SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-K

       (Mark One)

       [ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
                    For the fiscal year ended December 31, 1999
       [    ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
                        For the transition period from to

                         Commission file number 0-11535

                      CITY NATIONAL BANCSHARES CORPORATION
             (Exact name of registrant as specified in its charter)

New Jersey                                                     22-2434751
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

900 Broad Street,                                                     07102
Newark, New Jersey                                                 (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (973) 624-0865

        Securities Registered Pursuant to Section 12(b) of the Act: None

           Securities Registered Pursuant to Section 12(g) of the Act:

                               Title of each class
                               -------------------
                      Common stock, par value $10 per share

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes     X                                   No
   -------------

The  aggregate  market  value  of  voting  stock  held by  nonaffiliates  of the
Registrant as of March 22, 2000 was approximately $1,555,450.

There were 120,130 shares of common stock outstanding at March 22, 2000.

Documents incorporated by reference:
Certain  portions of the definitive  Proxy Statement for the 1998 Annual Meeting
of shareholders to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A are incorporated herein by reference in Part III.



                      CITY NATIONAL BANCSHARES CORPORATION
                                    FORM 10-K
                                Table of Contents

                                                                           Page

                                     PART I

Item 1.  Business..............................................................3
Item 2.  Properties............................................................4
Item 3.  Legal Proceedings.....................................................5
Item 4.  Submission of Matters to a Vote of Security Holders...................5

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters...............................................................5
Item 6.  Selected Financial Data...............................................6
Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations......................................7 - 14
Item 8.  Financial Statements and Supplementary Data.....................15 - 29
Item 9.  Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure.............................30

                                    PART III

Item 10. Directors and Executive Officers of Registrant.......................30
Item 11. Executive Compensation...............................................30
Item 12. Security Ownership of Certain Beneficial Owners and Management.......30
Item 13. Certain Relationships and Related Transactions.......................30

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......30


Signatures....................................................................32






Part I

Item 1...Business

Description of business

City National  Bancshares  Corporation  (the  "Corporation"  or "CNBC") is a New
Jersey corporation  incorporated on January 10, 1983. At December 31, 1999, CNBC
had  consolidated  total  assets of $171.5  million,  total  deposits  of $139.8
million and  stockholders'  equity of $9 million.  Its only  subsidiary  is City
National  Bank of New Jersey  (the  "Bank" or  "CNB"),  a  nationally  chartered
commercial  bank  which  commenced  operations  on June  11,  1973.  CNB has one
subsidiary, City National Investments,  Inc., an investment company which holds,
maintains and manages investment assets for CNB.

CNB is a national  banking  association  chartered in 1973 under the laws of the
United States of America.  CNB is minority  owned and  controlled  and therefore
eligible to participate in certain federal government programs.  CNB is a member
of the Federal  Reserve Bank, the Federal Home Loan Bank and the Federal Deposit
Insurance  Corporation.  CNB  provides  a wide  range of retail  and  commercial
banking services  through three offices located in northern New Jersey.  Deposit
services  include  savings and checking  accounts,  certificates  of deposit and
money market and retirement accounts. The Bank also provides many forms of small
to medium size business  financing,  including  revolving credit,  credit lines,
term loans and all forms of consumer financing,  including auto, home equity and
mortgage loans and maintains banking  relationships  with several major domestic
corporations.

CNB  specializes  in providing  credit and deposit  services to  businesses  and
individuals located within urban areas in New Jersey, particularly in the Newark
area.

The Bank does not have a trust department.

Competition

The market for banking and bank related services is highly competitive. The Bank
competes with other  providers of financial  services such as other bank holding
companies,  commercial  saving  banks,  savings  and loan  associations,  credit
unions, money market and mutual funds, mortgage companies, and a growing list of
other local,  regional and national institutions which offer financial services.
Mergers  between  financial  institutions  within New Jersey and in  neighboring
states have added competitive pressures. Competition is expected to intensify as
a consequence of interstate  banking laws now in effect or that may be in effect
in the future. CNB competes by offering quality products and convenient services
at  competitive  prices.  CNB  regularly  reviews its products and locations and
considers various branch acquisition prospects.

Management  believes  that  as New  Jersey's  only  African-American  owned  and
controlled Bank, it has a unique ability to provide  commercial banking services
to that segment of the minority community.

Supervision and regulation

The banking industry is highly regulated.  The following  discussion  summarizes
some of the material  provisions of the banking laws and  regulations  affecting
City National Bancshares Corporation and City National Bank of New Jersey.

Bank holding company regulations

CNBC is a bank holding  company  within the meaning of the Bank Holding  Company
Act (the "Act") of 1956, and as such, is supervised by the Board of Governors of
the Federal Reserve System (the "FRB").

The Act prohibits CNBC,  with certain  exceptions,  from acquiring  ownership or
control of more than five percent of the voting  shares of any company  which is
not a bank and  from  engaging  in any  business  other  than  that of  banking,
managing and controlling  banks or furnishing  services to subsidiary banks. The
Act also requires prior  approval by the FRB of the  acquisition by CNBC of more
than five  percent  of the voting  stock of any  additional  bank.  The Act also
restricts the types of  businesses,  activities,  and operations in which a bank
holding company may engage.

The  Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994 (the
"Interstate  Banking and  Branching  Act")  enabled  bank  holding  companies to
acquire  banks in states  other than its home state,  regardless  of  applicable
state law. The  Interstate  Banking and Branching Act also  authorized  banks to
merge across state  lines,  thereby  creating  interstate  branches.  Under such
legislation,  each  state had the  opportunity  to "opt out" of this  provision.
Furthermore,  a state may "opt-in"  with respect to de novo  branching,  thereby
permitting  a bank to open new  branches  in a state in which  the bank does not
already have a branch.  Without de novo branching,  an  out-of-state  commercial
bank can enter the state only by acquiring an existing bank or branch.  The vast
majority of states have allowed  interstate banking by merger but not authorized
de novo branching.

New Jersey enacted legislation to authorize interstate banking and branching and
the entry into New Jersey of foreign country banks. New Jersey did not authorize
de novo branching into the state.  However,  under federal law,  federal savings
banks which meet certain conditions may branch de novo into a state,  regardless
of state law.

On November 12, 1999,  the  President  signed the  Gramm-Leach-Bliley  Financial
Modernization  Act of 1999 into  law.  The  Modernization  Act will  allow  bank
holding companies  meeting  management,  capital and Community  Reinvestment Act
standards to engage in a  substantially  broader range of nonbanking  activities
than  currently is  permissible,  including  insurance  underwriting  and making
merchant banking  investments in commercial and financial  companies.  If a bank
holding  company  elects to become a financial  holding  company,  it may file a
certification,  effective  in 30 days,  and  thereafter  may  engage in  certain
financial  activities  without  further  approvals.  It also allows insurers and
other   financial   services   companies  to  acquire  banks,   removes  various
restrictions   that  currently  apply  to  bank  holding  company  ownership  of
securities firms and mutual fund advisory  companies and establishes the overall
regulatory  structure  applicable to bank holding  companies that also engage in
insurance and securities operations.

The Modernization Act also modifies other current financial laws, including laws
related to financial privacy and community reinvestment.

Regulation of bank subsidiary

CNB is subject to the supervision  of, and to regular  examination by the Office
of the  Comptroller  of the Currency of the United  States (the "OCC").  Various
laws and the regulations  thereunder  applicable to CNB impose  restrictions and
requirement in many areas,  including capital  requirements,  the maintenance of
reserves,  establishment  of new offices,  the making of loans and  investments,
consumer  protection and other matters.  There are various legal  limitations on
the extent to which a bank  subsidiary may finance or otherwise  supply funds to
its holding  company or its non-bank  subsidiaries.  Under  federal law, no bank
subsidiary may, subject to certain limited exceptions,  make loans or extensions
of credit  to, or  investments  in the  securities  of,  its  parent or  nonbank
subsidiaries  of its parent  (other than direct  subsidiaries  of such bank) or,
subject to broader exceptions,  take their securities as collateral for loans to
any  borrower.  Each bank  subsidiary  is also  subject to  collateral  security
requirements for any loans or extension of credit permitted by such exceptions.

CNBC is a legal entity  separate and distinct from its subsidiary  bank.  CNBC's
revenues (on a parent  company only basis) result from dividends paid to CNBC by
its subsidiary.  Payment of dividends to CNBC by CNB,  without prior  regulatory
approval,  is subject to  regulatory  limitations.  Under the National Bank Act,
dividends  may be declared  only if, after  payment  thereof,  capital  would be
unimpaired  and  remaining  surplus  would  equal 100% of capital.  Moreover,  a
national  bank  may  declare,  in any one  year,  dividends  only  in an  amount
aggregating  not more  than  the sum of its net  profits  for such  year and its
retained  net  profits  for the  preceding  two  years.  In  addition,  the bank
regulatory agencies have the authority to prohibit a bank subsidiary from paying
dividends  or  otherwise  supplying  funds  to a  bank  holding  company  if the
supervising  agency  determines that such payment would  constitute an unsafe or
unsound banking practice.

Under the Financial  Institutions Reform,  Recovery, and Enforcement Act of 1989
("FIRREA"),  a depository institution insured by the FDIC can be held liable for
any loss  incurred  by, or  reasonably  expected to be incurred  by, the FDIC in
connection  with the default of a commonly  controlled  FDIC-insured  depository
institution  or any  assistance  provided  by the FDIC to a commonly  controlled
FDIC-insured  depository  institution  in danger of default,  or deferred by the
FDIC.  Further,  under  FIRREA,  the failure to meet  capital  guidelines  could
subject a banking institution to a variety of enforcement  remedies available to
federal regulatory  authorities,  including the termination of deposit insurance
by the FDIC.

The Federal  Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA")
requires each federal banking agency to revise its risk-based  capital standards
to ensure that those  standards  take  adequate  account of interest  rate risk,
concentration  of credit risk and the risks of  non-traditional  activities.  In
addition,  each federal banking agency has promulgated  regulations,  specifying
the  levels  at  which  a  financial   institution  would  be  considered  "well
capitalized",  "adequately  capitalized",   "undercapitalized",   "significantly
undercapitalized",  or  "critically  undercapitalized",   and  to  take  certain
mandatory and  discretionary  supervisory  actions based on the capital level of
the institution.

The OCC's  regulations  implementing  these provisions of FDICIA provide that an
institution  will  be  classified  as  "well  capitalized"  if it  has  a  total
risk-based  capital ratio of at least 10%, has a Tier 1 risk-based capital ratio
of at least 6%,  has a Tier 1 leverage  ratio of at least 5%, and meets  certain
other   requirements.   An   institution   will  be  classified  as  "adequately
capitalized"  if it has a total  risk-based  capital ratio of at least 8%, has a
Tier 1 risk-based capital ratio of at least 4%, and has Tier 1 leverage ratio of
at least 4%. An institution will be classified as "undercapitalized" if it has a
total risk-based  capital ratio of less than 6%, has a Tier 1 risk-based capital
ratio of less  than 3%,  or has a Tier 1  leverage  ratio  of less  than 3%.  An
institution will be classified as "significantly  undercapitalized"  if it has a
total risk-based  capital ratio of less than 6%, or a Tier I risk-based  capital
ratio  of less  than  3%,  or a Tier I  leverage  ratio  of  less  than  3%.  An
institution  will be classified  as  "critically  undercapitalized"  if it has a
tangible  equity  to total  assets  ratio  that is equal to or less  than 2%. An
insured  depository  institution  may be deemed to be in a lower  capitalization
category if it receives an unsatisfactory examination.

Insured   institutions  are  generally   prohibited  from  paying  dividends  or
management  fees if  after  making  such  payments,  the  institution  would  be
"undercapitalized".  An  "undercapitalized"  institution  also  is  required  to
develop  and  submit  to  the  appropriate  federal  banking  agency  a  capital
restoration  plan, and each company  controlling such institution must guarantee
the institution's compliance with such plan.

Community reinvestment

Under the Community Reinvestment Act ("CRA"), as implemented by OCC regulations,
a national bank has a continuing and affirmative  obligation consistent with its
safe and sound operation to help meet the credit needs of its entire  community,
including  low and moderate  income  neighborhoods.  The CRA does not  establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's  discretion to develop the types of products and services
that it believes are best suited to its particular  community,  consistent  with
the CRA. The CRA  requires  the OCC, in  connection  with its  examination  of a
national bank, to assess the association's record of meeting the credit needs of
its community and to take such record into account in its  evaluation of certain
applications by such association. The CRA also requires all institutions to make
public disclosure of their CRA ratings. CNB received a "Satisfactory" CRA rating
in its most recent examination.

Government policies

The earnings of the  Corporation  are affected not only by economic  conditions,
but also by the  monetary  and  fiscal  policies  of the  United  States and its
agencies,  especially  the  Federal  Reserve  Board.  The actions of the Federal
Reserve  Board  influence  the  overall  levels of bank loans,  investments  and
deposits  and  also  affect  the  interest  rates  charged  on  loans or paid on
deposits.  The  monetary  policies  of the  Federal  Reserve  Board  have  had a
significant  affect on the operating results of commercial banks in the past and
are expected to do so in the future.  The nature and impact of future changes in
monetary  and fiscal  policies  on the  earnings  of the  Corporation  cannot be
determined.

Employees

On December  31,  1999,  CNBC and its  subsidiary  had 69  full-time  equivalent
employees. Management considers relations with employees to be satisfactory.

Item 2.  Properties

The corporate  headquarters  and main office as well as the  operations and data
processing  center  of CNBC and CNB are  located  in  Newark,  New  Jersey  in a
building owned by CNB. The Bank leases its Hackensack office from the Resolution
Trust  Corporation,  for which no rent is payable for five years, until 1999, at
which time the Bank will have the opportunity to purchase the property. The Bank
owns the property where two of its other branch offices are located, and a third
branch office is located in leased space.

Item 3.  Legal proceedings

In May of 1998, CNB commenced a lawsuit against an entity that acted as an agent
for CNB in the sale of CNB's money orders and certain  affiliates of such entity
for fraud and other damages.  CNB alleges,  among other things,  that at various
times during its  business  relationship  with the  defendants,  the  defendants
stole,  misappropriated,  hypothecated  or  embezzled  a  sum  of  approximately
$805,000 from CNB. The defendants have responded  alleging CNB records regarding
these  transactions  are in error and that CNB is liable to the  defendants  for
amounts  due as a  result  of  these  errors  and for  damages  incurred  by the
defendants  as  a  result  of  CNB's  collection  efforts.  The  amount  of  the
defendants'  counterclaim  has not been  quantified.  This  litigation is in the
midst of discovery.  The likelihood of CNB's success in this  litigation and its
ability to recover any amount for which it obtains  judgment is  uncertain.  CNB
has filed appropriate proofs of loss under various insurance policies, including
CNB's  fidelity  bond.  It is also too early to  determine  the  amount CNB will
ultimately recover, if any, under these insurance policies.

Item 4.  Submission of matters to a vote of security  holders  During the fourth
quarter of 1999, there were no matters submitted to stockholders for a vote.

Part II

Item 5.  Market for the Registrant's Common Equity and Related Stockholders
Matters

The   Corporation's    common   stock,   when   publicly   traded,   is   traded
over-the-counter.  The  common  stock is not listed on any  exchange  and is not
quoted on the National  Association of Securities  Dealers' Automated  Quotation
System.  The last customer trade effected by a market maker was  unsolicited and
occurred on November 2, 1990. No price  quotations  are currently  published for
the common stock, nor is any market maker executing  trades. No price quotations
were published during 1999.

Item 6.  Selected Financial Data

At March 22, 1999, the Corporation had 1,953 common stockholders of record.

On April 16, 1999,  the  Corporation  paid a cash dividend of $1.80 per share to
stockholders  of record on March 31, 1999.  Whether cash dividends on the common
stock will be paid in the future  depends upon various  factors,  including  the
earnings and financial  condition of the Bank and the  Corporation  at the time.
Additionally, federal and state laws and regulations contain restrictions on the
ability of the Bank and the Corporation to pay dividends.

Form 10-K

The annual report filed with the Securities and Exchange Commission on Form 10-K
is available  without  charge upon written  request to City National  Bancshares
Corporation, Raul L. Oseguera, Vice President,  Stockholder Relations, 900 Broad
Street, Newark, New Jersey, 07102.

