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                       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, 1995
       [    ]   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: (201) 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 15, 1996 was approximately $1,207,962.

There were 111,141 shares of common stock outstanding at March 15, 1996.

Documents incorporated by reference:
Certain  portions of the definitive  Proxy Statement for the 1996 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.

Page 1 of                    pages.  Exhibit Index appears on page ___________.


<PAGE>

                      CITY NATIONAL BANCSHARES CORPORATION
                                    FORM 10-K
                                Table of Contents
                                                                           Page
                                     PART I

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

                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related 
           Stockholder Matters.................................................3
Item 6.  Selected Financial Data...............................................4
Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................5-16
Item 8.  Financial Statements and Supplementary Data.......................17-35
Item 9.  Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure.............................35

                                    PART III

Item 10. Directors and Executive Officers of Registrant.......................35
Item 11. Executive Compensation...............................................35
Item 12. Security Ownership of Certain Beneficial Owners and Management.......35
Item 13. Certain Relationships and Related Transactions.......................35

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......36


Signatures....................................................................35


<PAGE>
                                       1
Part I

Item 1.       Business

City National  Bancshares  Corporation  (the  "Corporation"  or "CNBC") is a New
Jersey corporation  incorporated on January 10, 1983. At December 31, 1995, CNBC
had  consolidated  total  assets of $114.8  million,  total  deposits  of $100.9
million and total stockholders'  equity of $7.1 million.  Its only subsidiary is
City National Bank of New Jersey (the "Bank" or "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 two 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  business  and
individuals located within minority communities within New Jersey,  particularly
in the Newark area.

During 1995,  the Bank entered into an agreement  with NatWest Bank to acquire a
branch office located in Newark,  New Jersey. The transaction closed on March 8,
1996.

The Bank has no 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.

Regulatory matters

On January 21, 1992,  the Bank  entered into a Consent  Order with the Office of
the Comptroller of the Currency  ("OCC") which replaced and superceded the Cease
and Desist Order issued by the OCC in 1989.  The Consent Order  contained  fewer
articles than the Cease and Desist Order, but required, among other things, that
the Bank continue to implement  certain internal  procedures and controls in the
areas of lending  practices,  asset  quality and loan loss  review and  consumer
compliance  and  prohibited  the Bank from  declaring  or paying  any  dividends
without prior notification to the OCC.

The Consent  Order also required the Bank to achieve by April 30, 1992 a minimum
5% ratio of Tier I (core)  capital to total  assets.  This was  achieved  by the
required date and as of December 31, 1994, the Bank remained in compliance.

In April  1994,  the Bank was  advised by the OCC that as a result of the Bank's
substantial  compliance with the terms of the Consent Order,  such Consent Order
was terminated as of March 30, 1994.

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").
<PAGE>
                                       2

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  Bank and  Branching  Efficiency  Act of 1994  (the
"Branching Act") significantly changed interstate banking rules. Pursuant to the
Branching  Act, a bank holding  company will be able to acquire  banks in states
other than its home state beginning September 29, 1995, regardless of applicable
state laws.

The Branching  Act also  authorizes  banks to merge across state lines,  thereby
creating  interstate  branches,  beginning June 1, 1997. Under such legislation,
each state has the opportunity  either to "opt out" of this  provision,  thereby
prohibiting  interstate  branching in such states,  or to "opt in" at an earlier
time, thereby allowing  interstate  branching within that state prior to June 1,
1997.  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 bank can
enter the state only by acquiring an existing bank.

The New Jersey  legislature is presently  examining  whether it will opt-in with
respect to earlier interstate banking and branching,  as well as whether it will
authorize de novo branching and the entry into New Jersey of foreign banks.

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.
<PAGE>
                                       3
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.

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,  1995,  CNBC and its  subsidiary  had 57  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. In connection with the aforementioned branch acquisition,
the Bank leases its Hackensack office from the Resolution Trust Corporation, for
which no rent is  payable  for five  years,  after  which the Bank will have the
opportunity to purchase the property.

The main  office of the Bank is  undergoing  a major  renovation  which  will be
completed in 1996.

Item 3.       Legal Proceedings

There were no material  pending  legal  proceedings  to which CNBC of CNB were a
party.

Item 4.       Submission of Matters to a Vote of Security Holders

During  the  fourth  quarter  of  1995,  there  were  no  matters  submitted  to
stockholders for a vote.

Part II

Item 5.  Market  For The  Registrant's  Common  Equity and  Related  Stockholder

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 1995.

At March 11, 1996, the Corporation had 1,925 common stockholders of record.

On May 1,  1995,  the  Corporation  paid a cash  dividend  of $1.25 per share to
stockholders  of record on March 31, 1995.  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.
<PAGE>
                                       4

