##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
 For the quarterly period ended September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from
 to
 Commission File Number 000-13232
 Juniata Valley Financial Corp.
  Pennsylvania
    
    23-2235254(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)Bridge and Main Streets,
Mifflintown, Pennsylvania
    
    17059(Address of principal executive offices)
    
    (Zip Code)
  
  þ o
  o þ o
 o þ
  Class
    
    Outstanding as of November 4, 2006Common Stock ($1.00 par value)
    
    4,457,184 shares




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Statements of Financial Condition
as of September 30, 2006 (Unaudited) and December 31, 2005 (Audited)
    
    
    3Consolidated Statements of Income for the Three
Months and Nine Months Ended September 30, 2006 and 2005 (Unaudited)
    
    
    4Consolidated Statements of Changes in Stockholders Equity
for the Nine Months Ended September 30, 2006 and 2005 (Unaudited)
    
    
    5Consolidated Statements of Cash
Flows for the Nine Months Ended September 30, 2006 and 2005 (Unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3.
    
    Defaults Upon Senior Securities
    
    
    23Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 5.
    
    Other Information
    
    
    23Item 6.
    
    Exhibits
    
    
    23Signatures
    
    
    24
 2




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##### 



PART I  FINANCIAL INFORMATION  Item 1. Financial Statements
 Juniata Valley Financial Corp. and Subsidiary
 September 30,
    
    
    December 31,2006
    
    
    2005Unaudited
    
    
    AuditedASSETSCash and due from banks
    
    $
    9,683
    
    
    $
    16,373Interest bearing deposits with banks
    
    
    110
    
    
    
    66Cash and cash equivalents
    
    
    9,793
    
    
    
    16,439Interest bearing time deposits with banks
    
    
    5,660
    
    
    
    5,660Securities available for sale
    
    
    61,415
    
    
    
    66,699Securities held to maturity, fair value of $8,564 and $3,436, respectively
    
    
    8,599
    
    
    
    3,493Restricted investment in Federal Home Loan Bank (FHLB) stock
    
    
    1,467
    
    
    
    1,356Investment in unconsolidated subsidiary
    
    
    2,825
    
    
    
    Total loans, net of unearned interest
    
    
    308,418
    
    
    
    298,063Less: Allowance for loan losses
    
    
    (2,793
    )
    
    
    (2,763
    )Total loans, net of allowance for loan losses
    
    
    305,625
    
    
    
    295,300Premises and equipment, net
    
    
    6,345
    
    
    
    6,211Bank owned life insurance
    
    
    10,919
    
    
    
    10,647Accrued interest receivable and other assets
    
    
    5,882
    
    
    
    4,997Core deposit intangible
    
    
    445
    
    
    
    Goodwill
    
    
    2,039
    
    
    
    Total assets
    
    $
    421,014
    
    
    $
    410,802LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Non-interest bearing
    
    $
    43,223
    
    
    $
    46,041Interest bearing
    
    
    315,544
    
    
    
    297,426Total deposits
    
    
    358,767
    
    
    
    343,467Securities sold under agreements to repurchase
    
    
    5,942
    
    
    
    4,201Short-term borrowings
    
    
    2,500
    
    
    
    5,600Long-term debt
    
    
    
    
    
    
    5,000Other interest bearing liabilities
    
    
    895
    
    
    
    819Accrued interest payable and other liabilities
    
    
    5,064
    
    
    
    4,596Total liabilities
    
    
    373,168
    
    
    
    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 -4,457,184 shares at September 30, 2006;4,503,392 shares at December 31, 2005
    
    
    4,746
    
    
    
    4,746Surplus
    
    
    18,253
    
    
    
    18,177Retained earnings
    
    
    30,942
    
    
    
    29,486Accumulated other comprehensive loss
    
    
    (428
    )
    
    
    (694
    )Cost of common stock in Treasury:288,642 shares at September 30, 2006;242,434 shares at December 31, 2005
    
    
    (5,667
    )
    
    
    (4,596
    )Total stockholders equity
    
    
    47,846
    
    
    
    47,119Total liabilities and stockholders equity
    
    $
    421,014
    
    
    $
    410,802
  3




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##### 



Juniata Valley Financial Corp. and Subsidiary
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest income:Loans, including fees
    
    $
    5,501
    
    
    $
    4,989
    
    
    $
    16,082
    
    
    $
    14,710Taxable securities
    
    
    502
    
    
    
