##### 



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 March 31, 2006
 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 May 10, 2006Common Stock ($1.00 par value)
    
    4,489,539 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition
as of March 31, 2006 (Unaudited) and December 31, 2005 (Audited)
    
    
    2Consolidated Statements of Income for the three
months ended March 31, 2006 and 2005 (Unaudited)
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the three months ended March 31, 2006 and 2005 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the three
months ended March 31, 2006 and 2005 (Unaudited)
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17Signatures
    
    
    17




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##### 



PART I  FINANCIAL INFORMATION
 Item 1. Financial Statements
 Juniata Valley Financial Corp. and Subsidiary
 March 31,
    
    
    December 31,2006
    
    
    2005Unuadited
    
    
    AuditedASSETSCash and due from banks
    
    $
    9,703
    
    
    $
    16,373Interest bearing deposits with banks
    
    
    72
    
    
    
    66Cash and cash equivalents
    
    
    9,775
    
    
    
    16,439Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,660Securities available for sale
    
    
    65,325
    
    
    
    66,699Securities held to maturity, fair value of $8,535 and $3,436 respectively
    
    
    8,595
    
    
    
    3,493Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    1,507
    
    
    
    1,356Total loans, net of unearned interest
    
    
    302,434
    
    
    
    298,063Less: Allowance for loan losses
    
    
    (2,780
    )
    
    
    (2,763
    )Total loans, net of allowance for loan losses
    
    
    299,654
    
    
    
    295,300Premises and equipment, net
    
    
    6,085
    
    
    
    6,211Bank owned life insurance
    
    
    10,654
    
    
    
    10,647Accrued interest receivable and other assets
    
    
    6,047
    
    
    
    4,997Total assets
    
    $
    413,302
    
    
    $
    410,802LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    42,731
    
    
    $
    46,041Interest bearing
    
    
    299,009
    
    
    
    297,426Total deposits
    
    
    341,740
    
    
    
    343,467Securities sold under agreements to repurchase
    
    
    4,259
    
    
    
    4,201Short-term borrowings
    
    
    9,000
    
    
    
    5,600Long-term debt
    
    
    5,000
    
    
    
    5,000Other interest bearing liabilities
    
    
    841
    
    
    
    819Accrued interest payable and other liabilities
    
    
    5,255
    
    
    
    4,596Total liabilities
    
    
    366,095
    
    
    
    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 sharesOutstanding -4,489,539 shares at March 31, 2006;4,503,392 shares at December 31, 2005
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,224
    
    
    
    18,177Retained earnings
    
    
    29,973
    
    
    
    29,486Accumulated other comprehensive (loss)
    
    
    (767
    )
    
    
    (694
    )Cost of common stock in Treasury:256,287 shares at March 31, 2006;242,434 shares at December 31, 2005
    
    
    (4,969
    )
    
    
    (4,596
    )Total stockholders equity
    
    
    47,207
    
    
    
    47,119Total liabilities and stockholders equity
    
    $
    413,302
    
    
    $
    410,802
  2




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##### 



Juniata Valley Financial Corp. and Subsidiary
 Three Months EndedMarch 31,2006
    
    
    2005Interest income:Loans, including fees
    
    $
    5,202
    
    
    $
    4,757Taxable securities
    
    
    498
    
    
    
    485Tax-exempt securities
    
    
    164
    
    
    
    167Other interest income
    
    
    60
    
    
    
    79Total interest income
    
    
    5,924
    
    
    
    5,488Interest expense:Deposits
    
    
    2,153
    
    
    
    1,686Securities sold under agreements to repurchase
    
    
    48
    
    
    
    25Short-term borrowings
    
    
    92
    
    
    
    5Long-term debt
    
    
    35
    
    
    
    36Other interest bearing liabilities
    
    
    5
    
    
    
    5Total interest expense
    
    
    2,333
    
    
    
    1,757Net interest income
    
    
    3,591
    
    
    