Item 6.       Selected Financial Data
<TABLE>
<CAPTION>

=================================================================================================================================
Five-Year Summary
Dollars in thousands, except per share data                        1995        1994 (1)     1993         1992         1991
=================================================================================================================================
Year-end Balance Sheet data:
<S>                                                           <C>          <C>           <C>          <C>          <C>    
Total assets                                                  $114,410     $111,062      $74,786      $61,911      $51,536
Total loans                                                     45,294       26,033       23,659       20,331       17,001
Reserve for possible loan losses                                   650          625          700          650          750
Investment securities                                           55,104       53,751       39,193       35,644       31,709
Total deposits                                                 100,889      103,941       64,435       57,853       40,653
Long-term debt                                                   1,749          249          249          249          269
Stockholders' equity                                             6,896        5,588        4,562        3,356        2,305
=================================================================================================================================
Income Statement data:
Interest income                                                $ 7,470      $ 5,596      $ 4,509      $ 4,430      $ 4,768
Interest expense                                                 2,829        2,068        1,469        1,513        2,143
---------------------------------------------------------------------------------------------------------------------------------
Net interest income                                              4,641        3,528        3,040        2,917        2,625
Provision (credit) for possible loan losses                        486       (1,464)         (23)          30          174
---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision (credit)
  for possible loan losses                                       4,155        4,992        3,063        2,887        2,451
Noninterest income                                               1,363        1,375          898          508          708
Noninterest expense                                              4,245        3,645        3,019        2,829        2,930
---------------------------------------------------------------------------------------------------------------------------------
Income before income tax expense, cumulative
  effect of accounting change                                    1,273        2,722          942          566          229
Income tax expense                                                 471          998          168          205          149
---------------------------------------------------------------------------------------------------------------------------------
Net income before cumulative effect of
  accounting change and extraordinary item                         802        1,724          774          361           80
Cumulative effect of accounting change                              -            -           206           -             -
Extraordinary item                                                  -            -            -           194          142
---------------------------------------------------------------------------------------------------------------------------------
Net income                                                      $  802      $ 1,724      $   980      $   555      $   222
=================================================================================================================================
<FN>
(1) Includes  the effects of a $1.6 million  recovery of a loan that was charged
off in 1989,  which is more fully  discussed  in  "Management's  discussion  and
analysis of financial condition and results of operations."
</FN>

Per share data:
Income before cumulative effect of
  accounting change and extraordinary item                      $ 7.22       $15.51       $ 7.88       $ 4.16       $ 1.37
Cumulative effect of accounting change and
  extraordinary item                                                -            -          2.09         2.24         2.42
Net income per primary share                                      7.22        15.51         9.97         6.40         3.79
Net income per fully diluted share                                6.53        13.90         8.86         6.40         3.79
Book value                                                       62.05        50.28        41.05        34.30        35.58
Dividends                                                         1.25         1.00          N/A          N/A          N/A

Average shares outstanding                                     111,141      111,141       98,267       86,738       58,673
Number of shares outstanding at year-end                       111,141      111,141      111,141       97,841       64,795

Financial ratios:
Net income as a percentage of
  average total assets                                             .72%        1.66%        1.20%         .81%         .39%
Net income as a percentage of
  average stockholders' equity                                   12.71        30.24        25.22        19.02        10.94
Stockholders' equity as a percentage of total assets              6.03         5.03         6.10         5.42         4.47
Dividend payout ratio                                            17.46         6.45          N/A          N/A          N/A
</TABLE>

<PAGE>
                                       5

Item 7. Management's  Discussion and Analysis Of Financial Condition and Results

Earnings performance

Net income in 1995 was $802,000  compared to $1,724,000 in 1994,  which included
the benefit of a $1.6  million  recovery of a loan that was charged off in 1989.
Returns on average stockholders'equity and average assets assets were 12.71% and
 .72% in 1995 and 30.24% and 1.66% in 1994. Related earnings per share on a fully
diluted   basis  fell  to  $6.53  from  $13.90.   After  giving  effect  to  the
aforementioned nonrecurring recovery and netsecurities gains, operating earnings
increased 16% from $688,000 to $798,000.

The primary  reason for the improved  performance  in operating  earnings was an
increase in net interest income,  which rose 31.5% compared to 1994.  Offsetting
this improvement  somewhat were higher costs associated with the operations of a
branch office acquired in May, 1994 from the Resolution  Trust  Corporation of a
failed  savings and loan  association,  for a full year, a full year of salaries
and benefits  attributable  to additions to the management  team made throughout
1994 in anticipation  of future  expansion,  and the ongoing  renovations of the
Bank's  executive  and  main  offices,  along  with  the  commencement  of major
enhancements to the Bank's  technology  systems to improve  customer service and
enhance efficiency.

Net interest income

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 from $3.6
million in 1994 to $4.7 million in 1995,  while the related net interest  margin
increased from 3.63% to 4.50%. These  improvements  resulted from a higher level
of interest  earning  assets,  which averaged $104.4 million in 1995 compared to
$97.1 million in 1994. This growth occurred primarily from the use for an entire
year in 1995 of  deposit  proceeds  resulting  from  the  aforementioned  branch
acquisition.  The higher net interest margin resulted from a shift in the mix of
earning assets to loans from investment securities and short-term assets.

The yield on average  interest  earning  assets rose 140 basis points in 1995 to
7.21%  from 5.81% in 1994 due to the  aforementioned  emphasis  on loan  volume,
which more than offset the lower interest rate  environment  that existed during
1995.

Investments

Total  investment  securities  averaged  $57  million in 1995  compared to $50.9
million in 1994,  an increase of $6.1 million,  or 11.9%.  Most of this increase
came from the proceeds received from the deposit assumption and were invested in
U.S. Government agency securities and mortgage backed securities.

In  September  1994,  the  Bank  transferred   certain  U.S.  Government  agency
securities, including structured notes, from the available for sale portfolio to
the  held to  maturity  portfolio.  Immediately  prior  to the  transfer,  these
securities  had a book value of  $6,437,000  and a market  value of  $5,933,000,
resulting in a gross unrealized loss totalling $504,000, or $302,000 net of tax.
This loss was being  amortized  by  increasing  the book  values of the  related
securities over their remaining maturities. At December 31, 1994, the securities
transferred  had a book  value of  $5,967,000,  with a related  market  value of
$5,834,000,  including  structured  notes with book and related market values of
$4,113,000 and $4,025,000,  respectively,  with an additional  gross  unrealized
loss included in stockholders' equity of $473,000.