    442
    
    
    
    1,488
    
    
    
    1,403Tax-exempt securities
    
    
    158
    
    
    
    163
    
    
    
    481
    
    
    
    498Other interest income
    
    
    71
    
    
    
    138
    
    
    
    191
    
    
    
    294Total interest income
    
    
    6,232
    
    
    
    5,732
    
    
    
    18,242
    
    
    
    16,905Interest expense:Deposits
    
    
    2,435
    
    
    
    2,011
    
    
    
    6,885
    
    
    
    5,558Securities sold under agreements to repurchase
    
    
    68
    
    
    
    51
    
    
    
    171
    
    
    
    101Short-term borrowings
    
    
    78
    
    
    
    1
    
    
    
    258
    
    
    
    8Long-term debt
    
    
    16
    
    
    
    36
    
    
    
    88
    
    
    
    108Other interest bearing liabilities
    
    
    9
    
    
    
    5
    
    
    
    20
    
    
    
    15Total interest expense
    
    
    2,606
    
    
    
    2,104
    
    
    
    7,422
    
    
    
    5,790Net interest income
    
    
    3,626
    
    
    
    3,628
    
    
    
    10,820
    
    
    
    11,115Provision for loan losses
    
    
    29
    
    
    
    
    
    
    
    89
    
    
    
    28Net interest income after provision for loan losses
    
    
    3,597
    
    
    
    3,628
    
    
    
    10,731
    
    
    
    11,087Noninterest income:Trust fees
    
    
    99
    
    
    
    86
    
    
    
    323
    
    
    
    276Customer service fees
    
    
    395
    
    
    
    353
    
    
    
    1,118
    
    
    
    1,036Earnings on bank-owned life insurance
    
    
    134
    
    
    
    95
    
    
    
    318
    
    
    
    273Comnmissions from sales of annuities and mutual funds
    
    
    143
    
    
    
    105
    
    
    
    406
    
    
    
    323Gain on sale of loans and other assets
    
    
    28
    
    
    
    9
    
    
    
    51
    
    
    
    15Gain on sale of securities
    
    
    
    
    
    
    52
    
    
    
    67
    
    
    
    151Income from unconsolidated subsidiary
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    Other noninterest income
    
    
    148
    
    
    
    138
    
    
    
    435
    
    
    
    375Total noninterest income
    
    
    967
    
    
    
    838
    
    
    
    2,738
    
    
    
    2,449Noninterest expense:Salaries and wages
    
    
    1,185
    
    
    
    1,079
    
    
    
    3,417
    
    
    
    3,255Employee severance expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284Employee benefits
    
    
    375
    
    
    
    335
    
    
    
    1,113
    
    
    
    1,094Occupancy
    
    
    195
    
    
    
    214
    
    
    
    600
    
    
    
    631Equipment
    
    
    148
    
    
    
    148
    
    
    
    455
    
    
    
    438Data processing expense
    
    
    309
    
    
    
    307
    
    
    
    869
    
    
    
    917Director compensation
    
    
    120
    
    
    
    114
    
    
    
    369
    
    
    
    363Professional fees
    
    
    97
    
    
    
    305
    
    
    
    283
    
    
    
    623Taxes, other than income
    
    
    129
    
    
    
    130
    
    
    
    375
    
    
    
    389Other noninterest expense
    
    
    281
    
    
    
    327
    
    
    
    869
    
    
    
    838Total noninterest expense
    
    
    2,839
    
    
    
    2,959
    
    
    
    8,350
    
    
    
    8,832Income before income taxes
    
    
    1,725
    
    
    
    1,507
    
    
    
    5,119
    
    
    
    4,704Provision for income taxes
    
    
    494
    
    
    
    416
    
    
    
    1,464
    
    
    
    1,307Net income
    
    $
    1,231
    
    
    $
    1,091
    
    
    $
    3,655
    
    
    $
    3,397Earnings per shareBasic
    
    $
    0.27
    
    
    $
    0.24
    
    
    $
    0.81
    
    
    $
    0.74Diluted
    
    $
    0.27
    
    
    $
    0.24
    
    
    $
    0.81
    
    
    $
    0.74Cash dividends declared per share
    
    $
    0.17
    
    
    $
    0.00
    
    
    $
    0.49
    
    
    $
    0.80Weighted average shares outstanding
    
    
    4,485,365
    
    
    
