
    
    
    21,208
    
    
    
    15.6
    %Home equity
    
    
    53,010
    
    
    
    52,893
    
    
    
    117
    
    
    
    0.2
    %Obligations of states and political
subdivisions
    
    
    9,653
    
    
    
    13,553
    
    
    
    (3,900
    )
    
    
    (28.8
    %)Personal
    
    
    9,651
    
    
    
    11,670
    
    
    
    (2,019
    )
    
    
    (17.3
    %)Total loans
    
    $
    308,075
    
    
    $
    311,630
    
    
    
    ($3,555
    )
    
    
    (1.1
    %)
  Periods Ended June 30,2010
    
    
    2009Balance of allowance  January 1
    
    $
    2,719
    
    
    $
    2,610Loans charged off
    
    
    (312
    )
    
    
    (331
    )Recoveries of loans previously charged off
    
    
    6
    
    
    
    5Net charge-offs
    
    
    (306
    )
    
    
    (326
    )Provision for loan losses
    
    
    567
    
    
    
    212Balance of allowance  end of period
    
    $
    2,980
    
    
    $
    2,496Ratio of net charge-offs during period to
average loans outstanding
    
    
    0.10
    %
    
    
    0.11
    %
   20




---



##### Table of Contents



(Dollar amounts in thousands)
    
    June 30, 2010
    
    
    December 31, 2009Non-performing loansNonaccrual loans
    
    $
    5,117
    
    
    $
    2,629Accruing loans past due 90 days or more
    
    
    923
    
    
    
    1,369Restructured loans
    
    
    
    
    
    
    Total
    
    $
    6,040
    
    
    $
    3,998Average loans outstanding
    
    $
    311,526
    
    
    $
    310,813Ratio of non-performing loans to
average loans outstanding
    
    
    1.94
    %
    
    
    1.29
    %
     Comparison of the Three Months Ended June 30, 2010 and 2009
    21




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##### Table of Contents



Three Months EndedJune 30,2010
    
    
    2009Return on average assets (annualized)
    
    
    1.03
    %
    
    
    1.07
    %Return on average equity (annualized)
    
    
    9.01
    %
    
    
    9.47
    %Average equity to average assets
    
    
    11.42
    %
    
    
    11.26
    %Non-interest income, excluding securities
gains and impairment charges, as a
percentage of average assets (annualized)
    
    
    0.91
    %
    
    
    1.04
    %Non-interest expense as a percentage of
average assets (annualized)
    
    
    2.98
    %
    
    
    3.03
    %
          22




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##### Table of Contents



Year-to-date through June 30,Non-interest income (in thousands)
    
    2010
    
    
    2009Securities other-than-temporary impairment charge
    
    $
    
    
    
    $
    (226
    )Gains on the sale or call of securities
    
    
    27
    
    
    
    Gains on the sale of former branch locations
    
    
    
    
    
    
    14Net gains on sale of OREO
    
    
    6
    
    
    
    19Refund of overcharged PA sales tax from years 2004-2006
    
    
    
    
    
    
    40Prior period income from credit-life insurance sales
    
    
    
    
    
    
    323Total positive impact on non-interest income
    
    $
    33
    
    
    $
    170
        23




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##### Table of Contents



Comparison of the Six Months Ended June 30, 2010 and 2009
    Six Months EndedJune 30,2010
    
    
    2009Return on average assets (annualized)
    
    
    1.06
    %
    
    
    1.19
    %Return on average equity (annualized)
    
    
    9.18
    %
    
    
    10.52
    %Average equity to average assets
    
    
    11.53
    %
    
    
    11.34
    %Non-interest income, excluding securities
gains and impairment charges, as a
percentage of average assets (annualized)
    
    
    0.92
    %
    
    
    1.10
    %Non-interest expense as a percentage of
average assets (annualized)
    
    
    2.93
    %
    
    
    3.01
    %
        24




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##### Table of Contents



Year-to-date through June 30,Non-interest income (in thousands)
    
    2010
    
    
    2009Securities other-than-temporary impairment charge
    
    $
    
    
    
    $
    (226
    )Gains on the sale or call of securities
    
    
    27
    
    
    
    Gains on the sale of former branch locations
    
    
    
    
    
    
    14Net gains on sale of OREO
    
    
    6
    
    
    
    19Refund of overcharged PA sales tax from years 2004-2006
    
    
    
    
    
    
    40Prior period income from credit-life insurance sales
    
    
    
    
    
    
    323Total positive impact on non-interest income
    
    $
    33
    
    
    $
    170
    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
    
    $
    (473
    )
    
    $
    454
    
    
    $
    (19
    )300
    
    
    (355
    )
    
    
    305
    
    
    
    (50
    )200
    
    
    (236
    )
    
    
    158
    
    
    
    (78
    )100
    
    
    (119
    )
    
    
    42
    
    
    
    (77
    )0
    
    
    
    
    
    
    
    
    
    
    -25
    
    
    29
    
    
    
    (35
    )
    
    
    (6
    )
   
 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
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 1A.
    
    RISK FACTORS
  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



Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  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, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    205,936May 1-31, 2010
    
    
    20,000
    
    
    
    17.40
    
    
    
    20,000
    
    
    
    185,936June 1-30, 2010
    
    
    22,000
    
    
    
    17.92
    
    
    
    22,000
    
    
    
    163,936Totals
    
    
    42,000
    
    
    
    
    
    
    
    42,000
    
    
    
    163,936
 (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 August 9, 2010, the
number of shares that may yet be purchased under the program was 163,936. 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. 
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 Item 4.
    
    (Removed and Reserved)
 
 Item 5.
    
    OTHER INFORMATION
  
 Item 6.
    
    EXHIBITS
 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)
  30




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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 08-09-2010
    By
    /s/ Marcie A. BarberMarcie A. Barber, President andChief Executive OfficerDate 08-09-2010
    By
    /s/ JoAnn N. McMinnJoAnn N. McMinn, Chief FinancialOfficer, Principal Accounting
Officer and Principal Financial Officer  31