    3,731Provision for loan losses
    
    
    30
    
    
    
    28Net interest income after provision for loan losses
    
    
    3,561
    
    
    
    3,703Noninterest income:Trust fees
    
    
    136
    
    
    
    97Customer service fees
    
    
    342
    
    
    
    334Earnings on bank-owned life insurance
    
    
    92
    
    
    
    105Commissions from sales of annuities and mutual funds
    
    
    83
    
    
    
    96Gain on sale of loans and other assets
    
    
    13
    
    
    
    4Gain on sale of securities
    
    
    67
    
    
    
    99Other noninterest income
    
    
    137
    
    
    
    117Total noninterest income
    
    
    870
    
    
    
    852Noninterest expense:Salaries and wages
    
    
    1,086
    
    
    
    1,050Employee benefits
    
    
    378
    
    
    
    378Occupancy
    
    
    202
    
    
    
    207Equipment
    
    
    156
    
    
    
    140Data processing expense
    
    
    317
    
    
    
    312Director compensation
    
    
    125
    
    
    
    122Professional fees
    
    
    86
    
    
    
    94Taxes, other than income
    
    
    114
    
    
    
    130Other noninterest expense
    
    
    280
    
    
    
    226Total noninterest expense
    
    
    2,744
    
    
    
    2,659Income before income taxes
    
    
    1,687
    
    
    
    1,896Provision for income taxes
    
    
    483
    
    
    
    533Net income
    
    $
    1,204
    
    
    $
    1,363Earnings per shareBasic
    
    $
    0.27
    
    
    $
    0.30Diluted
    
    $
    0.27
    
    
    $
    0.30Cash dividends declared per share
    
    
    0.16
    
    
    
    0.50Weighted average shares outstanding
    
    
    4,490,243
    
    
    
    4,559,570Weighted average shares and share equivalents outstanding
    
    
    4,505,178
    
    
    
    4,575,954
  3




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##### 



Juniata Valley Financial Corp. and Subsidiary
 Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,204
    
    
    
    
    
    
    
    
    
    
    
    1,204Change in unrealized losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    
    
    
    
    (73
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,131Cash dividends at $0.16 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (717
    )
    
    
    
    
    
    
    
    
    
    
    (717
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Purchase of treasury stock, at cost
    
    
    (22,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (531
    )
    
    
    (531
    )Treasury stock issued for dividend
reinvestment plan
    
    
    8,147
    
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    196Balance at March 31, 2006
    
    
    4,489,539
    
    
    $
    4,746
    
    
    $
    18,224
    
    
    $
    29,973
    
    
    $
    (767
    )
    
    $
    (4,969
    )
    
    $
    47,207
 Juniata Valley Financial Corp. and Subsidiary
 Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,363
    
    
    
    
    
    
    
    
    
    
    
    1,363Change in unrealized losses on securities
available for sale, net of reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (632
    )
    
    
    
    
    
    
    (632
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731Cash dividends at $.50 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,279
    )
    
    
    
    
    
    
    
    
    
    
    (2,279
    )Purchase of treasury stock, at cost
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86
    )
    
    
    (86
    )Balance at March 31, 2005
    
    
    2,278,629
    
    
    $
    2,373
    
    
    $
    20,386
    
    
    $
    29,050
    
    
    $
    (218
    )
    
    $
    (3,072
    )
    
    $
    48,519
  4




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Juniata Valley Financial Corp. and Subsidiary
 Three Months Ended March 31,2006
    
    
    2005Operating activities:Net income
    
    $
    1,204
    
    
    $
    1,363Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    30
    
    
    
    28Provision for depreciation
    
    
    146
    
    
    
    150Net amortization of security premiums
    
    
    31
    
    
    
    17Net realized gains on sales of securities
    
    
    (67
    )
    
    
    (99
    )Net realized gains on sales of loans and other assets
    
    
    (13
    )
    
    
    (4
    )Earnings on investment in life insurance
    
    
    (92
    )
    