    4,568,060
    
    
    
    4,488,992
    
    
    
    4,562,132Weighted average shares and share equivalents outstanding
    
    
    4,497,637
    
    
    
    4,586,328
    
    
    
    4,503,269
    
    
    
    4,579,816
  4




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##### 



Juniata Valley Financial Corp. and Subsidiary
 Nine Months Ended September 30, 2006
 Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulatedof
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersOutstanding
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at December 31, 2005
    
    
    4,503,392
    
    
    $
    4,746
    
    
    $
    18,177
    
    
    $
    29,486
    
    
    $
    (694
    )
    
    $
    (4,596
    )
    
    $
    47,119Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,655
    
    
    
    
    
    
    
    
    
    
    
    3,655Change in unrealized losses on
securities
available for sale, net of
reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266
    
    
    
    
    
    
    
    266Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,921Cash dividends at $0.49 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,199
    )
    
    
    
    
    
    
    
    
    
    
    (2,199
    )Stock-based compensation activity
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28Purchase of treasury stock, at cost
    
    
    (58,082
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,302
    )
    
    
    (1,302
    )Treasury stock issued for dividend
reinvestment plan and employee
stock
purchase plan
    
    
    11,874
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    279Balance at September 30, 2006
    
    
    4,457,184
    
    
    $
    4,746
    
    
    $
    18,253
    
    
    $
    30,942
    
    
    $
    (428
    )
    
    $
    (5,667
    )
    
    $
    47,846
 Nine Months Ended September 30, 2005
 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,397
    
    
    
    
    
    
    
    
    
    
    
    3,397Minimum pension liability
adjustment, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (631
    )
    
    
    
    
    
    
    (631
    )Change in unrealized losses on
securities
available for sale, net of
reclassifica-
tion adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (694
    )
    
    
    
    
    
    
    (694
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,072Cash dividends at $.80 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,644
    )
    
    
    
    
    
    
    
    
    
    
    (3,644
    )Treasury stock issued for dividend
reinvestment plan and employee
stock purchase plan
    
    
    21,086
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    348
    
    
    
    445Purchase of treasury stock, at cost
    
    
    (32,800
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (763
    )
    
    
    (763
    )Stock issued pursuant to 2 for 1
stock split
effective October 31, 2005
    
    
    2,280,629
    
    
    
    2,373
    
    
    
    (2,373
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at September 30, 2005
    
    
    4,549,544
    
    
    $
    4,746
    
    
    $
    18,110
    
    
    $
    29,719
    
    
    $
    (911
    )
    
    $
    (3,401
    )
    
    $
    48,263
  5




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##### 



Juniata Valley Financial Corp. and Subsidiary
 Nine Months Ended September 30,2006
    
    
    2005Operating activities:Net income
    
    $
    3,655
    
    
    $
    3,397Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    89
    
    
    
    28Provision for depreciation
    
    
    437
    
    
    
    453Net amortization of securities premiums
    
    
    90
    
    
    
    170Amortization of core deposit intangible
    
    
    4
    
    
    
    Gains on sales of securities
    
    
    (67
    )
    
    
    (151
    )Gains on sales of loans and other assets
    
    
    (51
    )
    
    
    (15
    )Earnings on investment in life insurance
    
    
    (318
    )
    
    
    (273
    )Deferred income tax credit
    
    
    (67
    )
    
    
    Income from equity investment in unconsolidated subsidiary
    
    
    (20
    )
    
    
    Stock-based compensation expense
    
    
    28Increase in accrued interest receivable and other assets
    
    
    (909
    )
    
    
    (288
    )Increase (decrease) in accrued interest payable and other liabilities
    
    
    380
    
    
    
    (98
    )Net cash provided by operating activities
    
    
    3,251
    
    
    
    3,223Investing activities:Purchases of:Securities available for sale
    
    
    (7,196
    )
    
    
    (8,084
    )Securities held to maturity
    
    
    (5,100
    )
    
    
    (4,400
    )FHLB stock
    
    
    (765
    )
    
    
    Premises and equipment
    
    
    (432
    )
    
    
    (103
    )Bank owned life insurance
    
    
    (103
    )
    
    
    Investment in unconsolidated subsidiary
    
    
    (2,805
    )
    
    
    Proceeds from:Sales of available for sale securities
    
    
    137
    
    
    