At  December  31,  1994,  the Bank held  structured  notes  with a book value of
$11,019,000  and a  related  market  value of  $10,402,000,  reflecting  a gross
unrealized loss of $617,000. These notes include the aforementioned  transferred
securities,  part of which  is  included  in the  aforementioned  $473,000  loss
included in stockholders' equity.

In December 1995, the Bank transferred $21.8 million of securities from the held
to  maturity  to the  available  for  sale  portfolio  in  accordance  with  the
provisions  of the FASB Guide to  Implementation  of  Statement  No. 115,  which
provided a one-time opportunity for banks to restructure the components of their
investment portfolio.
<PAGE>
                                       6

At December 31, 1994, the gross  unrealized  loss on securities  included in the
available for sale portfolio totalled  $504,000,  which at December 31, 1995 was
reduced to $135,000 due primarily to a decrease in interest  rates.  The held to
maturity  portfolio  had a gross  unrealized  loss of $2,460,000 at December 31,
1994  compared to $61,000 a year later.  In addition to the lower  interest rate
environment,  this decrease also resulted from the removal  during 1995 of three
structured notes, as discussed below, and the  aforementioned  transfer in 1995,
both of which  allowed  the  Bank to  eliminate  a  significant  portion  of the
unrealized   loss   that   was   being   amortized   when  the   portfolio   was
marked-to-market.

After the 1995 transfer,  there  remained in the held to maturity  portfolio one
security  that had  been  transferred  from  available  for  sale in 1994.  This
investment  had a remaining  gross  unrealized  loss  included in  stockholders'
equity of $112,000 at December 31, 1995.

Included in the 1995 transfer were all the structured notes previously  included
in the 1994 transfer.  These notes had a book value  totalling  $3,461,000 and a
related  market  value of  $3,353,000  and a  remaining  gross  unrealized  loss
included in stockholders' equity of $224,000 at the time of the transfer.

At  December  31,  1995,  the  structured  note  portfolio  had a book  value of
$8,209,000 and related market value of $8,003,000, reflecting a gross unrealized
loss of $206,000.  The structured  note portfolio  consisted of twelve issues at
December  31,  1994,  of  which  two were  called  during  1995  and one  became
unstructured  due to reaching its step-up limit.  Of the nine remaining  issues,
dual-index  notes  totalled  $3,497,000  in book  value,  step-ups  amounted  to
$1,962,000 and deleveraged bonds totalled $2,750,000.

The  dual-index  notes are all indexed to a combination  of long and short- term
rates,  while  the  deleveraged  notes are  indexed  to the  ten-year  Treasury.
Accordingly, the value of these securities could fluctuate depending on interest
rate  movements.  The step-ups  have less  interest rate risk since their yields
will increase over their remaining maturities.

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

The composition of the investment portfolio between the held to maturity and the
available for sale changed  significantly  due  primarily to the  aforementioned
transfer.  At December 31, 1994, the available for sale portfolio comprised 7.5%
of the total investment portfolio,  while at December 31, 1995 the available for
sale portfolio represented 55.5%.

Information  pertaining to the average  weighted  yields of  investments in debt
securities   at  December   31,  1995  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.  Taking  into  account  such
contractual  amortization  and expected  prepayments,  a  significant  amount of
principal  reduction on the  aforementioned  securities  will occur within three
years:

Investment Securities Available for Sale
<TABLE>
<CAPTION>
                                                  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         $3,291     6.37%    $  2,773  6.52%    $     -     - %      $    -       - %    $ 6,064   6.44%
U.S. Government agencies            997     4.84       11,681  5.48           -     -         11,541    6.46      24,219   5.92
---------------------------------------------------------------------------------------------------------------------------------
Total book value                 $4,288     6.01%     $14,454  5.68%    $     -     - %      $11,541    6.46%    $30,283   6.02%
=================================================================================================================================
</TABLE>

<PAGE>
                                       7

Investment Securities Held to Maturity 
<TABLE>
<CAPTION>
                                                  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             -      -       $15,589    6.04%      $4,204    6.95%    $2,165     5.54%   $21,958   6.16%
Obligations of states and
  political subdivisions             -      -           558    7.45        1,978    6.76         -      -         2,536   6.91
---------------------------------------------------------------------------------------------------------------------------------
Total book value                $    -      -       $16,147    6.09%      $6,182    6.89%    $2,165     5.54%   $24,494   6.24%
=================================================================================================================================
</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, 1995. Average yields on obligations
of states 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 available for sale  portfolio  decreased  from 6.28% in
1994 to 6.03% in 1995  reflecting  the low yield on the  short-term  investments
transferred  from the held to maturity  portfolio in 1995,  as well as the lower
rates  securities  purchased  in 1995.  This  transfer  also reduced the average
maturity of the portfolio,  as maturities within five years comprised 61% of the
portfolio at December 31, 1995 compared to 30% a year earlier,  while maturities
longer than ten years  comprise 39% at December 31, 1995  compared to 70% a year
earlier.