    
    (105
    )Deferred compensation expense
    
    
    56
    
    
    
    124Payment of deferred compensation
    
    
    (58
    )
    
    
    (92
    )Deferred income tax credit
    
    
    (17
    )
    
    
    Increase in accrued interest receivable and other assets
    
    
    (710
    )
    
    
    (935
    )Increase in accrued interest payable and other liabilities
    
    
    692
    
    
    
    743Net cash provided by operating activities
    
    
    1,202
    
    
    
    1,190Investing activities:Purchases of:Securities available for sale
    
    
    (101
    )
    
    
    (2,992
    )Held to maturity securities
    
    
    (5,100
    )
    
    
    (4,400
    )FHLB stock
    
    
    (258
    )
    
    
    (275
    )Bank premises and equipment
    
    
    (20
    )
    
    
    (63
    )Bank owned life insurance
    
    
    (25
    )
    
    
    Proceeds from:Sales of available for sale securities
    
    
    
    
    
    
    126Maturities of and principal repayments on:Securities available for sale
    
    
    1,261
    
    
    
    3,743Held to maturity securities
    
    
    
    
    
    
    1,000Redemption of FHLB stock
    
    
    107
    
    
    
    561Bank owned life insurance
    
    
    110
    
    
    
    Net increase in loans receivable
    
    
    (4,519
    )
    
    
    (5,078
    )Net cash used in investing activities
    
    
    (8,545
    )
    
    
    (7,378
    )Financing activities:Net increase (decrease) in deposits
    
    
    (1,727
    )
    
    
    4,787Net increase (decrease) in short-term borrowings and securities
sold under agreements to repurchase
    
    
    3,458
    
    
    
    (1,474
    )Cash dividends
    
    
    (717
    )
    
    
    (2,279
    )Purchase of treasury stock
    
    
    (531
    )
    
    
    (86
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plan
    
    
    196
    
    
    
    Net cash provided by financing activities
    
    
    679
    
    
    
    948Net decrease in cash and cash equivalents
    
    
    (6,664
    )
    
    
    (5,240
    )Cash and cash equivalents at beginning of period
    
    
    16,439
    
    
    
    14,800Cash and cash equivalents at end of period
    
    $
    9,775
    
    
    $
    9,560Supplemental information:Interest paid
    
    $
    2,325
    
    
    $
    1,749Income taxes paid
    
    $
    475
    
    
    $
    Supplemental schedule of noncash investing and financing activitiesTransfer of loans to other real estate owned
    
    $
    148
    
    
    $
    
  5




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Juniata Valley Financial Corp. and Subsidiary
           6




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Three Months Ended March 31, 2006
    
    
    Three Months Ended March 31, 2005Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    1,687
    
    
    $
    483
    
    
    $
    1,204
    
    
    $
    1,896
    
    
    $
    533
    
    
    $
    1,363Other comprehensive income (loss):Unrealized losses on available for sale securities:Unrealized holding losses arising during the period
    
    
    (44
    )
    
    
    (15
    )
    
    
    (29
    )
    
    
    (860
    )
    
    
    (293
    )
    
    
    (567
    )Less reclassification adjustment for
gains included in net income
    
    
    (67
    )
    
    
    (23
    )
    
    
    (44
    )
    
    
    (99
    )
    
    
    (34
    )
    
    
    (65
    )Other comprehensive loss
    
    
    (111
    )
    
    
    (38
    )
    
    
    (73
    )
    
    
    (959
    )
    
    
    (327
    )
    
    
    (632
    )Total comprehensive income
    
    $
    1,576
    
    
    $
    445
    
    
    $
    1,131
    
    
    $
    937
    
    
    $
    206
    
    
    $
    731
      7




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Three Months EndedMarch 31,(Dollar amounts in thousands, except share data)
    