    336Maturities of and principal repayments on:Securities available for sale
    
    
    12,717
    
    
    
    11,098Securities held to maturity
    
    
    
    
    
    
    1,000Redemption of FHLB stock
    
    
    654
    
    
    
    240Bank owned life insurance
    
    
    149
    
    
    
    Sale of other real estate owned
    
    
    572
    
    
    
    Net decrease in interest-bearing time deposits
    
    
    
    
    
    
    1,100Net cash received from branch acquisition
    
    
    13,808
    
    
    
    Net increase in loans receivable
    
    
    (7,162
    )
    
    
    (16,050
    )Net cash provided by (used in) investing activities
    
    
    4,474
    
    
    
    (14,863
    )Financing activities:Net (decrease) increase in deposits
    
    
    (4,790
    )
    
    
    13,443Net (decrease) increase in short-term borrowings and securities
sold under agreements to repurchase
    
    
    (1,359
    )
    
    
    2,693Repayment of long-term debt
    
    
    (5,000
    )
    
    
    Cash dividends
    
    
    (2,199
    )
    
    
    (3,644
    )Purchase of treasury stock
    
    
    (1,302
    )
    
    
    (763
    )Treasury stock issued for dividend reinvestment
and employee stock purchase plan
    
    
    279
    
    
    
    445Net cash (used in) provided by financing activities
    
    
    (14,371
    )
    
    
    12,174Net (decrease) increase in cash and cash equivalents
    
    
    (6,646
    )
    
    
    534Cash and cash equivalents at beginning of period
    
    
    16,439
    
    
    
    14,800Cash and cash equivalents at end of period
    
    $
    9,793
    
    
    $
    15,334Supplemental information:Interest paid
    
    $
    7,197
    
    
    $
    5,675Income taxes paid
    
    $
    1,405
    
    
    $
    1,651Supplemental schedule of noncash investing and financing activities:Transfer of loans to other real estate owned
    
    $
    630
    
    
    $
    
  6




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##### 



Juniata Valley Financial Corp. and Subsidiary
               7




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##### 



Fair Value Measurements
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans
   8




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##### 



Three Months Ended September 30, 2006
    
    
    Three Months Ended September 30, 2005Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    1,725
    
    
    $
    494
    
    
    $
    1,231
    
    
    $
    1,507
    
    
    $
    416
    
    
    $
    1,091Other comprehensive income (loss):Unrealized gains (losses) on available for sale
securities :Unrealized
gains (losses) arising during the
period
    
    
    527
    
    
    
    179
    
    
    
    348
    
    
    
    (339
    )
    
    
    (115
    )
    
    
    (224
    )Less reclassification adjustment for
gains included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52
    )
    
    
    (18
    )
    
    
    (34
    )Other comprehensive income (loss)
    
    
    527
    
    
    
    179
    
    
    
    348
    
    
    
    (391
    )
    
    
    (133
    )
    
    
    (258
    )Total comprehensive income
    
    $
    2,252
    
    
    $
    673
    
    
    $
    1,579
    
    
    $
    1,116
    
    
    $
    283
    
    
    $
    833
 Nine Months Ended September 30, 2006
    
    
    Nine Months Ended September 30, 2005Before
    
    
    Tax Expense
    
    
    
    
    
    
    Before
    
    
    Tax ExpenseTax
    
    
    or
    
    
    Net-of-Tax
    
    
    Tax
    
    
    or
    
    
    Net-of-TaxAmount
    
    
    (Benefit)
    
    
    Amount
    
    
    Amount
    
    
    (Benefit)
    
    
    AmountNet income
    
    $
    5,119
    
    
    $
    1,464
    
    
    $
    3,655
    
    
    $
    4,704
    
    
    $
    1,307
    
    
    $
    3,397Other comprehensive income (loss):Unrealized gains (losses) on available for sale
securities :Unrealized gains (losses) arising during the
period
    
    
    470
    
    
    
    160
    
    
    
    310
    
    
    
    (900
    )
    
    
    (306
    )
    
    
    (594
    )Less reclassification adjustment for
gains included in net income
    
    
    (67
    )
    
    
    (23
    )
    
    
    (44
    )
    
    
    (151
    )
    
    
    (51
    )
    
    
    (100
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (956
    )
    
    
    (325
    )
    
    
    (631
    )Other comprehensive income (loss)
    