Transfer Agent

First City Transfer Company
P.O. Box 170
Iselin, New Jersey  08830

Five-Year Summary

Dollars in thousands,
  except per share data          1999       1998      1997      1996      1995
----------------------------- ---------  --------- --------- --------- ---------
Year-end Balance Sheet data:
Total assets ................   $172,496  $164,901  $138,868  $134,951  $114,410
Gross loans .................     82,446    71,440    56,947    57,128    44,739
Reserve for loan losses .....      1,975     1,415       825       750       650
Investment securities .......     68,475     3,966    62,360    60,863    55,103
Total deposits ..............    139,837   137,943   119,717   115,854   100,889
Long-term debt ..............     16,225    15,749     3,749     1,749     1,749
Stockholders' equity ........      9,026    10,123    10,032     8,287     6,896
-----------------------------   --------  --------  --------  --------  --------
Income Statement data:
Interest income .............   $ 10,615  $  9,555  $  9,571  $  9,034  $  7,470
Interest expense ............      5,276     4,598     4,330     3,802     2,829
-----------------------------   --------  --------  --------  --------  --------
Net interest income .........      5,339     4,957     5,241     5,232     4,641
Provision for loan losses ...        906     1,016       159        91       486
-----------------------------   --------  --------  --------  --------  --------
Net interest income after
  provision for loan losses .      4,433     3,941     5,082     5,141     4,155
Other operating income ......      1,492     1,297     1,199     1,147     1,363
Other operating expenses ....      5,330     4,999     4,630     4,839     4,245
-----------------------------   --------  --------  --------  --------  --------
Income before income tax
  expense ...................        595       239     1,651     1,449     1,273
Income tax expense ..........        193        13       582       504       471
-----------------------------   --------  --------  --------  --------  --------
Net income ..................   $    402  $    226  $  1,069  $    945  $    802
-----------------------------   --------  --------  --------  --------  --------
Per common share data:
Net income per basic share ..   $   2.48  $   1.25  $   8.98  $   8.31  $   7.22
Net income per diluted share        2.34      1.22      8.11      7.51      6.51
Book value ..................      66.73     72.54     74.34     66.23     62.05
Dividends ...................       1.80      1.75      1.50      1.35      1.25
Basic average number of common
  shares outstanding ........    118,902   115,189   114,141   113,498   111,141
Diluted average number of common
  shares outstanding ........    131,402   129,039   127,991   127,348   124,991
Number of common shares
  outstanding at year-end ...    119,571   118,221   114,141   114,141   111,141

Financial ratios:
Return on average assets ....       .25%      .16%      .78%      .71%      .72%
Return on average common
  equity ...................       3.49      1.51     13.05     13.19     12.71
Stockholders' equity as a
  percentage of total assets       5.23      6.14      7.22      6.14      6.03
Dividend payout ratio ......      72.58    140.00     16.70     16.25     17.31
----------------------------    --------  --------  --------  --------  --------

Management's  discussion  and  analysis of  financial  condition  and results of
operations  Performance  summary  1999 net income rose to  $402,000  compared to
$226,000 in 1998 due  primarily to a $382,000  increase in net interest  income.
Related  earnings  per common share on a diluted  basis  increased to $2.34 from
$1.22.

Total assets rose 15.8% to $172.5  million at 1999  year-end from $149 million a
year earlier,  after excluding a nonrecurring  $15.9 million  municipal  savings
deposit at December 31, 1998. Most of the asset growth occurred in loans,  which
grew 15.4%, and led to the increase in net interest income.

Investments

The  investment  securities  available for sale ("AFS")  portfolio rose 9.9%, to
$35.5 million at December 31, 1999 from $32.3 million a year earlier,  while the
related gross  unrealized loss increased to $1.2 million from an unrealized gain
of $40,000, due to the increase in interest rates.

The  major  change  within  the  portfolio  occurred  in  the   mortgaged-backed
portfolio, which rose 30% from the end of 1998 to year-end 1999. $2.5 million of
this  growth  came from the  reinvestment  of proceeds  from the  maturities  of
obligations of U.S. government agencies.

The investment securities held to maturity ("HTM") portfolio rose to $33 million
at December 31, 1999 compared to $31.7  million a year earlier.  Mortgage-backed
securities declined 45.3% in 1999 due to prepayments.

At December 31, 1999, the Bank held structured notes with total book and related
market values of $2,750,000 and $2,736,000.  These  structured  notes consist of
notes  which  are  indexed  to  the  ten-year  U.S.   Treasury   interest  rate.
Accordingly, the value of these securities could fluctuate depending on interest
rate movements. The notes mature in March, 2000.

Also, at December 31, 1999, the Bank held callable U.S.  Government agency notes
with a carrying  value of $20 million,  of which $19 million was included in the
HTM  portfolio.  These  notes are  callable  at par at  various  dates from 2000
through  March,  2001.  These  callable   securities  reflect  gross  unrealized
depreciation of $1.6 million,  or more than half the  depreciation in the entire
investment  portfolio.  Favorable spreads provide  compensation for the interest
rate risk inherent in this investment due to the call feature.

Management  believes  that  holding  either  the  structured  notes or  callable
securities  will not have a significant  impact upon the financial  condition or
operations of the Corporation.

Information  pertaining to the average  weighted  yields of  investments in debt
securities   at  December   31,  1999  is   presented   below.   Maturities   of
mortgaged-backed  securities included with U.S. Government agencies are based on
the maturity of the final scheduled  payment.  Such  securities,  which comprise
most of the balances shown as maturing beyond five years,  generally amortize on
a monthly basis and are subject to prepayment.

<TABLE>
<CAPTION>
Investment Securities Available for Sale         Maturing After One  Maturing After Five
                               Maturing Within     Year But Within   Years But Within      Maturing After
                                  One Year           Five Years          Ten Years            Ten Years          Total      Total
Dollars in thousands           Amount    Yield     Amount     Yield     Amount   Yield      Amount     Yield    Amount      Yield
---------------------------- --------- --------- --------- ---------- --------- --------- --------- --------- ---------- ---------
<S>                           <C>         <C>    <C>           <C>    <C>         <C>     <C>           <C>   <C>            <C>
U.S. Treasury securities      $ 2,004     5.56%  $    595      5.98%  $      -       -%   $      -         -% $  2,599       5.65%
U.S. Government agencies            -        -            -       -          -       -         594      5.98       594       5.98
Mortgage-backed securities      1,977     6.08      4,127      5.66        123    9.13      19,683      5.96    25,910       5.94
Obligations of state
  political and subdivisions(1)     -        -          -         -          -       -       2,280      7.90     2,280       7.90
Other debt securities               -        -          -         -        756    7.03       2,914      7.53     3,670       7.43
---------------------------- --------- --------- --------- ---------- --------- --------- --------- --------- ---------- ---------
Total amortized cost          $ 3,981     5.82%   $ 4,722      5.70%   $   879    7.32%    $25,471      6.31%  $35,053       6.20%
---------------------------- --------- --------- --------- ---------- --------- --------- --------- --------- ---------- ---------
<FN>
(1) Includes $250,000 of nontax-exempt securities with a 7.60% yield.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Investment Securities Held to Maturity           Maturing After One   Maturing After Five
                               Maturing Within      Year But Within   Years But Within     Maturing After
                                  One Year           Five Years         Ten Years             Ten Years          Total      Total
Dollars in thousands           Amount    Yield     Amount     Yield     Amount   Yield      Amount     Yield    Amount      Yield
----------------------------- --------- --------- --------- ----------- --------- ------- ---------- --------- --------- ----------
<S>                           <C>         <C>    <C>           <C>     <C>        <C>      <C>          <C>    <C>           <C>
U.S. Government agencies(1)   $ 2,750     5.17%  $      -         -%   $ 6,190    6.31%    $14,264      6.56%  $23,204       6.33%
Obligations of state and
  political subdivisions          350     6.85      1,962      6.82          -       -       1,048      7.77     3,360       7.12
Mortgage-backed securities        898     6.37      1,534      6.00          -       -       1,490      7.33     3,922       6.60
Other debt securities               -     -             -      -         2,031    7.95         500      9.75     2,531       8.31
----------------------------- -------- --------  --------- ---------- --------- --------- --------- --------- ---------- ----------
Total amortized cost          $ 3,998     5.59%   $ 3,496      6.46%   $ 8,221    6.72%    $17,302      6.79%  $33,017       6.59%
----------------------------- -------- --------  --------- ---------- --------- --------- --------- --------- ---------- ----------
<FN>
(1) Includes  $17.5 million of U.S.  Government  agency  securities  callable in
2000, all of which mature after five years.
</FN>
</TABLE>

Average  yields are  computed by dividing  the annual  interest,  net of premium
amortization  and including  discount  accretion,  by the amortized cost of each
type of security  outstanding at December 31, 1999. Average yields on tax-exempt
obligations  of state and political  subdivisions  have been computed on a fully
taxable equivalent basis, using the statutory Federal income tax rate of 34%.

The average yield on the AFS  portfolio  increased to 6.20% at December 31, 1999
from 5.95% at December 31, 1998, while the yield on the HTM portfolio  increased
to 6.59% at  December  31, 1999 from 6.14% at December  31,  1998.  72.7% of the
total portfolio matures after ten years, compared to 56.4% in 1998.


<TABLE>
<CAPTION>
Consolidated Average Balance Sheet with Related Interest and Rates

                                                              1999                                      1998
-------------------------------------------------- ---------- ------------ -------------- ------ ---------- ---------- -----------
                                                    Average                   Average             Average               Average
Tax equivalent basis; dollars in thousands          Balance    Interest        Rate               Balance   Interest      Rate
-------------------------------------------------- ---------- ------------ -------------- ------ ---------- ---------- -----------
<S>                                                 <C>       <C>             <C>                  <C>       <C>            <C
Assets
Interest earning assets:
  Federal funds sold and securities purchased
    under agreements to resell                      $  7,981  $     396       4.97%                $ 12,195  $     653      5.35%
  Interest-bearing deposits with banks                 1,771         76       4.27                       77          4      5.10
  Investment securities:
    Taxable 1                                         62,048      3,770       6.08                   55,401      3,390      6.12
    Tax-exempt                                         4,526        326       7.19                    4,761        342      7.20
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
    Total investment securities                       66,574      4,096       6.15                   60,162      3,732      6.20
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------

Loans 2,3:
    Commercial                                        25,138      1,889       7.51                   21,234      1,702      8.01
    Real estate                                       47,650      4,175       8.76                   37,224      3,502      9.41
    Installment                                          902         94      10.40                      772         78     10.14
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
    Total loans                                       73,690      6,158       8.36                   59,230      5,282      8.92
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
    Total interest earning assets                    150,016     10,726       7.15                  131,664      9,671      7.35
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Noninterest earning assets:
  Cash and due from banks                              4,451                                          3,670
  Gross unrealized loss on investment
    securities available for sale                       (483)                                           (18)
  Reserve for possible loan losses                    (1,336)                                        (1,104)
  Other assets                                         7,117                                          6,686
-------------------------------------------------- ---------- --------------- -------- ---------- ---------- ---------- -----------
  Total noninterest earning assets                     9,749                                          9,234
-------------------------------------------------- ---------- --------------- -------- ---------- ---------- ---------- -----------
Total assets                                        $159,765                                       $140,898
-------------------------------------------------- ---------- --------------- -------- ---------- ---------- ---------- -----------
Liabilities and stockholders' equity
Interest bearing liabilities:
  Savings deposits 4                                $ 40,597        791       1.95                 $ 34,619        728      2.10
  Time deposits 5                                     68,950      3,453       5.01                   61,887      3,047      4.92
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
  Total interest bearing deposits                    109,547      4,244       3.87                   96,506      3,775      3.91
  Short-term borrowings                                2,789        133       4.76                    3,068        159      5.19
  Long-term debt                                      15,989        899       5.62                   11,725        664      5.66
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
  Total interest bearing liabilities                 128,325      5,276       4.11                  111,299      4,598      4.13
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Noninterest bearing liabilities:
  Demand deposits                                     20,844                                         18,230
  Other liabilities                                      839                                          1,302
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
  Total noninterest bearing liabilities               21,683                                         19,532
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Stockholders' equity                                   9,757                                         10,067
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Total liabilities and stockholders' equity          $159,765                                       $140,898
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Net interest income (tax equivalent basis)                        5,450       3.04                               5,073      3.21
Tax equivalent basis adjustments 6                                 (111)                                          (116)
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Net interest income                                            $  5,339                                       $  4,957
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Average rate paid to fund interest earning assets                             3.52                                          3.49
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
Net interest income as a percentage of
   interest earning assets (tax equivalent basis)                             3.63%                                         3.85%
-------------------------------------------------- ---------- --------------- ------------ ------ ---------- ---------- -----------
<FN>
1 Includes  investment  securities  available  for sale and held to  maturity at amortized cost
2 Includes  nonperforming  loans 3 Includes loan fees of $149,000 and $151,000 in 1999 and 1998, respectively
4  Includes noninterest bearing deposits maintained by a state governmental agency of $369,000 in 1999 and $469,000 in 1998
5  Includes noninterest bearing deposits maintained by corporations and U.S. governmental agencies of $1,582,000 in 1999 and
   $5,920,000 in 1998
6  The tax equivalent adjustment was computed assuming a 34% statutory federal income tax rate in 1999 and 1998
</FN>
</TABLE>

The table below set forth, on a fully taxable basis, an analysis of the increase
(decrease)  in net interest  income  resulting  from the specific  components of
income and expenses  due to changes in volume and rate.  Because of the numerous
simultaneous  balance and rate changes, it is not possible to precisely allocate
such changes between balances and rates. Therefore,  for purposes of this table,
changes  which are not due solely to balance and rate  changes are  allocated to
rate

<TABLE>
<CAPTION>
                                                      1999 Net Interest Income Increase         1998 Net Interest Income Increase
                                                       (Decrease) from 1998 due to                (Decrease) from 1997 due to
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
In thousands                                           Volume     Rate      Total                 Volume    Rate       Total
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
<S>                                                       <C>       <C>        <C>                  <C>       <C>       <C>
Interest income
Loans:
  Commercial                                              $  313    $  (126)   $  187               $   158   $  (116)  $     42
  Real estate                                                981       (308)      673                   (43)       31        (12)
  Installment                                                 13          3        16                     4         1          5
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
Total loans                                                1,307       (431)      876                   119       (84)        35
Taxable investment securities                                407        (27)      380                  (227)     (101)      (328)
Tax-exempt investment securities                             (16)         -       (16)                   67        86        153
Federal funds sold and securities
  purchased under agreements to resell                      (225)       (32)     (257)                  224       (10)       214
Other short-term investments                                   -          -         -                   (39)        -        (39)
Interest-bearing deposits with banks                          86        (14)       72                     1         -          1
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
Total interest income                                      1,559       (504)    1,055                   145      (109)        36
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
Interest expense
Savings deposits                                            (126)        63       (63)                  (62)        -        (62)
Time deposits                                               (347)       (59)     (406)                  432      (218)       214
Short-term borrowings                                         14         12        26                    39         4         43
Long-term debt                                              (241)         6      (235)                 (482)       19       (463)
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
Total interest expense                                      (700)        22      (678)                  (73)     (195)      (268)
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
Net interest income                                       $  859     $ (482)   $  377               $    72   $  (304)   $  (232)
------------------------------------------------------ ---------- --------- ---------- ---------- --------- ---------- ----------
</TABLE>

Loans

Loans rose 15.4% to $82.4 million at December 31, 1999 compared to $71.4 million
a year earlier.  The increase  resulted from a 32.8% increase in the real estate
loan portfolio, most of which was commercial real estate.

Loans held for sale  decreased to $405,000  million at December 31, 1999 from $2
million a year earlier.  Loans sold  totalled  $571,000 in 1999 compared to $1.1
million  in 1998,  while  gains on loan sales  declined  to $21,000 in 1999 from
$64,000  in  1998.  Additionally,  $2.3  million  of loans  held  for sale  were
transferred  to the loan  portfolio  at the lower of cost or fair  market  value
reflecting  management's  decision  to  increase  the  Bank's  residential  loan
portfolio.

At December 31, 1999, loans to churches totalled $11 million, representing 13.3%
of total loans  outstanding and are included with real estate loans.  Management
does not believe that this loan  concentration  exposes the  Corporation  to any
unusual degree of risk.