The yield on the held to maturity  portfolio rose from 5.89% in 1994 to 6.24% in
1995,  reflecting  the  purchase  during  1995 of higher  coupon  callable  U.S.
Government agency  securities.  The average portfolio  maturity shortened during
1995 as maturities  falling within the first five years represented 65.9% of the
total held to maturity  portfolio at December 31, 1995  compared to 57.2% a year
earlier.
<PAGE>
                                       8

Consolidated Average Balance Sheet with Related Interest and Rates
<TABLE>
<CAPTION>
                                                              1995                                          1994
=================================================================================================================================
                                                Average                Average               Average                 Average
Tax equivalent basisdollars 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                 $ 4,948    $   280        5.65%              $18,867    $   815         4.32%
  Other short-term investments                   3,334        192        5.75                     -          -           -
  Interest-bearing deposits with banks             170         10        6.09                     -          -           -
  Investment securities:
    Taxable 1                                   54,468       3269        6.00                 48,997      2,503        5.11
    Tax-exempt                                   2,491        171        6.88                  1,925        127        6.60
---------------------------------------------------------------------------------------------------------------------------------
    Total investment securities                 56,959      3,440        6.04                 50,922      2,630        5.16
---------------------------------------------------------------------------------------------------------------------------------
  Loans 2,3:
    Commercial                                  14,598      1,202        8.23                 15,799      1,037        6.56
    Mortgage                                    24,000      2,365        9.85                 10,926      1,106       10.12
    Installment                                    374         40       10.70                    593         51        8.60
---------------------------------------------------------------------------------------------------------------------------------
    Total loans                                 38,972      3,607        9.26                 27,318      2,194        8.03
---------------------------------------------------------------------------------------------------------------------------------
    Total interest earning assets              104,383      7,529        7.21                 97,107      5,639        5.81
---------------------------------------------------------------------------------------------------------------------------------
Noninterest earning assets:
  Cash and due from banks                        3,784                                          4,918
  Net unrealized loss on investment securities
    available for sale                            (297)                                         (261)
  Reserve for possible loan losses                (729)                                         (724)
  Other assets                                   3,904                                         2,553
---------------------------------------------------------------------------------------------------------------------------------
  Total noninterest earning assets               6,662                                         6,486
---------------------------------------------------------------------------------------------------------------------------------
Total assets                                  $111,045                                      $103,593
=================================================================================================================================
Liabilities and stockholders' equity Interest bearing liabilities:
  Savings deposits 4                          $ 36,818        726        1.97               $ 40,060        785        1.96
  Time deposits 5                               47,797      1,927        4.03                 33,611      1,084        3.23
---------------------------------------------------------------------------------------------------------------------------------
  Total interest bearing deposits               84,615      2,653        3.14                 73,671      1,869        2.57
  Short-term borrowings                          2,780        156        5.63                  4,306        179        4.16
  Long-term debt                                   249         20        8.01                    249         20        8.03
---------------------------------------------------------------------------------------------------------------------------------
  Total interest bearing liabilities            87,644      2,829        3.23                 78,226      2,068        2.67
---------------------------------------------------------------------------------------------------------------------------------
Noninterest bearing liabilities:
  Demand deposits                               15,713                                        18,654
  Other liabilities                              1,378                                         1,012
---------------------------------------------------------------------------------------------------------------------------------
  Total noninterest bearing liabilities         17,091                                                   19,666
---------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                             6,310                                                    5,701
---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity    $111,045                                      $103,593
=================================================================================================================================
Net interest income (tax equivalent basis)                  4,700        3.98                             3,571        3.14
Tax equivalent basis adjustments 6                             59                                           (43)
---------------------------------------------------------------------------------------------------------------------------------
Net interest income                                         4,641                                       $ 3,528
=================================================================================================================================
Average rate paid to fund interest earning assets                        2.71                                          2.18
---------------------------------------------------------------------------------------------------------------------------------
Net interest income as a percentage of
   interest earning assets (tax equivalent basis)                        4.50%                                         3.63%
=================================================================================================================================
<FN>
1  Includes  investment  securities  available  for sale and held to  maturity 
2  Includes  nonperforming  loans 
3  Includes  loan fees of $197,000 and $109,000 in 1995 and 1994, respectively
4  Includes  noninterest  bearing  deposits  maintained by a state  governmental
   agency of $469,000 and $860,000 in 1995 and 1994, respectively
5  Includes noninterest bearing deposits maintained by corporations and U.S. 
   governmental agencies of $12,756,000 in 1995 and $4,144,000 in 1994
6  The tax equivalent adjustment was computed assuming a 34% statutory federal 
   income tax rate in 1995 and 1994
</FN>
</TABLE>
<PAGE>
                                       9

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>

                                               1995 Net Interest Income Increase       1994 Net Interest Income Increase
                                                 (Decrease) from 1994 due to              (Decrease) from 1993 due to
In thousands                                    Volume       Rate       Total             Volume     Rate       Total
=================================================================================================================================
<S>                                             <C>         <C>       <C>                 <C>      <C>         <C>
Interest income
Loans:
  Commercial                                    $(114)      $394        $163               $354    $  (4)       $350
  Real estate                                   1,323       (181)      1,142                 87      (19)         68
  Installment                                     (19)         8         (11)                (4)     (15)        (19)
---------------------------------------------------------------------------------------------------------------------------------
Total loans                                     1,190        221       1,411                437      (38)        399
Taxable investment securities                     280        486         766                523     (280)        243
Tax-exempt investment securities                   37          7          44                157      (36)        121
Federal funds sold and securities
  purchased under agreements to resell           (601)        66        (535)               109      256         365
Other short-term investments                      192         -          192                 -        -           -
Interest-bearing deposits with banks               10         -           10                 -        -           -
---------------------------------------------------------------------------------------------------------------------------------
Total interest income                           1,108        780       1,888              1,226      (98)      1,128
---------------------------------------------------------------------------------------------------------------------------------
Interest expense
Savings deposits                                   63         (4)         59               (224)     189         (35)
Time deposits                                    (458)      (385)       (843)              (313)    (217)       (530)
Short-term borrowings                             (86)       109          23                 25      (59)        (34)
---------------------------------------------------------------------------------------------------------------------------------
Total interest expense                           (481)      (280)       (761)              (512)     (87)       (599)
---------------------------------------------------------------------------------------------------------------------------------
Net interest income                              $627       $500      $1,027               $714    $(185)       $529
=================================================================================================================================
</TABLE>