    
    403
    
    
    
    137
    
    
    
    266
    
    
    
    (2,007
    )
    
    
    (682
    )
    
    
    (1,325
    )Total comprehensive income
    
    $
    5,522
    
    
    $
    1,601
    
    
    $
    3,921
    
    
    $
    2,697
    
    
    $
    625
    
    
    $
    2,072
   9




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##### 



Three Months
    
    
    Nine MonthsEnded
    
    
    Ended(Dollar amounts in thousands, except share data)
    
    September 30, 2005Net income, as reported
    
    $
    1,091
    
    
    $
    3,397Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects
    
    
    (5
    )
    
    
    (15
    )Pro forma net income
    
    $
    1,086
    
    
    $
    3,382Basic net income per share, as reported
    
    $
    0.24
    
    
    $
    0.74Pro forma basic net income per share
    
    $
    0.24
    
    
    $
    0.73Diluted net income per share, as reported
    
    $
    0.24
    
    
    $
    0.74Pro forma diluted net income per share
    
    $
    0.24
    
    
    $
    0.73
   2005Expected life of options
    
    7 yearsRisk-free interest rate
    
    
    4.40
    %Expected volatility
    
    
    21.13
    %Expected dividend yield
    
    
    3.20
    %
 10




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##### 



(Amounts, except earnings per share, in thousands)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30, 2006
    
    
    September 30, 2005Net income
    
    $
    1,231
    
    
    $
    1,091Weighted-average common shares outstanding
    
    
    4,485
    
    
    
    4,568Basic earnings per share
    
    $
    0.27
    
    
    $
    0.24Weighted-average common shares outstanding
    
    
    4,485
    
    
    
    4,568Common stock equivalents due to effect of stock options
    
    
    12
    
    
    
    18Total weighted-average common shares and equivalents
    
    
    4,497
    
    
    
    4,586Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.24
 Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30, 2006
    
    
    September 30, 2005Net income
    
    $
    3,655
    
    
    $
    3,397Weighted-average common shares outstanding
    
    
    4,489
    
    
    
    4,562Basic earnings per share
    
    $
    0.81
    
    
    $
    0.74Weighted-average common shares outstanding
    
    
    4,489
    
    
    
    4,562Common stock equivalents due to effect of stock options
    
    
    14
    
    
    
    18Total weighted-average common shares and equivalents
    
    
    4,503
    
    
    
    4,580Diluted earnings per share
    
    $
    0.81
    
    
    $
    0.74
    11




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##### 



(Dollar amounts in thousands)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Components of net periodic
pension costService cost
    
    $
    74
    
    
    $
    74
    
    
    $
    222
    
    
    $
    214Interest cost
    
    
    91
    
    
    
    87
    
    
    
    275
    
    
    
    260Expected return on plan assets
    
    
    (90
    )
    
    
    (85
    )
    
    
    (270
    )
    
    
    (251
    )Additional recognized amounts
    
    
    18
    
    
    
    26
    
    
    
    54
    
    
    
    63Net periodic pension cost
    
    $
    93
    
    
    $
    102
    
    
    $
    281
    
    
    $
    286
     Assets:Cash
    
    $
    261Premises and equipment
    
    
    139Loans
    
    
    3,810Core deposit intangible
    
    
    449Goodwill
    
    
    2,039Other assets
    
    
    9Total assets
    
    
    6,707Liabilities:Deposits
    
    
    20,090Other liabilities
    
    
    164Total liabilities
    
    
    20,254Net liabilities assumed
    
    $
    13,547
 12




---



##### 



13




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
           14




---



##### 



(Dollar amounts in thousands)
    
    September 30, 2006
    
    December 31, 2005Non-performing loansNonaccrual loans
    
    $
    1,416
    
    
    $
    1,515Accruing loans past due 90 days or more
    
    
    441
    
    
    
    724Restructured loans
    
    
    
    
    
    
    Total
    
    $
    1,857
    
    
    $
    2,239Average loans outstanding
    
    $
    302,711
    
    
    $
    290,327Ratio of non-performing loans to
average loans outstanding
    
    
    0.61
    %
    
    
    0.77
    %
  15




---



##### 



Balance
    
    Deposits
    
    Other Changes
    BalanceDecember 31,
    
    Acquired with
    
    in
    September 30,2005
    
    Branch Purchase
    
    Deposits
    2006Deposits:Demand, non-interest bearing
    
    $
    46,041
    
    
    $
    1,245
    
    
    $
    (4,063
    )
    