The Bank generally secures its loans by obtaining  primarily first liens on real
estate,  both  residential  and  commercial,  and does  virtually no asset-based
financing.  Without  additional  side  collateral,  the Bank generally  requires
maximum  loan-to-value ratios of 70% for loan transactions secured by commercial
real estate.

The Bank's  primary  market area  consists of northern New Jersey,  particularly
within the Newark area.  Although Newark is undergoing a major  renovation,  the
city continues to experience a high rate of unemployment.

While  management  believes that its loan  portfolio is well secured and able to
withstand a downturn  in economic  conditions,  its  effects  will be  carefully
considered in making credit decisions in 2000.

Maturities and interest sensitivities of loans

Information  pertaining to maturities and the sensitivity to changes in interest
rates of loans at December 31, 1999 is presented below.


                                              One Year
                                 Due in One    Through    Due After
In thousands                    Year or Less  Five Years  Five Years    Total
----------------                 ------------- ---------- ---------- -----------
Commercial .................      $ 4,576      $ 6,965      $ 6,146      $17,687
Real estate:
  Construction .............        2,356         --           --          2,356
  Mortgage .................        2,860       20,607       38,113       61,580
Installment ................          188          178          457          823
----------------------------      -------      -------      -------      -------
Total ......................      $ 9,980      $27,750      $44,716      $82,446
----------------------------      -------      -------      -------      -------
Loans at fixed
  Interest rates ...........      $ 8,622      $12,057      $13,797      $34,476
Loans at variable
  Interest rates ...........        1,358       15,693       30,919       47,970
----------------------------      -------      -------      -------      -------
Total ......................      $ 9,980      $27,750      $44,716      $82,446
----------------------------      -------      -------      -------      -------

Summary of loan loss experience

Changes in the reserve for loan losses are summarized below.
Dollars in thousands                                    1999           1998
------------------------------------------------   -----------    ------------
Balance, January 1 .............................       $ 1,415         $   825
------------------------------------------------       -------         -------
Charge-offs:
  Commercial loans .............................           411             480
  Real estate loans ............................            68              83
  Installment loans ............................            24              16
------------------------------------------------       -------         -------
Total ..........................................           503             579
------------------------------------------------       -------         -------
Recoveries:
  Commercial loans .............................           137              40
  Real estate loans ............................             4             111
  Installment loans ............................            16               2
------------------------------------------------       -------         -------
Total ..........................................           157             153
------------------------------------------------       -------         -------
Net charge-offs ................................          (346)           (426)
Provision for  loan
  losses charged to operations .................           906           1,016
------------------------------------------------       -------         -------
Balance, December 31 ...........................       $ 1,975         $ 1,415
------------------------------------------------       -------         -------
Net charge-offs as a
  percentage of average loans ..................           .47%            .72%
Reserve for loan losses as a
  percentage of loans ..........................          2.40            1.98
Reserve for loan losses as a
  percentage of nonperforming loans ............         71.40           78.51
------------------------------------------------       -------         -------

The reserve for loan losses is maintained at a level determined by management to
be adequate to provide for inherent losses in the loan portfolio. The reserve is
increased  by  provisions   charged  to  operations   and   recoveries  of  loan
charge-offs.  The  reserve  is  based  on  management's  evaluation  of the loan
portfolio  and  several  other  factors,  including  past loan loss  experience,
general  business  and  economic  conditions,  concentration  of credit  and the
possibility  that there may be inherent  losses in the  portfolio  which  cannot
currently be identified.

A  standardized  method is used to assess the  adequacy  of the  reserve  and to
identify the risks  inherent in the loan  portfolio.  This process  includes the
ongoing  assessment of  individual  borrowers'  financial  condition and payment
records and gives  consideration to areas of exposure such as conditions  within
the borrowers' industry, the value of underlying collateral, and the composition
of the performing and non-performing loan portfolios.

Specific  allocations are identified by loan category and allocated according to
prior charge-off  history as well as future performance  projections.  All loans
are graded and  incorporated  in the process of  assessing  the  adequacy of the
reserve.  The reserve is maintained at a level  considered  sufficient to absorb
estimated  losses in the loan portfolio,  and reserves not allocated to specific
loan  categories are considered  unallocated and evaluated based on management's
assessment of the portfolio's risk profile.

The reserve  represented  2.40% of total loans at December 31, 1999  compared to
1.98% a year  earlier.  Although  the  provision  for loan losses  decreased  by
$110,000 in 1999, it remained  relatively  high in order to maintain the reserve
at a level to provide for the increase in nonaccrual loans.

Allocation of the reserve for loan losses

The reserve for loan losses has been allocated based on  management's  estimates
of the risk elements within the loan categories set forth below at December 31:

                           1999                  1998
-------------------- -------------------- ---------------------
                                             Percentage            Percentage
                                               of Loan                of Loan
                                              Category               Category
                                              to Gross               to Gross
Dollars in thousands              Amount         Loans    Amount        Loans
------------------------------ ---------     ---------  --------    ----------
Commercial ...................    $1,492        21.41%    $  990        31.51%
Real estate ..................       386        77.60        408        67.32
Installment ..................        17          .99         15         1.17
Unallocated ..................        80        --             2         --
------------------------------    ------      -------      ------      ------
Total ........................    $1,975       100.00%    $1,415       100.00%
------------------------------    ------      ------      ------       ------

Most of the reserves at December  31, 1999 and December 31, 1998 were  allocated
to the commercial loan portfolio,  reflecting the higher levels of nonperforming
commercial loans at both dates.  Reserve allocations are subject to change based
on the  levels of  nonperforming  loans in each  segment of the  portfolio.  The
minimum  levels of reserves by internal  loan  classification  are .25% for pass
loans, 1% for special mention loans, 5% for substandard  loans, 50% for doubtful
loans,  and 100%  for  loss  loans.  These  minimum  reserve  levels  have  been
consistently  applied for all reported periods. The unallocated reserve is based
upon  management's  evaluation  of the  underlying  inherent  risk  in the  loan
portfolio  and totalled  $80,000 at December 31, 1999  compared to $2,000 a year
earlier.

Nonperforming assets

Information  pertaining  to  nonperforming  assets at December 31 is  summarized
below:

In thousands                                1999         1998
------------------------------------ ------------ -------------
Nonperforming loans
  Commercial                              $2,093       $1,148
  Real estate                                668          647
  Installment                                  5            1
------------------------------------ ------------ -------------
Total nonperforming loans                  2,766        1,796
Other real estate owned                      698          590
------------------------------------ ------------ -------------
Total                                     $3,464       $2,386
------------------------------------ ------------ -------------

Nonperforming  commercial  loans at December 31, 1999  includes two loans to one
commercial  borrower  totalling  $1.3  million that were  considered  total debt
restructurings at December 31, 1998.

OREO is carried  net of a $13,000  reserve at  December  31, 1999 and $35,000 in
1998.

Deposits

Total deposits rose to $139.8 million at December 31, 1999 from $137.9 million a
year earlier,  while average deposits increased 13.7%, to $130.4 million in 1999
from $114.7 million in 1998. Year-end 1998 included a $15.9 million nonrecurring
municipal savings deposit, which was withdrawn shortly after year-end.

Saving  deposits  declined  to $34.7  million at  December  31,  1999 from $57.5
million a year earlier due to the aforementioned  nonrecurring deposit.  Average
savings  accounts  rose 17.3% in 1999 due to higher Super NOW account  balances.
Regular savings and money-market  account growth was flat. The average rate paid
on savings accounts declined by 15 basis points.

Time deposits averaged $69 million in 1999, 11.4% more than in 1998,  reflecting
an expansion of the Bank's  municipal  account  relationships.  The average rate
paid rose nine basis points  reflecting the higher costs  associated  with these
relationships.

The Bank's  deposit  levels may change  significantly  on a daily basis  because
deposit accounts  maintained by  municipalities  represent a significant part of
the Bank's deposits and are more volatile than commercial or retail deposits.

These municipal and U.S. Government accounts represent a substantial part of the
Bank's business,  tend to have high balance  relationships and comprised most of
the Bank's accounts with balances of $100,000 or more at December 31, 1999.

While  the  collateral  maintenance  requirements  associated  with  the  Bank's
municipal and U.S.  Government account  relationships might limit the ability to
readily  dispose of investment  securities used as such  collateral,  management
does not foresee any need for such disposal,  and in the event of the withdrawal
of any of these deposits, these securities are readily marketable.

Certain  corporations and  governmental  agencies  maintain  noninterest-bearing
savings  accounts  with the Bank as  compensation  for  services  performed.  At
December 31, 1999, such balances totalled $369,000.

Short-term borrowings

Short-term  borrowings  rose to $6 million at  December  31,  1999  compared  to
$18,000 a year  earlier due to a higher U.S.  Treasury  tax and loan note option
account  balance.  These  balances  are  subject  to  daily  redemption  and can
fluctuate significantly.  Average short-term borrowings declined to $2.8 million
in 1999 from  $3.1 in 1998  because  of lower  U.S.  Treasury  tax and loan note
option account balances.

Long-term debt

Long-term  debt rose $476,000 in 1999 due to the issuance of a $500,000  capital
note during 1999.

Results of operations - 1999 compared with 1998
Net interest income is the principal  source of the  Corporation's  earnings and
represents  the amounts by which the interest and fees earned on loans and other
interest earning assets exceeds the interest paid on the funding sources used to
finance those assets.  An analysis of the  components of net interest  income is
facilitated when the income from tax-exempt investment securities is adjusted to
a taxable equivalent basis, placing tax-exempt assets on a comparable basis with
taxable interest earning assets.

On a fully taxable  equivalent  ("FTE") basis, net interest income rose 7.8%, to
$5.5 million in 1999 from $5.1  million in 1998,  while the related net interest
margin decreased to 3.63% from 3.85%. Average interest earning assets rose 13.9%
in 1999, with most of this growth occurring in loans. The higher interest income
levels were in part offset by increased  interest expense resulting from both an
increase in interest bearing liabilities and a higher cost of funds.

Interest  income  on a FTE  basis  rose  10.9%  in 1999.  Most of this  increase
resulted  from higher  income from the loan  portfolio.  A lower  interest  rate
environment coupled with competitive  pressures resulted in a lower yield during
the year, which declined to 7.15% from 7.35%.  Significant fluctuations occurred
within the earning  asset  categories  as  proceeds  from asset  maturities  and
payments and deposit growth were allocated to longer-term higher earning assets.

Interest  income  from  Federal  funds sold  decreased  by 39.4%,  reflecting  a
reduction  in  the  related   average  asset  balance.   Interest   income  from
interest-bearing deposits with banks was higher due to higher volumes.

Income interest on taxable investment securities rose $380,000, or 11.2% in 1999
due to higher asset volume,  offset by a slight reduction in the average rate by
four basis points. Tax-exempt income was relatively unchanged as was the average
rate, while the related average asset balance declined slightly.

The  percentage  increase in interest  income  from loans  resulted  from volume
increases  in all areas of the  portfolio,  as the average  rate  declined by 56
basis points.  The commercial loan portfolio  averaged 18.4% more in 1999, while
the average real estate loan  portfolio rose 28%. The average  installment  loan
portfolio grew 16.8%,  while the average rate also increased,  reflecting growth
in a new secured credit card product.

Overall,  the yield on earning  assets  declined 20 basis points,  to 7.15% from
7.35% due principally to the lower rate environment.

Interest  expense totalled $5.3 million in 1999, an increase of 14.7% from 1998.
This increase resulted  primarily from higher  interest-bearing  deposit levels.
The average  rate paid on  interest  bearing  liabilities  declined by two basis
points,  to 4.11% compared to 4.13%,  while the overall cost of funding interest
earning  assets  rose three  basis  points.  Interest  expense on time  deposits
increased  13.3% due to a  $7.1million  increase in average time  deposits.  The
average rate paid on time  deposits  rose nine basis points due to the high cost
of municipal deposits.

Interest expense on long-term debt rose $235,000 in 1999 due primarily to higher
levels of FHLB advances and the issuance of a $500,000  capital note,  while the
average rate paid declined by four basis points.

Other  operating  income rose 15% to $1,492,000 in 1999 from $1,297,000 in 1998.
The primary reasons for the increase were higher loan  syndication  fees,  which
rose 20.8% to $308,000  from  $255,000,  $48,000 in loan  referral fees received
during 1999 as a result of a new residential loan referral  relationship  with a
third-party lender and $52,000 received from the U.S. Treasury  Department as an
award for  generating  loans in certain  lower-income  areas made under the Bank
Enterprise  Award program.  These increases were partially offset by lower money
order fees due to the  discontinuance of an agency  relationship with a customer
of the Bank who sold the Bank's money orders.

Other operating  expenses,  which include  expenses other than interest,  income
taxes and the provision  for loan losses,  totalled $5.3 million in 1999, a 6.6%
increase compared to 1998. Higher salaries were the primary  contributing factor
to the increase.

Salary expense rose 6.7% due primarily to normal recurring merit increases,  the
operation  of a branch  opened in May,  1998 for a full year and the addition of
staff.  Employee benefits rose 9.7% due to the higher cost of providing employee
health insurance.

Occupancy and equipment  expense rose 11.5% due to the expenses of operating the
aforementioned  new  branch,  for  a  full  year,  along  with  increased  costs
associated  with the  acquisition of a building at another branch location which
was previously being leased.

Other  expenses  rose  $73,000,   or  4.5%  in  1999  due  primarily  to  higher
professional  expenses,  which increased to $319,000 from $282,000 due primarily
to work performed during 1999 in connection with a legal claim.

Income tax expense as a percentage of pre-tax  income was 32.4% in 1999 compared
to 5.4% in 1998. The increase  resulted due to a state tax loss in 1998 that did
not recur in 1999.

Liquidity

The  liquidity  position  of the  Corporation  is  dependent  on the  successful
management of its assets and liabilities so as to meet the needs of both deposit
and credit  customers.  Liquidity needs arise primarily to accommodate  possible
deposit  outflows and to meet borrowers'  requests for loans.  Such needs can be
satisfied by investment and loan maturities and payments, along with the ability
to raise short-term funds from external sources.

The Bank depends  primarily  on deposits as a source of funds and also  provides
for a portion  of its  funding  needs  through  short-term  borrowings,  such as
Federal  Funds  purchased,  securities  sold  under  repurchase  agreements  and
borrowings  under the U.S.  Treasury tax and loan note option program.  The Bank
also utilizes the Federal Home Loan Bank for longer-term funding purposes.

The  major   contribution   during  1999  from   operating   activities  to  the
Corporation's  liquidity  came from  proceeds  from sales of loans held for sale
totalling $592,000,  while loans originated for sale, amounting to $1.6 million,
represented the primary use of cash.

Net cash used in investing  activities  was  primarily  used for the purchase of
investment  securities  held to maturity,  which totalled  $21.2 million,  while
sources of cash provided by investing  activities  were derived  primarily  from
proceeds from maturities, principal payments and early redemptions of investment
securities available for sale, amounting to $16.8 million.

The primary sources of funds from financing activities resulted from an increase
in deposits and short-term borrowings of $6 million.

Effects of inflation

Inflation, as measured by the CPI, rose to 2.7% in 1999 compared to 1.6% in 1998
and 2% in 1997.

The asset and liability  structure of the Corporation and subsidiary bank differ
from that of an industrial  company since its assets and  liabilities  fluctuate
over time based upon monetary policies and changes in interest rates. The growth
in earning  assets,  regardless of the effects of  inflation,  will increase net
income if the  Corporation  is able to  maintain a  consistent  interest  spread
between earning assets and supporting  liabilities.  In an inflationary  period,
the  purchasing  power of  these  net  monetary  assets  necessarily  decreases.
However,  changes in interest  rates may have a more  significant  impact on the
Corporation's  performance than inflation.  While interest rates are affected by
inflation,  they do not necessarily  move in the same direction,  or in the same
magnitude as the prices of other goods and services.

The impact of inflation on the future  operations of the Corporation  should not
be viewed without  consideration of other financial and economic indicators,  as
well as historical  financial  statements and the preceding discussion regarding
the Corporation's liquidity and asset and liability management.