Loans

Total loans  averaged $39 million in 1995  compared to $27.3 million in 1994, an
increase of 46.5%.  At December 31,  1995,  total loans were $45.7  million,  up
75.8% from $26  million at 1994  year-end.  The  largest  increase  occurred  in
mortgage loans, where average volume in 1995 was $24 million,  compared to $10.9
million in 1994, an increase of 120.1%.

This  increase  occurred as a result of the  purchase  in January  1995 of $11.5
million  in  seasoned  residential  mortgage  loans  from the  Resolution  Trust
Corporation.   These  loans  consisted  of  one-to-four   family  loans  located
throughout  central New Jersey.  Other than these loans, there was little growth
in the Bank's residential  mortgage  portfolio,  as all its fixed-rate loans are
sold in the secondary  market and there was a lesser demand for  adjustable-rate
loans during 1995 due to the declining interest rate environment.

Loans  originated for sale declined to $4.6 million in 1995 from $6.5 million in
1994.  While  the  Bank  originates  Small  Business   Administration-guaranteed
commercial loans for sale, most loans originated for sale represent  Housing and
Urban Development ("HUD") - guaranteed residential rehabilitation loans. The HUD
loans are more labor intensive than the conventional  residential mortgage loans
that the Bank originated and sold during 1994, but are more profitable.  Because
of the  emphasis  in 1995 on HUD  loans,  the  volume  declined,  but  gains and
commission on loan sales rose by 90.6%. Loans sold decreased, to $4.5 million in
1995 from $6.1  million in 1994.  The Bank  intends  to expand  its  residential
mortgage lending program by moving into Federal Housing  Administration  ("FHA")
guaranteed  home  rehabilitation  loans,  which are sold to the FHA,  as well as
utilizing  the  benefits of the  Federal  Home Loan Bank  community  development
financing programs.

At December  31, 1995,  loans to churches  totaled  $6.3  million,  representing
13.78% 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.
<PAGE>
                                       10

The Bank's  primary  market area  consists of northern New Jersey,  particularly
within the Newark area. The overall unemployment rate in the State of New Jersey
was 7.3% at the end of 1995  compared to a  nationwide  rate of 5.6%,  which was
also the second highest rate of all industrialized states. In addition,  several
major companies  located in New Jersey have recently  announced  layoffs,  which
will further affect the New Jersey economy.

While  management  believes that its loan  portfolio is well secured and able to
withstand  a downturn in economic  conditions,  its effects are being  carefully
considered in making credit decisions in 1996.

Management is unaware of any significant potential problem loans at December 31,
1995. Maturities and interest  sensitivities of loans Information  pertaining to
maturities  and the  sensitivity  to changes in interest  rates of certain  loan
categorizes at December 31, 1995 is presented below.

                              Due After One
                   Due in One Year Through   Due After
In thousands     Year or Less Five Years    Five Years    Total
================================================================
Commercial          $ 15,335     $  937     $  2,015   $ 18,287
Real estate:
  Construction            90         -            -          90
  Mortgage             2,923     19,013        4,436     26,355
----------------------------------------------------------------
Total               $ 18,348   $ 19,940     $  6,451   $ 44,739
================================================================
Loans at fixed
  interest rates    $  1,703   $  2,433     $  1,734   $  5,870
Loans at variable
  Interest rates      16,645     17,507        4,717     38,872
----------------------------------------------------------------
Total               $ 18,348   $ 19,940     $  6,451   $ 44,739
================================================================

Summary of loan loss experience

Changes in the reserve for possible loan losses are summarized below.

Dollars in thousands                           1995     1994
==============================================================
Balance, January 1                            $625      $700
--------------------------------------------------------------
Charge-offs:
  Commercial loans                             382        35
  Real estate loans                            163       103
  Installment loans                             14        22
--------------------------------------------------------------
Total                                          559       160
--------------------------------------------------------------
Recoveries:
  Commercial loans                              26     1,461
  Real estate loans                             54        48
  Installment loans                             18        40
--------------------------------------------------------------
Total                                           98     1,549
--------------------------------------------------------------
Net charge-offs (recoveries)                   164    (1,389)
Provision (credit) for possible loan
  losses charged to operations                 486    (1,464)
--------------------------------------------------------------
Balance, December 31                          $650      $625
==============================================================
Net charge-offs (recoveries) as a
  percentage of average loans                 1.43%    (5.34)%
Reserve for possible loan losses as
  a percentage of loans                       1.45      2.44
Reserve for possible loan losses as
  a percentage of nonperforming loans        60.07    183.80
===============================================================

The reserve for possible  loan losses is  maintained  at a level  determined  by
management to be adequate to provide for potential 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,  the
credit  conditions  of the  borrower,  the value of the  underlying  collateral,
business and economic conditions and the possibility that there may be potential
losses in the portfolio which cannot currently be identified.