    $
    43,223NOW and money market
    
    
    68,522
    
    
    
    3,195
    
    
    
    6,294
    
    
    
    78,011Savings
    
    
    43,703
    
    
    
    1,369
    
    
    
    (6,484
    )
    
    
    38,588Time deposits, $100,000 and more
    
    
    39,631
    
    
    
    2,376
    
    
    
    (2,473
    )
    
    
    39,534Other time deposits
    
    
    145,570
    
    
    
    11,905
    
    
    
    1,936
    
    
    
    159,411Total deposits
    
    $
    343,467
    
    
    $
    20,090
    
    
    $
    (4,790
    )
    
    $
    358,767
       Comparison of the Three Months ended September 30, 2006 and 2005
    16




---



##### 



Three Months EndedSeptember 302006
    
    2005Return on average assets (annualized)
    
    
    1.19
    %
    
    
    1.07
    %Return on average equity (annualized)
    
    
    10.26
    %
    
    
    8.96
    %Average equity to average assets
    
    
    11.58
    %
    
    
    11.89
    %
            17




---



##### 



Comparison of the Nine Months ended September 30, 2006 and 2005
    Nine Months EndedSeptember 302006
    
    2005Return on average assets (annualized)
    
    
    1.18
    %
    
    
    1.12
    %Return on average equity (annualized)
    
    
    10.27
    %
    
    
    9.23
    %Average equity to average assets
    
    
    11.50
    %
    
    
    12.11
    %
       18




---



##### 



19




---



##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  20




---



##### 



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
    Changes in Internal Control Over Financial Reporting
  21




---



##### 



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 FACTORSBranch AcquisitionThe Bank has purchased the Richfield, Pennsylvania community office of the
Mifflinburg Bank and Trust Company, a subsidiary of Mifflinburg Bancorp as of
September 8, 2006. The transaction included approximately $20.0 million in
deposits and $3.8 million in loans outstanding. Additionally, intangible
assets were acquired, including core deposit intangible and goodwill of
$449,000 and $2,039,000, respectively.The branch transaction is intended to further expand the Banks presence in
Juniata County, Pennsylvania. However, there are risks in branch
acquisitions. While the Bank seeks to retain the deposits assumed in the
transaction, the deposit premium paid by the Bank in the transaction will
apply to all of the deposits assumed in the transaction, even if some of the
deposits run off in the future. Additionally, there is risk that acquired
goodwill may become impaired, resulting in a charge to earnings.Otherwise, there have been no material changes in risk factors that were
disclosed in the Annual Report on Form 10-K as of December 31, 2005.
 22




---



##### 



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 September 30, 2006:
 Total Number ofShares Purchased as
    
    Maximum Number ofTotal Number
    
    Average
    
    Part of Publicly
    
    Shares that May Yet Beof Shares
    
    Price Paid
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased
    
    per Share
    
    Programs
    
    Plans or Programs (1)July 1-31, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    178,748August 1-31, 2006
    
    
    10,000
    
    
    
    21.50
    
    
    
    10,000
    
    
    
    168,748September 1-30,
2006
    
    
    26,082
    
    
    
    21.30
    
    
    
    26,082
    
    
    
    142,666Totals
    
    
    36,082
    
    
    $
    21.36
    
    
    
    36,082
    
    
    
    142,666
 
 (1)
    
    On March 23, 2001, the Corporation 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, the repurchase of 400,000 additional shares were authorized by the
Board of Directors. As of November 4, 2006, the number of shares that may yet be purchased under
the program was 142,666. 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 SECURITIESNot applicableItem 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNoneItem 5.
    
    OTHER INFORMATIONNoneItem 6.
    
    EXHIBITS3.1   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 February 23, 2006)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 Officer
(furnished, not filed)32.2  Section 1350 Certification of Chief Financial Officer (furnished, not filed)
 23




---



##### 



Juniata Valley Financial Corp.(Registrant)Date 11-08-2006
    
    By
    
    /s/ Francis J. EvanitskyFrancis J. Evanitsky, Presidentand Chief Executive OfficerDate 11-08-2006
    
    By
    
    /s/ JoAnn N. McMinnJoAnn N. McMinn, Chief Financial Officer
 24