Interest rate sensitivity

The management of interest rate risk is also important to the  profitability  of
the Corporation. Interest rate risk arises when an earning asset matures or when
its interest rate changes in a time period  different  from that of a supporting
interest bearing  liability,  or when an interest bearing  liability  matures or
when its  interest  rate  changes  in a time  period  different  from that of an
earning asset that it supports.  While the  Corporation  does not match specific
assets and liabilities,  total earning assets and interest  bearing  liabilities
are  grouped to  determine  the  overall  interest  rate risk within a number of
specific time frames.

It is the responsibility of the Asset/Liability Management Committee ("ALCO") to
monitor and oversee the activities of interest rate  sensitivity  management and
the protection of net interest income from fluctuations in interest rates.

Interest  sensitivity  analysis  attempts to measure the  responsiveness  of net
interest  income to changes in interest  rate  levels.  The  difference  between
interest sensitive assets and interest  sensitive  liabilities is referred to as
interest sensitive gap. At any given point in time, the Corporation may be in an
asset-sensitive  position,  whereby  its  interest-sensitive  assets  exceed its
interest-sensitive liabilities or in a liability-sensitive position, whereby its
interest-sensitive  liabilities exceed its interest-sensitive  assets, depending
on management's judgment as to projected interest rate trends.

One measure of interest rate risk is the  interest-sensitivity  analysis,  which
details the repricing  differences for assets and liabilities for given periods.
The primary  limitation of this  analysis is that it is a static (i.e.,  as of a
specific  point in time)  measurement  which does not  capture  risk that varies
nonproportionally  with changes in interest rates.  Because of this  limitation,
the  Corporation  uses a  simulation  model as its primary  method of  measuring
interest rate risk.  This model,  because of its dynamic  nature,  forecasts the
effects of  different  patterns of rate  movements on the  Corporation's  mix of
interest sensitive assets and liabilities.

The following  table  presents the financial  instruments  that are sensitive to
changes  in  interest  rates,   categorized  by  expected   maturity,   and  the
instruments' fair values at December 31, 1999. Market risk sensitive instruments
are generally defined as on-and-off balance sheet financial instruments.
<TABLE>
<CAPTION>

Interest Rate Sensitivity Analysis

                                                                    Expected Maturity
                                            ---------- ---------- ---------- --------- ---------- ---------- ----------
                                     Average
                                 Interest                                                                      Total      Fair
In thousands                     Rate (1)     2000       2001       2002       2003      2004     Thereafter  Balance     Value
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
<S>                                  <C>       <C>     <C>        <C>        <C>       <C>        <C>        <C>         <C>
Interest sensitive assets
Federal funds sold                   5.34%     $5,400  $       -  $       -  $       - $       -  $       -  $   5,400   $  5,400
Interest bearing deposits
    with banks                       4.56           -      2,286          -          -         -          -      2,286      2,211
Investment securities available
    for sale:
  U.S. Treasury securities           5.11       2,007          -          -        595         -          -      2,602      2,588
  Obligations of U.S. government
    agencies                         6.00       1,974          -          -      1,114     3,013     20,400     26,501     25,627
  Obligations of state and
political subdivisions               8.08           -          -          -          -         -      2,280      2,280      2,211
  Other debt securities              7.72           -          -          -          -       756      2,914      3,670      3,507
  Equity securities                    -            -          -          -                    -      1,534      1,534      1,525
Investment securities held to
    maturity:
  Obligations of U.S. government
    agencies                         6.36       3,648        309          -        605       620     21,944     27,126     25,391
  Obligations of state and
political subdivisions               6.53         350      1,562        400-         -         -      1,048      3,360      3,327
Other debt securities                8.31           -          -          -          -         -      2,531      2,531      2,333
Loans net of unearned income:
  Commercial                         8.34       4,576      1,500      3,200      1,236     1,029      6,146     17,687     16,278
  Real estate                        8.77       5,216      3,471      3,501      6,893     6,742     38,113     63,936     63,453
  Installment                        9.81         188         80         80         14         4        457        823        808
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
Loans held for sale                  8.50         405          -          -          -         -          -        405        405
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
Total interest sensitive assets      7.54%    $23,758   $  9,208   $  7,181   $ 10,457   $15,192    $97,915   $159,736   $154,658
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
Interest sensitive liabilities
Deposits:
  SuperNOW accounts                  1.68%    $11,518  $       -  $       -  $       - $       -  $       -   $ 11,518   $ 11,518
  Money market accounts              4.02       5,937          -          -          -         -          -      5,937      5,937
  Regular savings                    1.97           -          -          -          -         -     17,264     17,264     17,264
  Time - less than $100,000          5.45      13,163        371        370         31    14,597      3,320     26,076     24,929
  Time -  $100,000 or more           5.34      57,526        156        311        106         -        318     58,417     58,303
Short-term borrowings                2.75       6,000          -          -          -         -          -      6,000      6,000
Long-term debt                       5.62       2,000        150      2,225        300         -     11,074     16,225     15,003
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
Total interest sensitive
liabilities                          4.52%    $94,357       $677   $  2,906  $     437   $14,597    $31,976   $141,437   $138,954
-------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ----------
<FN>
(1) Tax equivalent basis; excludes equity securities.
</FN>
</TABLE>

Various  assumptions  are used to estimate fair values and expected  maturities.
The actual maturities of these  instruments  could vary  substantially if future
prepayments differ from estimated experience.

Capital

The following table presents the consolidated and bank-only  capital  components
and  related  ratios as  calculated  under  regulatory  accounting  practice  at
December 31:

                            Consolidated        Bank Only
---------------------------------------------------------
                             December 31,      December 31,
Dollars in thousands         1999     1998     1999     1998
--------------------------- -------- -------- -------- --------
Total stockholders' equity  $ 9,026  $10,123  $10,083  $10,597
Net unrealized (gain) loss
on investment securities
    available for sale          679      (25)     664        1
Disallowed intangibles          (37)     (96)     (36)     (46)
--------------------------- -------- -------- -------- --------
Tier 1 capital                9,668   10,002   10,711   10,552
--------------------------- -------- -------- -------- --------
Qualifying long-term debt     2,225    1,749      249      249
Reserve for loan
    losses                    1,231    1,066    1,222    1,058
--------------------------- -------- -------- -------- --------
Tier 2 capital                3,456    2,815    1,471    1,307
--------------------------- -------- -------- -------- --------
Total capital               $13,124  $12,817  $12,182  $11,859
--------------------------- -------- -------- -------- --------
Risk-adjusted assets        $97,736  $84,942  $97,038  $84,263
Total assets                172,496  164,901  171,625  163,867
--------------------------- -------- -------- -------- --------
Risk-based capital ratios:
  Tier 1 capital to risk-
    adjusted assets            9.89%   11.83%   11.04%   12.52%
  Regulatory minimum           4.00     4.00     4.00     4.00
  Total capital to risk-
    adjusted assets           13.43    15.09    12.55    14.07
  Regulatory minimum           8.00     8.00     8.00     8.00
Leverage ratio                 5.68     7.02     6.32     7.42
Total stockholders' equity
to total assets                5.23     6.14     5.87     6.47
--------------------------- -------- -------- -------- --------

Results of operations - 1998 compared with 1997
Net interest  income on a FTE basis decreased 4.4%, to $5.1 million in 1998 from
$5.3 million in 1997,  while the related net interest  margin  declined to 3.85%
from 4.13%.  Higher  interest  income  levels were more than offset by increased
interest expense resulting from both an increase in interest bearing liabilities
and a higher cost of funds. Related earnings per common share on a diluted basis
decreased to $1.22 from $8.11.

While income from loans rose due to higher  commercial loan volume,  lower rates
virtually  eliminated the year-to-year  income  increase.  The yield on the loan
portfolio  declined  to 8.92%  from 9.08% due to three  reductions  in the prime
lending rate in 1998 along with the impact of price competition.

Interest income from  shorter-term  earning assets increased 48.7% due to higher
volume, which averaged 38.3% more in 1998 than in 1997.

Overall,  the yield on earning  assets  declined 15 basis points,  to 7.35% from
7.50% due principally to the lower rate environment.

Interest  expense on  long-term  debt rose to $664,000 in 1998 from  $201,000 in
1997,  due to FHLB advances  incurred  during 1998,  while the average rate paid
declined  by 17  basis  points.  The  average  rate  paid  on  interest  bearing
liabilities rose 21 basis points, to 4.13% compared to 3.92%,  while the overall
cost of funding interest earning assets rose 12 basis points.

Other operating  income rose 8.2% to $1,297,000 in 1998 from $1,199,000 in 1997.
The primary  reasons for the increase were higher  service  charges,  which rose
10.6% and higher income from non-customer  transaction charges,  which increased
from $18,000 to $89,000.  These  increases were partially  offset by lower money
order fees due to the  discontinuance of an agency  relationship with a customer
of the Bank who sold the Bank's money orders.

Other operating  expenses,  which include  expenses other than interest,  income
taxes and the provision  for possible loan losses,  totalled $5 million in 1998,
an 8% increase  compared  to 1997.  The primary  reasons for the  increase  were
primarily higher loan collection costs and legal expenses incurred in connection
with the aforementioned overdraft.

Salaries and other employee  benefits remained  virtually  unchanged in 1998, as
did  equipment  expense.  Occupancy  expense  rose 10.7% due to the  expenses of
operating a new branch.

Income tax expense as a percentage  of pre-tax  income was 5.4% in 1998 compared
to 35.3% in 1997.  The decrease  resulted due to higher tax exempt  income and a
state tax loss in 1998.

Year 2000

The Bank completed its Year 2000 ("Y2K")  upgrades to its computer  hardware and
software systems, resulting in a smooth transition for its computer systems over
the 1999 year-end.  The cost of implementing this Y2K compliance program related
to system modifications was approximately  $243,000,  most of which were capital
costs.

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Balance Sheet

                                                              December 31,
                                                    ============================
Dollars in thousands, except per share data                 1999        1998
===============================================================================
Assets
Cash and due from banks (Note 2) ...................    $   6,209     $  20,467
Federal funds sold (Note 3) ........................        5,400         1,500
Interest-bearing deposits with banks ...............        2,286            25
Investment securities available for
  sale (Note 4) ....................................       35,458        32,254
Investment securities held to
  maturity (Market value of $31,051
  in 1999 and $31,580 in 1998) (Note 5) ............       33,017        31,712
Loans held for sale ................................          405         2,026
Loans (Note 6) .....................................       82,446        71,440
Less: Reserve for loan losses (Note 7) .............        1,975         1,415
                                                        ---------     ---------
Net loans ..........................................       80,471        70,025
                                                        ---------     ---------
Premises and equipment (Note 8) ....................        3,709         3,308
Accrued interest receivable ........................        1,295         1,110
Other real estate owned ............................          698           590
Other assets  (Notes 13 and 14) ....................        3,548         1,884
                                                        ---------     ---------
Total assets .......................................    $ 172,496     $ 164,901
                                                        =========     =========
Liabilities and Stockholders' Equity

Deposits: (Notes 2, 4, 5, and 9)
  Demand ...........................................    $  20,625     $  16,919
  Savings ..........................................       34,719        57,523
  Time .............................................       84,493        63,501
                                                        ---------     ---------
Total deposits .....................................      139,837       137,943
Short-term borrowings (Notes 6 and 10) .............        6,000            18
Accrued expenses and other liabilities .............        1,408         1,068
Long-term debt (Note 11) ...........................       16,225        15,749
                                                        ---------     ---------
Total liabilities ..................................      163,470       154,778

Commitments and contingencies (Note 20)

Stockholders' equity (Notes 16 and 23):
  Preferred stock, no par value: Authorized
    100,000 shares (Note 15); Series A ,
    issued and outstanding 8 shares in 1999
    and 1998 .......................................          200           200
    Series B , issued and outstanding 20
      shares in 1998 ...............................         --             500
    Series C , issued and outstanding 108
      shares in 1999 and 1998 ......................           27            27
    Series D , issued and outstanding 3,280
      shares in 1999 and 1998 ......................          820           820
  Common stock, par value $10: Authorized
    400,000 shares; 120,130 shares issued in
    1999 and 118,780 shares issued in 1998,
    119,571 shares outstanding in 1999 and
    118,821 shares outstanding in 1998 .............        1,201         1,188
  Surplus ..........................................          950           938
  Retained earnings ................................        6,524         6,442
  Accumulated other comprehensive (loss) income ....         (679)           25
  Treasury stock, at cost - 559 shares in
    1999 and 1998 ..................................          (17)          (17)
                                                        ---------     ---------
Total stockholders' equity .........................        9,026        10,123
                                                        ---------     ---------
Total liabilities and stockholders' equity .........    $ 172,496     $ 164,901
                                                        =========     =========
See accompanying notes to consolidated financial statements.


CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Income
                                                     Year Ended December 31,
                                            ====================================
Dollars in thousands, except per share data       1999        1998        1997
================================================================================
Interest income
Interest and fees on loans ................   $   6,158   $   5,282    $   5,247
Interest on Federal funds sold and
  securities purchased under
  agreements to resell ....................         396         653          439
Interest on other short-term investments ..        --          --             39
Interest on deposits with banks ...........          76           4            3
Interest and dividends on investment
  securities:
  Taxable .................................       3,770       3,390        3,718
  Tax-exempt ..............................         215         226          125
                                              ---------   ---------    ---------
Total interest income .....................      10,615       9,555        9,571
                                              ---------   ---------    ---------
Interest expense
Interest on deposits (Note 9) .............       4,244       3,775        3,927
Interest on short-term borrowings .........         133         159          202
Interest on long-term debt ................         899         664          201
                                              ---------   ---------    ---------
Total interest expense ....................       5,276       4,598        4,330
                                              ---------   ---------    ---------
Net interest income .......................       5,339       4,957        5,241
Provision for loan losses (Note 7) ........         906       1,016          159
                                              ---------   ---------    ---------
Net interest income after provision
  for loan losses .........................       4,433       3,941        5,082
                                              ---------   ---------    ---------
Other operating income
Service charges on deposit accounts .......         660         668          604
Other income (Note 12) ....................         815         642          577
Net gains (losses) on sales of
  investment securities (Notes 4 and 5) ...          17         (13)          18
                                              ---------   ---------    ---------
Total other operating income ..............       1,492       1,297        1,199
                                              ---------   ---------    ---------
Other operating expenses
Salaries and other employee
  benefits (Note 14) ......................       2,820       2,644        2,615
Occupancy expense (Note 8) ................         394         356          319
Equipment expense (Note 8) ................         433         386          382
Other expenses (Note 12) ..................       1,683       1,613        1,314
                                              ---------   ---------    ---------
Total other operating expenses ............       5,330       4,999        4,630
                                              ---------   ---------    ---------
Income before income tax expense ..........         595         239        1,651
Income tax expense (Note 13) ..............         193          13          582
                                              ---------   ---------    ---------
Net income ................................   $     402   $     226    $   1,069
                                              =========   =========    =========
Net income per common share (Note 17)
Basic .....................................   $    2.48   $    1.25    $    8.98
Diluted ...................................        2.34        1.22         8.11
                                              =========   =========    =========
Basic average common shares
  outstanding .............................     118,902     115,189      114,141
Diluted average common shares
  outstanding .............................     131,402     129,039      127,991
                                              =========   =========    =========
See accompanying notes to consolidated financial statements.