Charge-offs  rose from  $160,000  in 1994 to $559,000 in 1995 as a result of the
charge-off,  in the fourth  quarter of 1995, of a loan that had been  performing
until  that  time  where  credit  quality  rapidly  eroded  to the  extent  that
management considered the collection of the loan to be doubtful.
<PAGE>
                                       11

During 1994, the Bank recovered $1.6 million as an insurance recovery for a loan
that was charged off in 1989.  $175,000  was  recorded  as other  income,  while
$1,425,000,  which  represents  the total  amount of the loan  charged  off, was
recorded as a recovery to the reserve for possible loan losses.

Allocation of the reserve for possible loan losses

The reserve for possible loan losses has been  allocated  based on  management's
estimates of the risk  elements  within the loan  categories  set forth below at
December 31:
                                   1995                  1994
===============================================================
                             Percentage            Percentage
                                of Loan               of Loan
Dollars in thousands  Amount   Category     Amount   Category
===============================================================
Commercial             $ 175      .98%       $  83      .63%
Real estate              448     1.65          384     3.14
Installment                7     1.97            9     1.56
Unallocated               20       -           149       -
--------------------------------------------------------------
Total                  $ 650     1.44%       $ 625     2.39%
==============================================================

Nonperforming assets

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

In thousands                                  1995       1994
================================================================
Nonperforming loans
  Commercial                                $   68    $    17
  Real estate                                  800        314
  Installment                                    2          6
  Lease financing receivables                   -           4
----------------------------------------------------------------
Total nonperforming loans                      870        341
Other real estate owned                        212        307
----------------------------------------------------------------
Total                                       $1,082    $   648
================================================================

The increase in nonperforming loans in 1995 resulted primarily from the addition
of one loan that management considers well-secured by a commercial property.

Deposits

Total  deposits  decreased  from $103.9  million at December  31, 1994 to $100.9
million a year later,  due to a decline in demand  deposits.  The Bank's deposit
levels  may change  significantly  on a daily  basis  because  deposit  accounts
maintained by federal and state  governmental  agencies  represent a significant
part of the Bank's  deposits and are more volatile than  commercial or or retail
deposits.

These municipal and U.S. Government deposits represent a substantial part of the
Bank's business,  tend to have high balance  relationships  and comprise most of
the Bank's  accounts  with  balances of $100,000 or more at December  31,  1995.
While  local  municipalities  use the  accounts  for  operating  and  short-term
investments purposes, the U.S. Government uses noninterest-bearing  certificates
of deposit as compensating balances, representing a form of payment for services
provided.  All the foregoing  deposits  require  collateralization  with readily
marketable U.S.  Government  securities.  While the Bank issues  certificates of
deposit to  municipalities in amounts of $100,000 at rates which are competitive
with other institutions and somewhat more costly than other sources of deposits,
the overall  cost of  certificates  of deposit of $100,000 or more is reduced by
the maintenance of the foregoing compensating balance accounts.

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 loss of any
of these deposits, these securities are readily marketable.

Contributing  to the  decline in demand  deposits  were new  federal tax deposit
regulations which went into effect on December 1, 1994,  whereby large companies
began making their deposits directly to the U.S. Treasury Department rather than
through a commercial  bank. As a result,  at December 31, 1995,  balances  under
this tax deposit program totalled $89,000 compared to $3 million a year earlier.
To offset the loss of these deposits, the U.S. Treasury Department has deposited
a $9.5 million  noninterest bearing time deposits with CNB, which will be repaid
over five years.
<PAGE>
                                       12

Average  deposits  totalled  $100.3 million in 1995, an 8.7% increase from $92.3
million  in 1994,  with  almost  all the growth  occurring  in savings  and time
deposits.  The branch  acquisition  contributed  $14.7  million  to the  deposit
growth.

Certain  corporations and governmental  agencies  maintain  noninterest  bearing
savings and time deposit  accounts  with the Bank as  compensation  for services
performed.   In  1995,  such  balances   averaged   $469,000  and   $12,756,000,
respectively,  contributing  39 basis  points to net interest  income.  In 1994,
these   respective   balances  were  $860,000  and   $4,144,000,   respectively,
contributing 23 basis points.

Short-term borrowings

Average  short-term  borrowings  were  lower  in  1995  because  of the  greater
liquidity available from proceeds received with the branch acquisition.

Other operating income

Other operating  income was $1.4 million in both 1995 and 1994. There were major
changes within the components,  however,  as service  charges rose $216,000,  or
44.8% due to a greater volume of service chargeable  transactions.  Other income
decreased $213,000,  or 26.1%, due primarily to the aforementioned  recording in
1994 of $175,000 associated with the loan loss recovery.

Other operating expenses

Other operating  expenses,  which include  expenses other than interest,  income
taxes and the provision for possible loan losses, totalled $4.2 million in 1995,
a 16.5%  increase  compared  to  1994.  Salaries  and  other  employee  benefits
comprised the largest  portion of the increase,  rising 23.7% from $2 million to
$2.5 million in 1995. The primary  reason for the increase in overall  operating
expenses was the operation of the acquired branch office for a full year.

Also  contributing  to the higher  salary and benefit  costs were the effects of
increased lending and administrative staff and annual merit increases.

Occupancy  expense  rose  $30,000,  or 24.4%  from  1994 to 1995  due to  higher
depreciation  expense  arising from the  completion  of the  renovations  to the
Bank's executive offices

Equipment expense increased  $74,000,  or 37% from 1994 to 1995 due primarily to
higher costs related to the aforementioned renovations.