    2005Net income, as reported
    
    $
    1,363Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects
    
    
    (5
    )Pro forma net income
    
    $
    1,358Basic net income per share, as reported
    
    $
    0.30Pro forma basic net income per share
    
    $
    0.30Diluted net income per share, as reported
    
    $
    0.30Pro forma diluted net income per share
    
    $
    0.30
   (Amounts, except earnings per share, in thousands)Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2006
    
    
    March 31, 2005Net income
    
    $
    1,204
    
    
    $
    1,363Weighted-average common shares outstanding
    
    
    4,490
    
    
    
    4,560Basic earnings per share
    
    $
    0.27
    
    
    $
    0.30Weighted-average common shares outstanding
    
    
    4,490
    
    
    
    4,560Common stock equivalents due to effect of stock options
    
    
    15
    
    
    
    16Total weighted-average common shares and equivalents
    
    
    4,505
    
    
    
    4,576Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.30
    8




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##### 



(Dollar amounts in thousands)Three Months EndedMarch 31,2006
    
    2005Components of net periodic pension costService cost
    
    $
    74
    
    
    $
    70Interest cost
    
    
    92
    
    
    
    86Expected return on plan assets
    
    
    (90
    )
    
    
    (83
    )Additional recognized amounts
    
    
    18
    
    
    
    19Net periodic pension cost
    
    $
    94
    
    
    $
    92
   9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
            10




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##### 



(Dollar amounts in thousands)
    
    March 31, 2006
    
    December 31, 2005Non-performing loansNonaccrual loans
    
    $
    1,416
    
    
    $
    1,514Accruing loans past due 90 days or more
    
    
    1,185
    
    
    
    724Restructured loans
    
    
    
    
    
    
    Total
    
    $
    2,601
    
    
    $
    2,238Average loans outstanding
    
    $
    300,377
    
    
    $
    290,327Ratio of non-performing loans to
average loans outstanding
    
    
    0.87
    %
    
    
    0.77
    %
     11




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##### 



Comparison of the Three Months ended March 31, 2006 and 2005
   Three Months EndedMarch 31,2006
    
    2005Return on average assets (annualized)
    
    
    1.17
    %
    
    
    1.37
    %Return on average equity (annualized)
    
    
    9.88
    %
    
    
    11.10
    %Average equity to average assets
    
    
    11.81
    %
    
    
    12.34
    %
       12




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##### 



13




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##### 



14




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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
  15




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##### 



Part II  OTHER INFORMATION
 Item 1.
    
    LEGAL PROCEEDINGSIn 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 FACTORSThere have been no material changes in risk factors that were disclosed in
the Annual Report on Form 10-K as of December 31, 2005.Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSThe following table provides information on repurchases by the Corporation of
its common stock in each month of the quarter ended March 31, 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)January 1-31, 2006
    
    
    10,000
    
    
    $
    24.10
    
    
    
    10,000
    
    
    
    190,748February 1-28, 2006
    
    
    12,000
    
    
    
    24.15
    
    
    
    12,000
    
    
    
    178,748March 1-31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,748Totals
    
    
    22,000
    
    
    $
    24.13
    
    
    
    22,000
    
    
    
    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 May 1, 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. 16




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##### 



Item 3.
    
    DEFAULTS UPON SENIOR SECURITIESNot applicableItem 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNoneItem 5.
    
    OTHER INFORMATIONNoneItem 6.
    
    EXHIBITSExhibit 3.1  Amended and Restated Articles of Incorporation (incorporated by
reference to Exhibit 4.1 to the Companys Form S-3 Registration Statement No.
333-129023 filed with the SEC on October 14, 2005)Exhibit 3.2  Bylaws incorporated by reference to Exhibit 3.2 to the
Companys report on Form 8-K filed with the SEC on February 23, 2006)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 05-10-2006
    
    By
    
    /s/ Francis J.Evanitsky

Francis J. Evanitsky, Presidentand Chief Executive OfficerDate 05-10-2006
    
    By
    
    /s/ JoAnn N. McMinnJoAnn N. McMinn, Chief Financial Officer
 17