<TABLE>
<CAPTION>
CITY NATIONAL BANCSHARES CORPORATION
 AND SUBSIDIARIES

Consolidated Statement of Changes
in Stockholders' Equity
                                                                                                  Accumulated
                                                                                                        Other
                                                     Common                Preferred   Retained Comprehensive   Treasury
Dollars in thousands                                 Stock       Surplus     Stock     Earnings (Loss) Income     Stock      Total
====================================================================================================================================
<S>                                                 <C>         <C>        <C>         <C>         <C>         <C>         <C>
Balance, December 31, 1996 ......................   $  1,150    $    901   $    727    $  5,645    $   (111)   $    (25)   $  8,287
Comprehensive income:
  Net income ....................................       --          --         --         1,069        --          --         1,069
  Unrealized holding gains on securities
    arising during the period (net of tax of $45)       --          --         --          --            84        --
  Reclassification adjustment for gains
    included in net income (net of tax of $(7)) .       --          --         --          --           (11)       --
                                                                                                    --------
  Net unrealized holding gains on securities
    arising during the period (net of tax of $38)       --          --         --          --            73        --            73
                                                                                                                            -------
  Total comprehensive income ....................                                                                             1,142
Proceeds from issuance of preferred stock .......       --          --          820        --          --          --           820
Dividends paid on common stock ..................       --          --         --          (173)       --          --          (173)
Dividends paid on preferred stock ...............       --          --         --           (44)       --          --           (44)
                                                    --------    --------   --------    --------    --------    --------    --------
Balance, December 31, 1997 ......................      1,150         901      1,547       6,497         (38)        (25)     10,032
Comprehensive income:
  Net income ....................................       --          --         --           226        --          --           226
  Unrealized holding gains on securities
    arising during the period (net of tax
    of $16) .....................................       --          --         --          --            55        --
  Reclassification adjustment for losses
    included in net income (net of tax of $5) ...       --          --         --          --             8        --
                                                                                                   --------
  Net unrealized holding gains on securities
    arising during the period (net of tax
    of $21) .....................................       --          --         --          --            63        --            63
                                                                                                                           --------
  Total comprehensive income ....................                                                                               289
Proceeds from issuance of common stock ..........         38          37       --          --          --             8          83
Dividends paid on common stock ..................       --          --         --          (199)       --          --          (199)
Dividends paid on preferred stock ...............       --          --         --           (82)       --          --           (82)
                                                    --------    --------   --------    --------    --------    --------    --------
Balance, December 31, 1998 ......................   $  1,188    $    938   $  1,547    $  6,442    $     25    $    (17)   $ 10,123
Comprehensive income:
  Net income ....................................       --          --         --           402        --          --           402
  Unrealized holding losses on securities
    arising during the period (net of tax
    of $(458) ...................................       --          --         --          --          (694)       --
  Reclassification adjustment for gains
    included in net income (net of tax of $(7) ..       --          --         --          --           (10)       --
                                                                                                   --------
  Net unrealized holding gains (losses) on
    securities arising during the period (net
    of tax of $(465) ............................       --          --         --          --          (704)       --          (704)
                                                                                                                           --------
  Total comprehensive income (loss) .............                                                                              (302)
Redemption of preferred stock ...................       --          --         (500)       --          --          --          (500)
Proceeds from issuance of common stock ..........         13          12       --          --          --          --            25
Dividends paid on common stock ..................       --          --         --          (213)       --          --          (213)
Dividends paid on preferred stock ...............       --          --         --          (107)       --          --          (107)
                                                    --------    --------   --------    --------    --------    --------    --------
Balance, December 31, 1999 ......................   $  1,201    $    950   $  1,047    $  6,524    $   (679)   $    (17)   $  9,026
                                                    ========    ========   ========    ========    ========    ========    ========
</TABLE>
See accompanying notes to consolidated financial statements.


CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARY

Consolidated Statement of Cash Flows

                                                        Year Ended December 31,
                                                        ========================
In thousands                                                  1999        1998
================================================================================
Operating activities
Net income .............................................   $    402    $    226
Adjustments to reconcile net income to net cash
  from operating activities:
  Depreciation and amortization ........................        420         376
  Provision  for possible loan losses ..................        906       1,016
  Premium amortization on investment securities ........         69          73
  Net (gains) losses  on sales and early
    redemption of investment securities ................        (17)         13
  Gains on sales of loans held for sale ................        (21)        (64)
Loans originated for sale ..............................     (1,640)     (2,307)
Proceeds from sales of loans held for sale .............        592       1,152
(Increase) decrease in accrued interest receivable .....       (185)          2
Deferred income tax  benefit ...........................       (514)       (409)
Increase in other assets ...............................     (1,050)       (343)
Increase (decrease) in accrued expenses and
  other liabilities ....................................        340         327
                                                            --------   --------
Net cash (used in) provided by operating activities ....       (698)         62
                                                            --------   --------
Investing activities
(Increase) decrease in loans ...........................     (8,419)        361
Purchases of loans .....................................       --       (15,665)
(Increase) decrease in interest-bearing
  deposits with banks ..................................     (2,261)         15
Proceeds from maturities of investment
  securities available for sale, including sales,
  principal payments and early redemptions .............     16,791      18,882
Proceeds from maturities of investment securities
  held to maturity, including principal payments
  and early redemptions ................................      8,729      18,255
Purchases of investment securities available
  for sale .............................................    (21,185)    (18,472)
Purchases of investment securities held to maturity ....    (10,046)    (20,252)
Purchases of premises and equipment ....................       (821)       (492)
(Increase) decrease in other real estate owned, net ....         (5)        180
                                                            --------   --------
Net cash used in investing activities ..................    (17,217)    (17,188)
                                                            --------   --------
Financing activities
Increase in deposits ...................................      1,894      18,226
Increase (decrease) in short-term borrowings ...........      5,982      (4,195)
Proceeds from issuance of long-term debt ...............        476      12,000
Proceeds from issuance of common stock .................         25          83
(Redemptions of) proceeds from issuance of
  preferred stock ......................................       (500)       --
Dividends paid on preferred stock ......................       (107)        (82)
Dividends paid on common stock .........................       (213)       (199)
                                                            --------   --------
Net cash provided by financing activities ..............      7,557      25,833
                                                            --------   --------
Net (decrease) increase in cash and
  cash equivalents .....................................    (10,358)      8,707
Cash and cash equivalents at beginning of year .........     21,967      13,260
                                                           --------   --------
Cash and cash equivalents at end of year ...............   $ 11,609    $ 21,967
                                                           ========    ========
Cash paid during the year:
Interest ...............................................   $  5,428    $  4,173
Income taxes ...........................................        520         539
Supplemental schedule for noncash investing
  activities:
Real estate acquired in settlement of loans ............        103         385
Transfer of loans held for sale to loans ...............      2,292        --

See accompanying notes to consolidated financial statements.



Note 1   Summary of significant accounting policies

The accounting and reporting  policies of City National  Bancshares  Corporation
(the  "Corporation"  or "CNBC") and its  subsidiary  City  National  Bank of New
Jersey  (the  "Bank"  or  "CNB")  conform  with  generally  accepted  accounting
principles and to general practice within the banking industry. In preparing the
financial  statements,  management is required to make estimates and assumptions
that affect the reported  amounts of assets and  liabilities  and  disclosure of
contingent  liabilities  as of the date of the balance  sheet and  revenues  and
expenses for the related periods. Actual results could differ significantly from
those estimates. The following is a summary of the more significant policies and
practices.

Principles of consolidation

The  financial  statements  include the  accounts  of CNBC and its  wholly-owned
subsidiary,  CNB. All significant  intercompany  accounts and transactions  have
been eliminated in consolidation.

Cash and cash equivalents

For purposes of the  presentation of the Statement of Cash Flows,  Cash and cash
equivalents includes Cash and due from banks and Federal funds sold.

Federal Home Loan Bank of New York

The Bank, as a member of Federal Home Loan Bank of New York "FHLB",  is required
to hold shares of capital  stock of the FHLB based on a specified  formula.  The
FHLB stock is carried at cost and is included in investment securities available
for sale.

Investment  securities held to maturity and investment  securities available for
sale  Investment  securities are designated as held to maturity or available for
sale at the time of acquisition.  Securities that the Corporation has the intent
and ability at the time of purchase to hold until  maturity  are  designated  as
held to maturity.  Investment securities held to maturity are stated at cost and
adjusted for  amortization  of premiums and accretion of discount to the earlier
of maturity or call date using the level yield method.

Securities to be held for indefinite periods of time but not intended to be held
until maturity or on a long-term  basis are classified as investment  securities
available  for sale.  Securities  held for  indefinite  periods of time  include
securities  that the  Corporation  intends to use as part of its  interest  rate
sensitivity  management  strategy and that may be sold in response to changes in
interest  rates,  resultant  risk  and  other  factors.   Investment  securities
available for sale are reported at fair market value,  with unrealized gains and
losses,  net of  deferred  tax  reported  as a component  of  accumulated  other
comprehensive  income,  which is included  in  stockholders'  equity.  Gains and
losses  realized from the sales of securities  available for sale are determined
using the specific identification method.

The Corporation holds in its investment portfolios  mortgage-backed  securities.
Such securities are subject to changes in the prepayment rates of the underlying
mortgages, which may affect both the yield and maturity of the securities.

Loans held for sale

Loans held for sale  include  residential  mortgage  loans  originated  with the
intent to sell.  Loans held for sale are carried at the lower of aggregate  cost
or fair value.  During 1999, the Bank transferred $2.3 million in loans held for
sale into the loan portfolio at the lower of cost or fair market value.

Loans

Loans are stated at the principal amounts outstanding,  net of unearned discount
and deferred  loan fees.  Interest  income is accrued as earned,  based upon the
principal  amounts  outstanding.  Loan  origination fees and certain direct loan
origination  costs,  as well as unearned  discount,  are deferred and recognized
over the life of the loan revised for loan prepayments,  as an adjustment to the
loan's  yield.  Recognition  of  interest  on the  accrual  method is  generally
discontinued  when a loan  contractually  becomes  90 days or more past due or a
reasonable doubt exists as to the  collectibility of the loan, unless such loans
are well-secured and in the process of collection.  At the time a loan is placed
on a nonaccrual status, previously accrued and uncollected interest is generally
reversed against interest income in the current period.  Interest on such loans,
if  appropriate,  is recognized as income when payments are received.  A loan is
returned to an accrual  status when it is current as to  principal  and interest
and its future collectibility is expected.

The  Corporation  has  defined  the  population  of  impaired  loans  to be  all
nonaccrual loans of $100,000 or more considered by management to be inadequately
secured  and  subject to risk of loss.  Impaired  loans of  $100,000 or more are
individually  assessed  to  determine  that the loan's  carrying  value does not
exceed the fair value of the  underlying  collateral or the present value of the
loan's expected future cash flows.  Smaller balance  homogeneous  loans that are
collectively   evaluated  for  impairment  such  as  residential   mortgage  and
installment loans, are specifically excluded from the impaired loan portfolio.

Reserve for loan losses

A  substantial  portion of the Bank's  loans are  secured by real  estate in New
Jersey particularly within the Newark area. Accordingly,  as with most financial
institutions  in the market area, the ultimate  collectibility  of a substantial
portion  of the  Bank's  loan  portfolio  is  susceptible  to  changes in market
conditions.

The reserve  for loan losses is  maintained  at a level  determined  adequate to
provide  for losses  inherent in the  portfolio.  The  reserve is  increased  by
provisions  charged to operations and recoveries of loans previously charged off
and reduced by loan charge-offs. The reserve is based on management's evaluation
of the loan portfolio  considering current economic  conditions,  the volume and
nature of the loan  portfolio,  historical  loan loss  experience and individual
credit and collateral situations.

Management  believes  that  the  reserve  for loan  losses  is  adequate.  While
management uses available  information to determine the adequacy of the reserve,
future  additions  may be necessary  based on changes in economic  conditions or
subsequent events unforeseen at the time of evaluation.

In  addition,  various  regulatory  agencies,  as  an  integral  part  of  their
examination  process,  periodically  review the Bank's  reserve for loan losses.
Such  agencies  may  require the Bank to  increase  the  reserve  based on their
judgment of information available to them at the time of their examination.

Bank premises and equipment

Premises and equipment are stated at cost less  accumulated  depreciation  based
upon  estimated  useful  lives  of  three  to  39  years,   computed  using  the
straight-line  method.  Expenditures  for maintenance and repairs are charged to
operations  as  incurred,   while  major   replacements   and  improvements  are
capitalized.  The net asset values of assets  retired or disposed of are removed
from the  asset  accounts  and any  related  gains or  losses  are  included  in
operations.

Other real estate owned

Other real estate owned ("OREO") acquired through foreclosure or deed in lieu of
foreclosure is carried at the lower of cost or fair value less estimated cost to
sell, net of a valuation allowance.  When a property is acquired,  the excess of
the loan  balance  over the  estimated  fair value is charged to the reserve for
loan losses. Operating results,  including any future writedowns of OREO, rental
income and operating expenses, are included in "Other expenses".

A reserve for OREO has been  established  through charges to "Other expenses" to
maintain  properties at the lower of cost or fair value less  estimated  cost to
sell.

Core deposit premiums

The premium paid for the acquisition of deposits in connection with the purchase
of a branch  office is  amortized  on an  accelerated  basis  over the  ten-year
estimated useful life of the assumed deposit base.

Income taxes

Federal  income taxes are based on currently  reported  income and expense after
the elimination of income which is exempt from Federal income tax.

Deferred tax assets and liabilities  are recognized for future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing assets and liabilities and their  respective tax bases.  Such temporary
differences include depreciation and the provision for possible loan losses.

Net income per common share

Basic  income  per common  share is  calculated  by  dividing  net  income  less
dividends  paid on  preferred  stock by the  weighted  average  number of common
shares  outstanding.  On a diluted  basis,  both net income  and  common  shares
outstanding are adjusted to assume the conversion of the convertible subordinate
debentures.

Comprehensive income

SFAS  No.  130  "Reporting  Comprehensive  Income",  establishes  standards  for
reporting  and display of  comprehensive  income and its  components  (revenues,
expenses,  gains,  and  losses)  in a  full  set  of  general-purpose  financial
statements.  SFAS 130 requires that all items that are required to be recognized
under accounting  standards as components of comprehensive income be reported in
a  financial  statement  that is  displayed  with the same  prominence  as other
financial statements.  The required disclosures are included in the Statement of
Changes in Stockholders' Equity.

Reclassifications

Certain  reclassifications  have  been  made to the 1998  and 1997  consolidated
financial statements in order to conform with the 1999 presentation.

Note 2   Cash and due from banks

The Bank is required to maintain a reserve balance with the Federal Reserve Bank
based primarily on deposit levels.  These reserve balances  averaged $826,000 in
1999 and $800,000 in 1998.

At December 31, 1998,  Cash and due from banks and savings  deposits  included a
$15.9 million nonrecurring  municipal deposit, which was withdrawn on January 4,
1999.

Note 3 Federal funds sold and securities  purchased  under  agreements to resell
Federal  funds sold  averaged $8 million  during 1999 and $11.7 million in 1998,
while the maximum  balance  outstanding at any month-end  during 1999,  1998 and
1997 was $15.4 million, $30.5 million and $7.3 million,  respectively.  In 1999,
there were no securities  purchased under  repurchase  agreements,  while during
1998,  securities purchased under agreements to resell averaged $537,000.  There
were no such  transactions  outstanding  at any month-end  during 1999,  1998 or
1997. The  aforementioned  repurchase  agreements  were  collateralized  by U.S.
Treasury  securities  held for the  benefit of the Bank at the  Federal  Reserve
Bank.

Note 4   Investment securities available for sale

The amortized  cost and market  values at December 31 of  investment  securities
available for sale were as follows:

                                     Gross     Gross
                         Amortized Unrealized Unrealized Market
1999 In thousands           Cost     Gains     Losses    Value
------------------------- -------- --------- --------- --------
U.S. Treasury securities
  and obligations of U.S.
  government agencies      $ 3,193      $25  $     13  $ 3,205
Obligations of state and
  political subdivisions     2,280        -        69   2,211
Other securities:
  Mortgage-backed
  securities                25,910       10       910  25,010
  Other debt securities      3,670        -       163   3,507
  Equity securities          1,534        -         9   1,525
------------------------- -------- --------- --------- --------
Total                      $36,587      $35    $1,164  $35,458
------------------------- -------- --------- --------- --------

                                    Gross     Gross
                         Amortized Unrealized Unrealized Market
1998 In thousands           Cost     Gains     Losses    Value
------------------------- -------- --------- --------- --------
U.S. Treasury securities
  and obligations of U.S.
  government agencies      $ 5,605  $    92   $     -  $ 5,697
Obligations of states and
  political subdivisions     2,747       84         -    2,831
Other securities:
  Mortgage-backed
    securities              19,997       63       288   19,772
  Other debt securities      2,688       70        14    2,744
  Equity securities          1,177       40         7    1,210
------------------------- -------- --------- --------- --------
Total                      $32,214   $  349    $  309  $32,254
------------------------- -------- --------- --------- --------

The  amortized  cost and the market  values of  investments  in debt  securities
available for sale  presented  below as of December 31, 1999 are  distributed by
contractual  maturity,  including  mortgage-backed  securities,  which  may have
shorter estimated lives as a result of prepayments of the underlying mortgages.