Other  operating  expense was  nominally  higher in 1995 due  primarily to lower
premiums  for  FDIC  insurance  coverage  as well as the  effectiveness  of cost
containment measures instituted in early 1995. These reductions partially offset
the increased cost of operating the acquired branch for a full year.

Income tax expense

Income  tax  expense as a  percentage  of  pre-tax  income  was 37%,  relatively
unchanged from 36.7% in 1994.

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'  request 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.

It is the  responsibility  of senior  management  to  monitor  and  oversee  all
activities  relating to liquidity  management and the protection of net interest
income from fluctuations in interest rates.

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 major
contribution  during  1995  from  operating   activities  to  the  Corporation's
liquidity came from proceeds from sales of loans originated for sale,  amounting
to $4.6 million,  while loans  originated for sale  represented the greatest use
from operating activities, totalling $4.6 million.

The purchase of loans from the Resolution  Trust  Corporation  for $11.5 million
represented the largest use of funds for investing activities, while most of the
cash received from investing  activities  came from proceeds from  maturities of
investment securities, which totalled $10.5 million.

The primary source of funds from financing  activities resulted from an increase
in  short-term  borrowings  of $3.7  million,  while  a  reduction  in  deposits
represented the greatest use for financing activities.
<PAGE>
                                       13

Effects of inflation

Inflation,  as measured by the CPI, has been  relatively  steady  during  recent
years, advancing 2.8% in 1995, 2.7% in 1994 and 1993 and 2.9% in 1992.

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.

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 and variances in the effects of
rate  changes  on  the  Corporations'  mix  of  interest-sensitive   assets  and
liabilities.
<PAGE>
                                       14

The  following  table  presents  the  Corporation's  interest  rate  sensitivity
position at December 31, 1995.
Interest-sensitivity analysis
<TABLE>
<CAPTION>
                                                                 Interest Sensitivity Period
=================================================================================================================================
                                                         Daily    Due After    Due After                  Due After
                                                  Floating and Three Months   Six Months        Total   One Year or
                                                    Due Within   but Within   But Within       Within  Noninterest-
In thousands                                      Three Months   Six Months     One Year     One Year     sensitive        Total
=================================================================================================================================
<S>                                                  <C>          <C>          <C>          <C>            <C>          <C>
Interest-earning assets
Federal funds sold                                    $ 6,950       $   -        $   -       $ 6,950       $    -       $ 6,950
Interest-bearing deposits with banks                      321           -            -           321            -           321
Investment securities                                  16,937        2,025        6,484       25,446        29,792       55,238
Loans                                                  16,922        1,270        4,849       23,041        22,628       45,669
---------------------------------------------------------------------------------------------------------------------------------
Total                                                  41,130        3,295       11,333       55,758        52,420      108,178
---------------------------------------------------------------------------------------------------------------------------------
Sources of funds supporting interest-earning assets
Savings deposits (1)                                   22,812           -            -        22,812        14,207       37,019
Time deposits                                          26,520        9,614        6,630       42,754         8,191       50,945
Short-term borrowings                                   3,661           -            -         3,661            -         3,661
Long-term debt                                             -            -            -            -          1,749        1,749
Noninterest bearing sources                                -            -            -            -         15,842       15,842
---------------------------------------------------------------------------------------------------------------------------------
Total                                                  52,983        9,614        6,630       69,227        40,451      109,678
---------------------------------------------------------------------------------------------------------------------------------
Interest-sensitive gap                                (11,853)      (6,319)       4,703      (13,469)
---------------------------------------------------------------------------------------------------------------------------------
Cumulative interest-sensitivity gap                  $(11,853)    $(18,172)    $(13,469)    $(13,469)
---------------------------------------------------------------------------------------------------------------------------------
Interest-sensitive assets to interest
  sensitive liabilities                                  77:1         .34:1      1.71:1       1.81:1
---------------------------------------------------------------------------------------------------------------------------------
Cumulative interest-sensitive assets
  to interest sensitive liabilities                     .77:1         .71:1       .81:1        .81:1
---------------------------------------------------------------------------------------------------------------------------------
Interest-sensitivity gap as a percentage
  of total assets                                      (10.33)%      (5.51)%       4.01%       11.74%
---------------------------------------------------------------------------------------------------------------------------------
Cumulative interest-sensitivity gap as a percentage
  of total assets                                      (10.33)%     (26.17)%      11.74%       11.74%
=================================================================================================================================
<FN>
(1) Based on historical experience, management has classified passbook and 
    statement savings accounts as noninterest sensitive
</FN>
</TABLE>

At December 31, 1995, the Corporation  had a cumulative  one-year gap of $(13.5)
million, representing 11.74% of total assets and a ratio of .81:1. Utilizing the
dynamic simulation model,  management believes that this amount would not result
in a significant  change in net interest  income should  interest  rates rise or
fall up to 300 basis points, which is the maximum change that management uses to
measure the Corporation's exposure to interest rate risk.

Capital

Capital  adequacy is a measure of the amount of capital  needed to support asset
growth.  Minimum  capital  levels  for  banks  and bank  holding  companies  are
regulated  by capital  adequacy  guidelines,  which  establish  minimum  capital
standards  related  to the  level of assets  and  off-balance  sheet  exposures,
adjusted for credit risk. The guidelines categorize assets and off-balance sheet
items into four  risk-weightings and require banking  institutions to maintain a
minimum ratio of total capital to risk-weighted  assets.  Total capital consists
of the sum of a core (Tier I) and  qualifying  supplementary  (Tier II)  capital
elements.  Tier I capital  essentially  is comprised  of tangible  stockholders'
equity for common  stock and  certain  perpetual  preferred  stock,  and Tier II
capital  includes a portion of the reserve for  possible  loan  losses,  certain
qualifying  subordinated  long-term  debt and  preferred  stock  which  does not
qualify as Tier I capital.  The regulatory  minimum for combined Tier I and Tier
II capital is 8% of  risk-adjusted  assets,  with Tier II elements which qualify
for inclusion in total capital being limited to 100% of the total amount of Tier
I elements.