                                            Amortized   Market
In thousands                                   Cost     Value
------------------------------------------- --------- ---------
Due within one year:
  U.S. Treasury securities and obligations
    of U.S. government agencies             $  2,004  $  2,000
  Mortgage-backed securities                   1,977     1,970
Due after one year but within five years:
  U.S. Treasury securities and obligations
    of U.S. government agencies                  595       589
  Mortgage-backed securities                   4,127     4,089
Due after five years but within ten years:
  Mortgage-backed securities                     123       124
  Other debt securities                          756       731
Due after ten years:
  U.S. Treasury securities and obligations
    of U.S. government agencies                  594       616
  Mortgage-backed securities                  19,683    18,827
  Obligations of state and political
    subdivisions                               2,280     2,211
  Other debt securities                        2,914     2,776
------------------------------------------- --------- ---------
Total debt securities                         35,053    33,933
Equity securities                              1,534     1,525
------------------------------------------- --------- ---------
Total                                        $36,587   $35,458
------------------------------------------- --------- ---------

Sales of investment  securities available for sale totalled $4.9 million in1999,
$3.9  million in 1998 and $3.7  million  in 1997,  resulting  in gross  gains of
$133,000,  $44,000 and $68,000 and gross losses of $116,000, $57,000 and $50,000
respectively.

Interest  and  dividends  on  investment  securities  available  for sale was as
follows:

In thousands                      1999       1998      1997
------------------------------- ---------- --------- ----------
Taxable                           $1,977    $ 1,760   $ 1,999
Tax-exempt                           104        116         9
------------------------------- ---------- --------- ----------
Total                             $2,081    $ 1,876   $ 2,008
------------------------------- ---------- --------- ----------

Investment  securities  available for sale with an amortized cost of $20,709,000
were pledged to secure public funds at December 31, 1999.

Note 5   Investment securities held to maturity

The book and market  values as of December 31 of investment  securities  held to
maturity were as follows:

                                      Gross     Gross
                             Book Unrealized Unrealized  Market
1999 In thousands           Value     Gains     Losses    Value
-----------------------   --------- --------- --------- ---------
U.S. Treasury securities
  and obligations of U.S.
  government agencies      $23,204       $ -   $ 1,660   $21,544
Obligations of state and
  political subdivisions     3,360         -        33     3,327
-----------------------   --------- --------- --------- ---------
Other securities:
-----------------------   --------- --------- --------- ---------
  Mortgage-backed            3,922         -        75     3,847
  Other debt securities      2,531         -       198     2,333
-----------------------   --------- --------- --------- ---------
Total                      $33,017       $ -    $1,966   $31,051
-----------------------   --------- --------- --------- ---------

                                      Gross     Gross
                             Book Unrealized Unrealized  Market
   1998 In thousands         Value    Gains     Losses    Value
   -----------------------   -------- --------- --------- ---------
   U.S. Treasury securities
    and obligations of U.S.
    government agencies    $22,125  $     56   $   143   $22,038
  Obligations of state and
    political subdivisions   2,414        60         -     2,474
    Other securities:
     Mortgage-backed         7,173         4       109     7,068
    ----------------------- -------- --------- --------- ---------
   Total                  $31,712    $   120   $   252   $31,580
  ----------------------- -------  --------- --------- ---------

At  December  31,  1999,  the  Corporation  held  structured  notes with a total
amortized  cost  of  $2,750,000  and  a  related  market  value  of  $2,736,000,
reflecting gross unrealized depreciation of $14,000.  Comparable amounts as of a
year earlier were $2,750,000, $2,725,000 and $25,000, respectively.

The book value and the market value of  investment  securities  held to maturity
presented below as of December 31, 1999 are distributed by contractual maturity,
including mortgage-backed securities,  which may have shorter estimated lives as
a result of prepayments of the underlying mortgages.

                                              Book      Market
In thousands                                  Value     Value
------------------------------------------ ---------- ---------
Due within one year:
  U.S. Treasury and obligations of
    U.S. government agencies               $  2,750   $  2,738
  Mortgage-backed securities                    898        892
  Obligations of state and political
    subdivisions                                350        350
Due after one year but within five years:
  Mortgage-backed securities                  1,534      1,510
  Obligations of state and political
   subdivisions                               1,962      1,957
Due after five years but within ten years:
  U.S. Treasury securities and obligations
    of U.S. government agencies               6,190      5,714
  Other debt securities                       2,031      1,837
Due after ten years:
  U.S. Treasury securities and obligations
    of U.S. government agencies              14,264     13,092
  Mortgage-backed securities                  1,490      1,445
  Obligations of state and political
    subdivisions                              1,048      1,020
  Other debt securities                         500        496
------------------------------------------ ---------- ---------
Total                                       $33,017    $31,051
------------------------------------------ ---------- ---------

There were no sales of securities held to maturity in 1999 or 1998.

Interest and dividends on investment securities held to maturity was as follows:
In thousands                    1999        1998       1997
----------------------------- ---------- ----------- ----------
Taxable                          $1,793   $ 1,630       $1,719
Tax-exempt                          111       110          116
----------------------------- ---------- ----------- ----------
Total                            $1,904   $ 1,740       $1,835
----------------------------- ---------- ----------- ----------

Investment  securities  held to maturity with a book value of  $16,468,000  were
pledged to secure public funds at December 31, 1999.

Note 6   Loans

Loans, net of unearned  discount and net deferred  origination fees and costs at
December 31, were as follows:

In thousands                          1999           1998
-------------------------------- --------------- --------------
Commercial                            $17,687         $22,591
Real estate                            64,113          48,274
Installment                               823             841
Total loans                            82,623          71,706
Less: Unearned income                     177             266
-------------------------------- --------------- --------------
Loans                                 $82,446         $71,440
-------------------------------- --------------- --------------

Loans guaranteed by the Small Business Administration  totalling $1,667,000 were
pledged as collateral  for borrowings  under a note issued to the U.S.  Treasury
Department at December 31, 1999.

Nonperforming  loans include loans which are  contractually  past due 90 days or
more for which interest income is still being accrued and nonaccrual loans.

At December 31,  nonperforming  loans and troubled debt  restructurings  were as
follows:
In thousands                               1999        1998
---------------------------------------- ---------- -----------
Nonaccrual loans                            $2,539    $ 1,455
Loans with interest or principal 90
  days or more past due and still              227        341
accruing
---------------------------------------- ---------- -----------
Total nonperforming loans                    2,766      1,796
Troubled debt restructurings                     -      1,261
---------------------------------------- ---------- -----------
Total nonperforming loans
  and troubled debt restructurings          $2,766    $ 3,057
---------------------------------------- ---------- -----------

The effect of nonaccrual loans on income before taxes is presented below.
In thousands                      1999       1998        1997
---------------------------- ----------- ---------- -----------
Interest income foregone          $(183)       $(81) $    ( 67)
Interest income received            108         104        101
---------------------------- ----------- ---------- -----------
                                $   (75)       $ 23  $      34
---------------------------- ----------- ---------- -----------

Nonaccrual  loans at December  31,  1999  includes  two loans to one  commercial
borrower totaling $1.3 million that were considered troubled debt restructurings
at December  31,  1998.  These loans are secured by a leasehold  mortgage on the
financed property and the borrower's  principals have provided joint and several
personal guarantees.

Other  than  the  aforementioned  nonaccrual  loans,  nonperforming  assets  are
generally well secured by residential and small  commercial  real estate.  It is
the Bank's intent to dispose of all other real estate owned ("OREO")  properties
at the earliest possible date at or near current market value.

At December 31, 1999,  there were no  commitments  to lend  additional  funds to
borrowers for loans that were on nonaccrual or contractually  past due in excess
of 90 days and still accruing  interest,  or to borrowers  whose loans have been
restructured.  A majority of the Bank's loan portfolio is  concentrated in first
mortgage  loans to  borrowers in northern  New Jersey,  particularly  within the
Newark area. Its borrowers'  abilities to repay their  obligations are dependent
upon various  factors  including the borrowers'  income,  net worth,  cash flows
generated by the underlying  collateral,  the value of the underlying collateral
and  priority  of the Bank's  lien on the  related  property.  Such  factors are
dependent upon various economic conditions and individual  circumstances  beyond
the  Bank's  control.  Accordingly,  the Bank may be  subject  to risk of credit
losses.

Impaired  loans  totalled  $1.3  million at December  31,  1999 and  $400,000 at
December 31, 1998, while the related reserves  allocated to these loans amounted
to $955,000 and $400,000 respectively.  Impaired loans averaged $425,000 in 1999
and $569,000 in 1998.

Note 7   Reserve for loan losses

Transactions in the reserve for loan losses are summarized as follows:
In thousands                      1999       1998      1997
------------------------------- ---------- --------- ----------
Balance, January 1                $1,415     $  825      $750
Provision for loan
  losses                             906      1,016       159
Recoveries of loans
previously charged off               157        153        74
------------------------------- ---------- --------- ----------
                                   2,478      1,994       983
Less: Charge-offs                    503        579       158
------------------------------- ---------- --------- ----------
Balance, December 31              $1,975     $1,415      $825
------------------------------- ---------- --------- ----------

Note 8   Premises and equipment

A summary of premises and equipment at December 31 follows:
In thousands                                      1999     1998
----------------------------------------------   -------- -------
Land                                             $  421   $  274
Premises                                          1,397    1,035
Furniture and equipment                           2,219    2,007
Building improvements                             2,191    2,132
----------------------------------------------   -------- -------
Total cost                                        6,228    5,448
Less: Accumulated depreciation and amortization   2,519    2,140
Total premises and equipment                     $3,709   $3,308
----------------------------------------------   -------- -------

Depreciation  and  amortization   expense  charged  to  operations  amounted  to
$420,000, $376,000, and $367,000 in 1999, 1998, and 1997, respectively.

Note 9   Deposits

Deposits at December 31 are presented below.
In thousands                               1999        1998
---------------------------------------- ---------- -----------
Noninterest bearing:
  Demand                                  $ 20,625   $ 16,919
  Savings                                      369        469
  Time                                           -      1,918
---------------------------------------- ---------- -----------
Total noninterest bearing deposits          20,994     19,306
---------------------------------------- ---------- -----------
Interest bearing:
---------------------------------------- ---------- -----------
  Savings                                   34,350     57,054
  Time                                      84,493     61,583
---------------------------------------- ---------- -----------
Total interest bearing deposits            118,843    118,637
---------------------------------------- ---------- -----------
Total deposits                            $139,837   $137,943
---------------------------------------- ---------- -----------

Time  deposits  issued  in  amounts  of  $100,000  or more  have  the  following
maturities at December 31:
In thousands                                1999       1998
----------------------------------------- ---------- ----------
Three months or less                       $ 44,223   $ 36,885
Over three months but within six months      11,859      2,339
Over six months but within twelve months      1,556      2,857
Over twelve months                              779        841
----------------------------------------- ---------- ----------
Total deposits                             $ 58,417   $ 42,922
----------------------------------------- ---------- ----------

Interest expense on certificates of deposits of $100,000 or more was $2,323,000,
$1,974,000 and $2,369,000 in 1999, 1998 and 1997, respectively.

Note 10     Short-term borrowings

Information regarding short-term borrowings at December 31, is presented below.

                              Average
                              Interest         Average  Maximum
                              Rate on  Average Interest Balance
                      Decem-   Decem-  Balance   Rate   at any
                      ber 31   ber 31  During   During  Month-
Dollars in thousands  Balance Balance the Year the Year   End
-------------------- -------- ------- -------- ------- --------
1999
Federal funds purchased and securities
  sold under repurchase
  agreements           $    -      -%   $   77   4.83%  $    -
Demand note issued
  to the U.S.Treasury   6,000   4.47     2,712   4.76    6,000
---------------------- ------- -------- ------- ------- -------
Total                  $6,000   4.47%   $2,789   4.76%  $6,000
---------------------- ------- -------- ------- ------- -------
1998
Federal funds purchased and securities
  sold under repurchase
  agreements           $    -  -%       $   23   5.76%  $    -
Demand note issued
  to the U.S. Treasury     18   4.12     3,045   5.19    6,000
---------------------- ------- -------- ------- ------- -------
Total                  $   18   4.12%   $3,068   5.19%  $6,000
---------------------- ------- -------- ------- ------- -------

The demand note,  which has no stated  maturity,  issued by the Bank to the U.S.
Treasury  Department  is payable with  interest at 25 basis points less than the
weekly average of the daily effective  Federal Funds rate and is  collateralized
by various  investment  securities  held at the Federal Reserve Bank of New York
with a book  value of  $10,171,000,  along with  loans  guaranteed  by the Small
Business Administration totalling $2,154,000.

Note 11  Long-term debt

Long-term debt at December 31 is summarized as follows:
In thousands                                1999     1998
------------------------------------------ -------- --------
FHLB convertible advances due from
  August 28, 2000 through April 7, 2008    $14,000   $14,000
5.25% capital note, due December 28, 2005    1,500     1,500
5.00% capital note, due July 1, 2008           500         -
8.00% mandatory convertible debentures,
  due July 1, 2003                            225        249
Total                                      $16,225   $15,749
------------------------------------------ -------- --------

Interest is payable  quarterly on most of the FHLB advances.  $12 million of the
advances  are  callable at various  dates from January 1, 2000 to April 7, 2003.
The advances bear interest  rates ranging from 5.00% to 5.93% and are secured by
residential  mortgages and certain obligations of U.S. Government agencies under
a blanket collateral agreement.

Interest is payable  semiannually  on January 15 and July 15 on the  convertible
debentures.  The debentures convert into CNBC common stock upon maturity and are
convertible  by the  holder  at any  time  on or  before  the  maturity,  unless
previously  redeemed by the  Corporation  into CNBC common stock at a conversion
price of $18.00 per share,  subject to adjustment upon the occurrence of certain
events,  including,  among other  things,  the issuance of common stock as a per
share price of less than $18.00 or the issuance of rights or options to purchase
shares of common stock at a price of less than $18.00 per share.

The debentures  are  subordinate to all other  indebtedness  of the  Corporation
except for  indebtedness  which by its terms is equal and not senior in right of
payment to the debentures.  The debentures become  immediately  payable upon the
bankruptcy,  insolvency  or  receivership  of the  Corporation.  In the event of
default as to  principal  or  interest,  the  Corporation  is required  upon the
request  of the  holder,  to pay the  unpaid  principal  balance  along with any
accrued interest by issuing an amount of common stock at the conversion price in
exchange for the  indebtedness,  subject to the holder owning not more than 9.9%
of the total  number of  common  shares  outstanding  when  added to the  shares
already  held by the holder.  The unpaid  balance of  principal,  if any,  after
conversion upon maturity, or an interest payment default is then payable in cash
upon maturity of the debenture  and prior to maturity  would  continue to accrue
interest at an annual rate of 8% payable semiannually.

Interest is payable  semiannually  on the capital note due December 28, 2005, on
June 29 and December 29, with  principal  payments  commencing  semiannually  in
June,  2001.  Interest  payments  on the  note  due  July 1,  2008  are  payable
semiannually,  on January 1 and July 1, while principal payments of $100,000 are
payable annually, commencing July 1, 2004.

The note  agreement  includes  restrictive  covenants  including the creation of
liens on Bank  assets,  the  sale of such  assets  and  certain  limitations  on
investments  and  dividend  payments and  requires  the  maintenance  of certain
capital levels and earning  performance,  asset quality and reserve for possible
loan loss ratios.

Note 12  Other operating income and expenses

The  following  table  presents  the major items of other  operating  income and
expenses:

In thousands                           1999    1998     1997
------------------------------------- ------- -------- --------
Other operating income
Agency fees on commercial loans         $307  $  255    $ 253

Other operating expenses
Professional fees                        319     282      160
Stationery and supplies expense           82     100       88
Data processing                          145     144      125
------------------------------------- ------- -------- --------

Note 13  Income taxes

The components of income tax expense are as follows:
In thousands                              1999    1998   1997
----------------------------------------- ------ ------- ------
Current  expense
Federal                                   $ 624  $ 399   $ 581
State                                        83     23     113
----------------------------------------- ------ ------- ------
Total current income tax expense            707    422     694
----------------------------------------- ------ ------- ------
Deferred
Federal                                    (441)  (364)    (90)
State                                       (73)   (45)    (22)
----------------------------------------- ------ ------- ------
Total deferred income tax benefit          (514)  (409)   (112)
----------------------------------------- ------ ------- ------
Total income tax expense                  $ 173  $  13   $ 582
---------------------------------------- ------ ------- ------

A  reconciliation  between  income tax  expense and the total  expected  federal
income tax computed by multiplying  pre-tax  accounting  income by the statutory
federal income tax rate is as follows:

In thousands                               1999    1998   1997
---------------------------------------- ------- ------ -------
Federal income tax at statutory rate      $ 202   $  81  $ 561
Increase (decrease) in income tax
  expense resulting from:
 State income tax (benefit) expense, net of
  federal (expense) benefit                   7     (15)    60
 Tax-exempt income                          (63)    (66)   (43)
 Life insurance                             (18)    (13)   (15)
 Change in valuation allowance                -      23     (7)
 Other, net                                  65       3     26
---------------------------------------- ------- ------ -------
Total income tax expense                  $ 193   $  13  $ 582
---------------------------------------- ------- ------ -------

The tax effects of temporary  differences  that give rise to deferred tax assets
and liabilities at December 31 are as follows:
In thousands                                 1999        1998
---------------------------------------- ---------- -----------
Deferred tax assets
Unrealized losses on investment securities
  available for sale                       $   450     $    -
Reserve for possible loan losses               525        163
Premises and equipment                           7          -
Reserve for other real estate owned              5         14
Deferred compensation                          131         93
Other                                          129         34
---------------------------------------- ---------- -----------
Total deferred tax assets                    1,247        304
Less: Valuation allowance                       23         23
---------------------------------------- ---------- -----------
Deferred tax asset                           1,224        281
---------------------------------------- ---------- -----------
Deferred tax liabilities
Unrealized gains on investment securities
   available for sale                            -         15
Premises and equipment                           -         31
Investment securities held to maturity           3          3
Other                                           10          -
---------------------------------------- ---------- -----------
Deferred tax liability                          13         49
---------------------------------------- ---------- -----------
Net deferred tax asset                     $ 1,211      $ 232
---------------------------------------- ---------- -----------

The net deferred asset (liability)  represents the anticipated federal and state
tax asset to be realized or  liability  to be incurred in future  years upon the
utilization of the underlying tax attributes comprising this balance. Management
believes, based upon estimates of future taxable earnings, that more likely than
not there will be  sufficient  taxable  income in future  years to  realize  the
deferred tax assets, net of deferred valuation allowance,  although there can be
no assurance about the level of future earnings.

Note 14  Benefit plans

Savings plan

The Bank maintains an employee savings plan under section 401(k) of the Internal
Revenue  Code  covering  all  employees  with at least six  months  of  service.
Participants are allowed to make  contributions to the plan by salary reduction,
up to 15% of total compensation. The Bank provides matching contributions of 25%
of  the  first  4%  of  participant  salaries  along  with  a  1%  discretionary
contribution,  subject to a vesting schedule.  Contribution  expense amounted to
$52,000 in 1999 and 1998 and $49,000 in 1997.

Bonus plan

The Bank awards profit  sharing  bonuses to its officers and employees  based on
the achievement of certain performance objectives.  Bonuses charged to operating
expense in 1999,  1998 and 1997  amounted to  $100,000  $68,000,  and  $119,000,
respectively.

Nonqualified benefit plans

During 1997,  the Bank  established a  supplemental  executive  retirement  plan
("SERP"),  which provides a post employment  supplemental  retirement benefit to
certain key  executive  officers.  SERP expense was $41,000 in 1999,  $39,000 in
1998 and $26,000 in 1997. The Bank also has a director retirement plan ("DRIP").
DRIP expense was $28,000 in 1999, $17,000 in 1998 and $19,000 in 1997.

Benefits  under both plans will be funded  through a bank-owned  life  insurance
policy,  the cash  surrender  value of which is included  in "Other  assets" and
totalled  $1.7  million  and  $1.5  million  at  December  31,  1999  and  1998,
respectively.  In  addition,  expenses  for both plans  along  with the  expense
related to  carrying  the policy  itself  are  offset by  increases  in the cash
surrender value of the policy. Such increases are included in "Other income" and
totalled $94,000 in 1999, $85,000 in 1998 and $72,000 in 1997, while the related
life insurance expense was $36,000 in 1999, $40,000 in 1998 and $28,000 in 1997.

Stock options

No stock options were issued during 1999 or 1998.  During 1997, the  Corporation
issued 5,700 stock  options at an exercise  price equal to the fair market value
of the stock on the date of the grant. Under Accounting Principles Board Opinion
No. 25,  compensation  cost for the stock options is not recognized  because the
exercise  price of the stock options  equaled the market price of the underlying
stock on the date of the grant. Had compensation expense been recorded for stock
options  granted  as  determined  under  Financial  Accounting  Standards  Board
Statement of Financial  Accounting Standards No. 123, net income would have been
reduced  by $2,000 in 1999,  1998 and  1997,  which  would  have  decreased  the
reported basic and diluted earnings per share by $.02 in each of these years.

The fair value of the option  grant is  estimated on the date of the grant using
the Black-Scholes option-pricing model with the following assumptions:  dividend
yield of 8.75%,  expected  volatility of 15%,  risk-free interest rate of 6% and
estimated  option life of three  years.  The fair value of the options was $1.08
per share. The options vest equally over three years.

Note 15    Preferred stock

The Corporation is authorized to issue  noncumulative  perpetual preferred stock
in one or more  series,  with no par  value.  Shares  of  preferred  stock  have
preference  over the  Corporation's  common stock with respect to the payment of
dividends.  Different  series of preferred  stock may have  different  stated or
liquidation values as well as different rates. Dividends are paid annually.

Set forth below is a summary of the  Corporation's  preferred  stock  issued and
outstanding.

            Date  Dividend Stated Number         December 31,
          Issued   Rate     Value of Shares    1999       1998
---------- ------ -------- ------- ------- ----------- ----------
Series A   12/96   6.00%   $25,000      8  $  200,000  $   200,000
Series B    3/96   8.00     25,000     20          -       500,000
Series C    2/96   8.00        250    108      27,000       27,000
Series D    6/97   6.50        250  3,280     820,000      820,000
---------- ------ -------- ------- ------- -----------  ----------
                                           $1,047,000   $1,547,000
---------- ------ -------- ------- ------- ----------- ----------

Note 16  Restrictions on subsidiary bank dividends

Subject  to  applicable  law,  the  Board  of  Directors  of the Bank and of the
Corporation  may provide for the payment of dividends when it is determined that
dividend  payments are  appropriate,  taking into account factors  including net
income,  capital  requirements,   financial  condition,  alternative  investment
options, tax implications,  prevailing economic conditions,  industry practices,
and other factors deemed to be relevant at the time.

Because  CNB is a national  banking  association,  it is  subject to  regulatory
limitation  on the amount of  dividends  it may pay to its  parent  corporation,
CNBC. Prior approval of the Office of the Comptroller of the Currency ("OCC") is
required  if the  total  dividends  declared  by the Bank in any  calendar  year
exceeds net profit,  as defined,  for that year  combined  with the retained net
profits from the preceding two calendar years.

Under this  limitation,  $912,000 was  available for the payment of dividends to
the  parent  corporation  at  December  31,  1999,  subject  to the  restrictive
covenants under long-term debt agreements included in Note 11.

Note 17  Net income per common share

The following table presents the computation of net income per common share.
In thousands, except per share data   1999     1998     1997
------------------------------------ -------- -------- --------
Net income                           $   402   $  226  $ 1,069
Dividends paid on preferred stock       (107)     (82)     (44)
------------------------------------ -------- -------- --------
Net income applicable to basic
  common shares                          295      144    1,025
Interest expense on convertible
  subordinated debentures, net of
  income taxes                            12       13       13
------------------------------------ -------- -------- --------
Net income applicable to diluted
 common shares                       $   307   $  157  $ 1,038
------------------------------------ -------- -------- --------
Number of average common shares
Basic                                118,902  115,189  114,141
------------------------------------ -------- -------- --------
Diluted:                             118,902  115,189  114,141
  Average common shares outstanding
  Average common shares converted from
   convertible subordinate debentures 12,500   13,850   13,850
------------------------------------ -------- -------- --------
                                     131,402  129,039  127,991
------------------------------------ -------- -------- --------
Net income per common share
Basic                                 $ 2.48   $ 1.25   $ 8.98
Diluted                                 2.34     1.22     8.11

The stock options  outstanding  are not included as common stock  equivalents in
the diluted net income per share calculation because they are antidilutive.

Note 18  Related party transactions

Certain directors of the Corporation and its subsidiary, including organizations
in which they are officers or have significant ownership, were customers of, and
had other  transactions  with the Bank in the ordinary course of business during
1999 and 1998. Such transactions were on substantially the same terms, including
interest rates and collateral with respect to loans, as those  prevailing at the
time of comparable  transactions with others. Further, such transactions did not
involve  more than the normal  risk of  collectibility  and did not  include any
unfavorable features.

Total loans to the  aforementioned  individuals  and  organizations  amounted to
$653,000 and $304,000 at December 31, 1999 and 1998,  respectively.  The highest
amount of such  indebtedness  during 1999 was $660,000  and in 1998  amounted to
$336,000.  During 1999,  $385,000 in new loans were made and  paydowns  totalled
$36,000.

Note 19  Fair value of financial instruments

The fair  value of  financial  instruments  is the  amount  at which an asset or
obligation could be exchanged in a current  transaction between willing parties,
other than in a forced liquidation.  Fair value estimates are made at a specific
point in time based on the type of  financial  instrument  and  relevant  market
information.

Because  no  quoted  market  price  exists  for a  significant  portion  of  the
Corporation's   financial  instruments,   the  fair  values  of  such  financial
instruments  are  derived  based on the amount and timing of future  cash flows,
estimated  discount rates, as well as management's best judgment with respect to
current economic conditions.  Many of these estimates involve  uncertainties and
matters of significant judgment and cannot be determined with precision.

The fair value  information  provided is indicative of the estimated fair values
of those  financial  instruments and should not be interpreted as an estimate of
the fair market value of the  Corporation  taken as a whole.  The disclosures do
not address the value of recognized  and  unrecognized  nonfinancial  assets and
liabilities  or the value of  future  anticipated  business.  In  addition,  tax
implications related to the realization of the unrealized gains and losses could
have a  substantial  impact  on these  fair  value  estimates  and have not been
incorporated into any of the estimates.

The following  methods and assumptions  were used to estimate the fair values of
significant financial instruments at December 31, 1999 and 1998.

Cash and short-term investments

These  financial  instruments  have  relatively  short  maturities or no defined
maturities  but are payable on demand,  with little or no credit risk. For these
instruments, the carrying amounts represent a reasonable estimate of fair value.

Investment securities

Investment  securities  are reported at their fair values based on quoted market
prices.

Loans

Fair values were estimated for performing  loans by discounting  the future cash
flows using market discount rates that reflect the credit and interest-rate risk
inherent in the loans. Fair value for significant  nonperforming loans was based
on recent  external  appraisals  of  collateral  securing  such  loans.  If such
appraisals were not available,  estimated cash flows were discounted employing a
rate incorporating the risk associated with such cash flows.

Deposit liabilities

The fair values of demand  deposits,  savings deposits and money market accounts
were the amounts payable on demand at December 31, 1999 and 1998. The fair value
of time deposits was based on the discounted  value of  contractual  cash flows.
The  discount  rate was  estimated  utilizing  the rates  currently  offered for
deposits of similar remaining maturities.

Short-term borrowings

For such  short-term  borrowings,  the carrying  amount was  considered  to be a
reasonable estimate of fair value.

Long-term debt

The  fair  value  of  long-term  debt was  estimated  based  on rates  currently
available  to  the  Corporation  for  debt  with  similar  terms  and  remaining
maturities.

Commitments to extend credit and letters of credit

The estimated fair value of financial instruments with off-balance sheet risk is
not significant at December 31, 1999 and 1998.

The following  table presents the carrying  amounts and fair values of financial
instruments at December 31:
                                1999               1998
                            Carrying   Fair    Carrying   Fair
In thousands                 Value    Value     Value    Value
--------------------------- --------- ------- -------- --------
Financial assets
Cash and other short-term
  investments              $ 11,609   $11,609 $ 21,967 $ 21,967
Interest-bearing deposits
  with banks                  2,286     2,211       15       13
Investment securities AFS    35,458    35,458   32,254   32,254
Investment securities HTM    33,017    31,051   31,712   31,580
Loans                        80,471    78,564   70,025   70,907
Loans held for sale             405       405    2,026    2,026
Financial liabilities
Deposits                   $139,837  $138,576 $137,943 $138,598
Short-term borrowings         6,000     6,000       18       18
Long-term debt               16,225    15,003   15,749   16,555
-------------------------- --------   ------- -------- --------

Note 20  Commitments and contingencies

In the normal course of business,  the  Corporation or its subsidiary  may, from
time to time, be party to various legal  proceedings  relating to the conduct of
its  business.  In  the  opinion  of  management,   the  consolidated  financial
statements  will not be materially  affected by the outcome of any pending legal
proceedings.

In May of 1998, CNB commenced a lawsuit against an entity that acted as an agent
for CNB in the sale of CNB's money orders,  and certain others  associated  with
such  entity for fraud,  other  claims and  damages.  CNB  alleges,  among other
things,  that at  various  times  during  its  business  relationship  with  the
defendants, the defendants converted, misappropriated, hypothecated or embezzled
a sum of  approximately  $805,000 from CNB. The  defendants  responded  alleging
CNB's records regarding certain  transactions between CNB and the defendants are
in error and that CNB is liable to the defendants for amounts due as a result of
these errors and for damages allegedly suffered by the defendants as a result of
CNB's  collection  efforts.  The amount of the defendants'  counterclaim has not
been quantified. This litigation is in the midst of discovery. The likelihood of
CNB's success in this litigation and its ability to recover any amount for which
it obtains judgment is uncertain. CNB has filed appropriate proofs of loss under
various  insurance  policies,  including  CNB's  fidelity  bond.  CNB  has  also
commenced  suit  against  the  insurance  carriers  in an effort to recover  the
amounts  claimed by CNB. It is also too early to  determine  the amount CNB will
ultimately recover, if any, under these insurance policies.

Note 21  Financial instruments with off-balance sheet risk
The Bank is party to financial  instruments with  off-balance  sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include lines of credit,  commitments  to extend standby
letters of credit,  and could involve,  to varying  degrees,  elements of credit
risk  in  excess  of  the  amounts  recognized  in  the  consolidated  financial
statements.

The Bank's exposure to credit loss in the event of  nonperformance  by the other
party to the financial  instrument for  commitments to extend credit and standby
letters  of  credit  is  represented  by  the   contractual   amounts  of  those
instruments.  The Bank uses the same credit  policies in making  commitments and
conditional  obligations as it does for on balance sheet instruments with credit
risk.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  the payment of a fee.  Since many of the  commitments  are  expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash   requirements.   The  Bank  evaluates  each  customer's
creditworthiness  on a case-by-case basis, and the amount of collateral or other
security obtained is based on management's credit evaluation of the customer.

Standby  letters of credit  are  conditional  commitments  issued by the Bank to
guarantee the performance of a customer to a third party.  These  guarantees are
primarily  issued to  support  borrowing  arrangements  and extend for up to one
year. The credit risk involved in issuing  letters of credit is essentially  the
same as that involved in extending  loan  facilities to customers.  Accordingly,
collateral is generally required to support the commitment.

At December 31,1999 and 1998 the Bank had mortgage commitments of $9,671,000 and
$7,731,000, unused corporate lines of credit of $34,725,000 and $30,569,000, and
$1,033,000 and $10,000 of other loan commitments, respectively.

The  aforementioned  commitments  and  credit  lines are made at both  fixed and
floating rates of interest based on the Bank's prime lending rate.

Note 22  Parent Company Information

Condensed financial statements of the parent company only are presented below.

Condensed Balance Sheet

                                                               December 31,
In thousands                                                   1999        1998
------------------------------------------------------- ----------- ------------
Assets
Cash and cash equivalents ..............................     $    60     $     9
Investment securities held to maturity .................         100         244
Investment securities available for sale ...............         745         779
Investment in subsidiary ...............................      10,083      10,598
Due from subsidiary ....................................         249         249
Other assets ...........................................          36          20
--------------------------------------------------------     -------     -------
Total assets ...........................................     $11,273     $11,899
--------------------------------------------------------     -------     -------
Liabilities and stockholders' equity
Other liabilities ......................................     $    22     $    27
Long-term debt .........................................       2,225       1,749
--------------------------------------------------------     -------     -------
Total liabilities ......................................       2,247       1,776
Stockholders' equity ...................................       9,026      10,123
--------------------------------------------------------     -------     -------
Total liabilities and stockholders' equity .............     $11,273    $11,899
--------------------------------------------------------     -------     -------

Condensed Statement of Income
                                                    Year Ended December 31,
----------------------------------------------  -------     -------     -------
In thousands                                       1999        1998        1997
--------------------------------------------    -------     -------     -------
Income
Interest income ............................    $    53     $    52     $    29
Dividends from subsidiary ..................        260         340         271
Interest from subsidiary ...................         20          20          20
--------------------------------------------    -------     -------     -------
Total income ...............................        333         412         320
--------------------------------------------    -------     -------     -------
Expenses
Interest expense ...........................        110          99          99
Other operating expenses ...................          4           4           1
Net gains (losses) on sales of
  investment securities ....................         29         (27)       --
Income tax benefit .........................         (4)        (19)        (12)
--------------------------------------------    -------     -------     -------
Total expenses .............................         81         111          88
--------------------------------------------    -------     -------     -------
Income before equity in
undistributed
  income of subsidiary .....................        252         301         232
Equity in undistributed income (loss)
  of subsidiary ............................        150         (75)        837
--------------------------------------------    -------     -------     -------
Net income .................................    $   402     $   226     $ 1,069
--------------------------------------------    -------     -------     -------

Condensed Statement of Cash Flows
                                       Year Ended December 31,
In thousands                             1999     1998    1997
--------------------------------------- -------- ------- --------
Operating activities
Net income ..................................   $ 402    $ 226   $1,069
Adjustments to reconcile net income
  to cash used in operating activities:
  (Discount accretion) premium
  amortization on investment securities .....      (5)       2     --
  Net (gains) losses on sales of
    investment securities available for sale      (29)      27     --
  Equity in undistributed (income) loss
    of subsidiary ...........................    (150)      75     (837)
(Increase) decrease in other assets .........     (16)    --         25
(Decrease) increase in other liabilities ....      (5)      18       (1)
                                                -----    -----    -----
Net cash provided by operating activities ...     197      348      256

Investing activities
Proceeds from sales of investment
  securities available for sale .............     205      416     --
Proceeds from maturities of investment
  securities held to maturity including
  principal payments ........................     221      111     --
Purchases of investment securities
  available for sale ........................    (179)    (433)    (764)
Purchases of investment securities
  held to maturity ..........................     (74)    (256)    (100)
                                                -----    -----    -----
Net cash used in investing activities .......     173     (162)    (864)
                                                -----    -----    -----
Financing activities
Redemption of long-term debt ................     476     --       --
Proceeds from issuance of common stock ......      25       83     --
(Redemption of) proceeds from issuance
  of preferred stock ........................    (500)    --        820
Dividends paid ..............................    (320)    (281)    (217)
                                                -----    -----    -----
Net cash (used in) provided by financing
  activities ................................    (319)    (198)     603
                                                -----    -----    -----
Increase (decrease) in cash and
  cash equivalents ..........................      51      (12)      (5)
Cash and cash equivalents at
  beginning of year .........................       9       21       26
                                                -----    -----    -----
Cash and cash equivalents at
  end of year ...............................   $  60    $   9    $  21
                                                -----    -----    -----

Note 23  Regulatory Capital Requirements

FDIC regulations require banks to maintain minimum levels of regulatory capital.
Under the  regulations  in effect at December 31, 1999, the Bank was required to
maintain (i) a minimum  leverage ratio of Tier 1 capital to total average assets
of 4.0%,  and (ii) minimum  ratios of Tier I and total capital to  risk-adjusted
assets of 4.0% and 8.0%, respectively.

Under its prompt  corrective  action  regulations,  the FDIC is required to take
certain supervisory actions (and may take additional discretionary actions) with
respect to an  undercapitalized  bank. Such actions could have a direct material
effect  on  such  bank's  financial  statements.  The  regulations  establish  a
framework   for   the    classification   of   banks   into   five   categories:
well-capitalized,   adequately  capitalized,   undercapitalized,   significantly
undercapitalized  and  critically   undercapitalized.   Generally,   a  bank  is
considered well-capitalized if it has a leverage capital ratio of at least 5.0%,
a Tier 1  risk-based  capital  ratio  of at least  6.0%  and a total  risk-based
capital ratio of at least 10.0%.

The foregoing capital ratios are based in part on specific quantitative measures
of assets,  liabilities and certain  off-balance sheet items as calculated under
regulatory  accounting  practices.  Capital amounts and classifications are also
subject to  qualitative  judgments by the FDIC about  capital  components,  risk
adjustments and other factors.

Management  believes  that, as of December 31, 1999,  the Bank meets all capital
adequacy  requirements  to which it is  subject.  Further,  the most recent FDIC
notification  categorized the Bank as a  well-capitalized  institution under the
prompt  corrective action  regulations.  There have been no conditions or events
since that notification that management believes have changed the Bank's capital
classification.

The following is a summary of the Bank's actual capital amounts and ratios as of
December  31,  1999 and 1998,  compared  to the FDIC  minimum  capital  adequacy
requirements and the FDIC requirements for  classification as a well-capitalized
Bank:

 In thousands               FDIC Requirements
 --------------------------------------------------------------
                                                 Minimum Capital
                                                For Classification
                   Bank Actual       Adequacy     as Well-Capitalized
                 Amount   Ratio    Amount   Ratio  Amount Ratio
----------------- ------- ------   ------- ------- ------ -------
December 31, 1999
  Leverage (Tier 1)
    capital        $10,711   6.32%  $6,774   4.00%  $8,468  5.00%
  Risk-based capital:
    Tier 1         10,711   11.04    3,882    4.00    5,822  6.00
    Total          12,182   12.55    7,763    8.00    9,705 10.00
December 31, 1998
  Leverage (Tier 1)
    capital        $10,552   7.42%  $5,687   4.00%  $4,213  5.00%
  Risk-based capital:
    Tier 1         10,552   12.52    3,371    4.00    5,056  6.00
    Total          11,859   14.07    6,741    8.00    8,426 10.00
------------------ ------  ------   ------ -------   ------ -----

Note 24  Summary of quarterly financial information (unaudited)
                                                     1999
----------------------------------   --------   --------    -------    --------
Dollars in thousands,                   First     Second      Third      Fourth
  except per share data               Quarter    Quarter    Quarter     Quarter
----------------------------------   --------   --------   --------    --------
Interest income ..................    $ 2,540    $ 2,585    $ 2,641     $ 2,849
Interest expense .................      1,166      1,209      1,383       1,518
----------------------------------    -------    -------    -------     -------
Net interest income ..............      1,374      1,376      1,258       1,331
Provision for
  loan losses ....................         43        141        301         421
Net gains on sales
  of investment securities .......         15       --            1           1
Other operating income ...........        398        355        347         375
Other operating expenses .........      1,279      1,273      1,310       1,468
----------------------------------    -------    -------    -------     -------
Income (loss) before income
  tax expense (benefit) ..........        465        317         (5)       (182)
Income tax expense (benefit) .....        159        110        (42)        (34)
----------------------------------    -------    -------    -------     -------
Net income (loss) ................    $   306    $   207    $    37     $  (148)
----------------------------------    -------    -------    -------     -------
Net income (loss) per share-
  basic ..........................    $  1.68    $  1.75    $   .31     $ (1.57)
----------------------------------    -------    -------    -------     -------
Net income (loss) per share-
  diluted ........................    $  1.53    $  1.59    $   .30     $ (1.08)
----------------------------------    -------    -------    -------     -------

                                                      1998
----------------------------------   --------   --------    -------    --------
Dollars in thousands,                   First     Second      Third      Fourth
  except per share data               Quarter    Quarter    Quarter     Quarter
----------------------------------   --------   --------   --------    --------
Interest income .....................   $ 2,331   $ 2,414    $ 2,409    $ 2,401
Interest expense ....................     1,097     1,165      1,176      1,160
-------------------------------------   -------   -------    -------    -------
Net interest income .................     1,234     1,249      1,233      1,241
Provision  for
  loan losses .......................        38       459         46        473
Net gains (losses) on sales
  of investment securities ..........         8         1         (4)       (18)
Other operating income ..............       336       349        314        311
Other operating expenses ............     1,138     1,293      1,274      1,294
-------------------------------------   -------   -------    -------    -------
Income (loss) before
  income tax expense ................       402      (153)       223       (233)
Income tax expense
  (benefit) .........................       136       (85)        57        (95)
-------------------------------------   -------   -------    -------    -------
Net income (loss) ...................   $   266   $   (68)   $   166    $  (138)
-------------------------------------   -------   -------    -------    -------
Net income (loss) per share-
  basic .............................   $  1.61   $  (.60)   $  1.45    $ (1.17)
-------------------------------------   -------   -------    -------    -------
Net income (loss) per share-
  diluted ...........................   $  1.46   $  (.60)   $  1.32    $ (1.17)
-------------------------------------   -------   -------    -------    -------
                          Independent Auditors' Report

The Board of Directors and Stockholders
City National Bancshares Corporation:


We have audited the  accompanying  consolidated  balance sheets of City National
Bancshares  Corporation and subsidiary (the Corporation) as of December 31, 1999
and  1998,  and the  related  consolidated  statements  of  income,  changes  in
stockholders'  equity,  and cash  flows for each of the years in the  three-year
period ended December 31, 1999. These consolidated  financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of City  National
Bancshares  and  subsidiary as of December 31, 1999 and 1998, and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.

                                                  /s/ KPMG LLp

March 7, 2000



Item 9.Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure There were no changes in or disagreements with accounts during 1995.

Part III

Item 10.  Directors and Executive  Officers of the  Registrant  The  information
required is  incorporated  herein by by reference to the material  responsive to
such  item in the  Corporation's  Proxy  Statement  for the  Annual  Meeting  of
Stockholders to be held on May 25, 2000.

Item 11.      Executive Compensation

The information  required is incorporated herein by by reference to the material
responsive to such item in the Corporation's Proxy Statement.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management The
information  required is  incorporated  herein by by  reference  to the material
responsive to such item in the Corporation's Proxy Statement.

Item 13.      Certain Relationships and Related Transactions

The information  required is incorporated herein by by reference to the material
responsive to such item in the Corporation's Proxy Statement.

Part IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K.

The following  exhibits are  incorporated  herein by reference or are annexed to
this Annual Report:

(a)      The required financial statements and the related independent auditor's
          report are included in Item 8.

(b)      The required exhibits are included as follows:

(3)(a) The Corporation's Restated Articles of Incorporation (incorporated herein
     by reference to Exhibit (3)(d) of the Corporation's  Current Report on Form
     8-K dated July 28, 1992).

(3)(b) Amendments to the  Corporation's  Articles of Incorporation  establishing
     the  Corporation's  Non-cumulative  Perpetual  Preferred  Stock,  Series  A
     (incorporated  herein by reference to Exhibit  (3)(b) of the  Corporation's
     Annual Report on Form 10-K for the year ended December 31, 1995).

(3)(c) Amendments to the  Corporation's  Articles of Incorporation  establishing
     the  Corporation's  Non-cumulative  Perpetual  Preferred  Stock,  Series  B
     (incorporated  herein by reference to Exhibit  (3)(c) of the  Corporation's
     Annual Report on Form 10-K for the year ended December 31, 1995).

(3)(d) Amendments to the  Corporation's  Articles of Incorporation  establishing
     the  Corporation's  Non-cumulative  Perpetual  Preferred  Stock,  Series  C
     (incorporated  herein by  reference to Exhibit  (3(i) to the  Corporation's
     Annual Report on Form 10-K for the year ended December 31, 1996).

(3)(e) Amendments to the  Corporation's  Articles of Incorporation  establishing
     the  Corporation's  Non-cumulative  Perpetual  Preferred  Stock,  Series  D
     (incorporated  herein by reference to Exhibit filed with the  Corporation's
     current report on Form 10-K dated July 10, 1997).

(3)(f) The amended By-Laws of the Corporation  (incorporated herein by reference
     to Exhibit (3)(c) of the  Corporation's  Annual Report on Form 10-K for the
     year ended December 31, 1991).

(4)(a) The Debenture  Agreements  between the  Corporation  and its  Noteholders
     (incorporated  herein by reference to Exhibit  (4)(a) of the  Corporation's
     Annual Report on Form 10-K for the year ended December 31, 1993).

(4)(b) Note Agreement dated December 28, 1995 by and between the Corporation and
     the  Prudential  Foundation  (incorporated  herein by  reference to Exhibit
     (4)(b) to the  Company's  Annual  Report  on Form  10-K for the year  ended
     December 31, 1995).

(10)(a) The  Employees'  Profit Sharing Plan of City National Bank of New Jersey
     (incorporated  herein by  reference  to Exhibit  (10) of the  Corporation's
     Annual Report on Form 10-K for the year ended December 31, 1988).

(10)(b) The Employment  Agreement among the  Corporation,  the bank and Louis E.
     Prezeau dated May 24, 1997 (incorporated  herein by reference to Exhibit 10
     to the  Corporation's  Quarterly  Report on Form 10-Q for the quarter ended
     June 30, 1997).

(10)(c) Lease and option  Agreement dated May 6, 1995 by and between the RTC and
     City  National  Bank of New Jersey  (incorporated  herein by  reference  to
     Exhibit  (10)(d) to the  Corporation's  Annual  Report on Form 10-K for the
     year ended December 31, 1995).

(10)(d) Amended and Restated Asset Purchase and Sale Agreement  between the Bank
     and Carver Federal Savings Bank dated as of January 18, 2000.

(10)(p) Asset  Purchase and Sale  Agreement  between the Bank and Carver Federal
     Savings Bank dated as of January 26, 1998.

(11) Statement  regarding  computation  of  per  share  earnings.  The  required
     information is included on page 24.

(12) Ratios  have  been  computed  using  the  average  daily  balances  of  the
     respective asset, liability and stockholders' equity accounts.

(13) Annual  Report to security  holders for the fiscal year ended  December 31,
     1999.

(21) Subsidiaries  of the  registrant.  The required  information is included on
     page 1.

(24) Power of Attorney is located on the signature page.

(27) Financial Data Schedule.

(c)  No reports on Form 8-K were filed during the quarter ended December 31,
     1999.


<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, City National Bancshares Corporation has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized:

                      CITY NATIONAL BANCSHARES CORPORATION

By:   /s/ Louis E. Prezeau                  By: /s/ Edward R. Wright
      ---------------------------------         --------------------
      Louis E. Prezeau                          Edward R. Wright
      President and Chief                       Chief Financial Officer
      Executive Officer                         and Principal Accounting Officer

Date: March 23, 2000                       Date:   March 23, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.  The undersigned hereby constitute
and appoint  Louis E.  Prezeau  his true and lawful  attorney in fact and agent,
with  full  power  of  substitution  and  resubstitution,  to  sign  any and all
amendments to this report and to file the same, with all exhibits  thereto,  and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission  granting  unto  said  attorney  in fact and  agent,  full  power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the  premises,  as fully and to all intents and purposes
as he or she might or could in person,  hereby ratifying and confirming all that
said  attorney in fact and agent,  may lawfully do or cause to be done by virtue
hereof.

Signature                                  Title                       Date

/s/ Douglas E. Anderson                    Director              March 23, 2000
-------------------------
Douglas E. Anderson

/s/ Barbara Bell                           Director              March 23, 2000
-------------------------
Barbara Bell

/s/ Leon Ewing                             Director              March 23, 2000
-------------------------
Leon Ewing

/s/ Eugene Giscombe                        Director              March 23, 2000
-------------------------                  Chairperson of the Board
Eugene Giscombe

/s/ Norman Jeffries                        Director              March 23, 2000
-------------------------
Norman Jeffries

/s/ Louis E. Prezeau                       Director              March 23, 2000
-------------------------                  President and Chief
Louis E. Prezeau                           Executive Officer

/s/ Lemar C. Whigham                       Director              March 23, 2000
--------------------------
Lemar C. Whigham