In addition to the  risk-adjusted  guidelines  discussed  above,  banks and bank
holding  companies  are  subject  to certain  leverage  standards.  Under  these
guidelines,  banks and bank  holding  companies  are  required  to maintain as a
minimum leverage  standard a Tier I  capital-to-total  assets ratio of 3%. Under
these guidelines,  institutions operating at the 3% minimum are expected to have

<PAGE>
                                       15

well diversified risk profiles, including no undue interest rate risk, excellent
asset quality,  high liquidity and strong  earnings.  Institutions  experiencing
growth or with high levels of risk would be expected to maintain  Tier I capital
levels 100 to 200 basis points above the minimum.

The following table presents the consolidated and bank-only  capital  components
and related ratios at December 31:
                                                                 Bank
                                        Consolidated             Only
========================================================================
Dollars in thousands                1995        1994             1995
========================================================================


Total stockholders' equity       $ 6,896     $ 5,588          $ 8,591
Net unrealized loss on investment
  securities available for sale      141         587              141
Disallowed intangibles               (76)        (85)             (76)
------------------------------------------------------------------------
Tier 1 capital                     6,961       6,090            8,656
------------------------------------------------------------------------
Qualifying long-term debt          1,749         249               -
Reserve for possible loan losses     516         412              516
------------------------------------------------------------------------
Tier 2 capital                     2,265         661              563
------------------------------------------------------------------------
Total capital                    $ 9,226     $ 6,751          $ 9,172
========================================================================
Risk-adjusted assets             $41,303     $32,997          $41,303
Total assets                     114,410     111,062          114,410
------------------------------------------------------------------------
Risk-based capital ratios:
  Tier 1 capital to
    risk-adjusted assets          15.86%      18.46%           20.96%
  Regulatory minimum               5.00        5.00             5.00
  Total capital to risk-adjusted
    assets                        17.81       20.46            22.21
  Regulatory minimum               8.00        8.00             8.00
Leverage ratio                     6.27        5.48             7.80
Total stockholders' equity to
  total assets                     6.03        5.03             7.51
========================================================================

Results of operations - 1994 compared with 1993

Net income for 1994 rose to $1,724,000, or, on a fully diluted basis, $13.90 per
share  compared to $568,000 , or $7.03 per share in 1993,  due to a $1.6 million
insurance  recovery of a loan charged off in 1989.  Excluding the recovery along
with net security gains, net earnings from operations were $688,000, compared to
$476,000  in 1993,  an  increase of 44.5%.  Higher net  interest  income was the
primarily  reason  for this  increase,  reflecting  greater  levels of  interest
earning assets resulting from the May, 1994 branch acquisition.

While net  interest  income was higher,  on a fully tax  equivalent  basis,  the
related net interest  margin  decreased  from 3.99% to 3.81% due  primarily to a
more rate-sensitive deposit structure at the acquired branch.

Average  deposits  grew from $72  million in 1993 to $92.3  million in 1994,  an
increase of 28%, due to the aforementioned  branch  acquisition.  While proceeds
from the the deposit  increase  were  spread  over a number of interest  earning
assets, the major growth was in taxable investment  securities,  which grew from
$39.1 million at December 31, 1993 to $53.7 million a year later.

Loan growth during 1994 was modest, although loans originated for sale rose from
$4.3  million  in  1993 to  $6.5  million  in  1994  as the  Bank  expanded  its
residential  lending  program  under which these loans are sold in the secondary
market.

As a result of generally improved economic  conditions in the Bank's market area
as well as  improvements  in the Bank's asset  quality,  management  reduced the
reserve for possible  loan losses from December 31, 1993 to December 31, 1994 by
recording a credit to the related provision of $1,464,000.

Other operating income

Other  operating  income rose  $302,000,  from $898,000 to $1.2 million in 1994,
primarily due to $339,000 of income  earned from funds  committed to loans to be
acquired from the Resolution  Trust  Corporation  in connection  with the branch
acquisition.  Also  contributing  to this income were higher service fees earned
for acting as lead bank in a  corporate  line of credit  syndication.  Such fees
rose from $42,000 in 1993 to $158,000 in 1994.

Offsetting  these  increases  was a reduction in net gain on sales of investment
securities, which fell from $353,000 in 1993 to $36,000 in 1994.
<PAGE>
                                       16

Other  operating  expenses  totalled  $3.6  million  in 1994,  a 20.7%  increase
compared to 1993. Salaries comprised the largest portion of the increase, rising
from $1.2 million to $1.6 million in 1994 due to the branch acquisition,  annual
merit increases and the added cost of new hires,  made primarily in anticipation
of an expansion in the Bank's lending activities.

Occupancy  expense  declined  19%, from $153,000 in 1993 to $123,000 in 1994 due
primarily to an increase in rental  income from a building  that was  previously
used as a branch  office  which was  subsequently  converted to storage with the
remaining space leased to a commercial business.

Furniture and equipment  expense declined 17%, from $241,000 in 1993 to $200,000
in 1994  due to a  decrease  in  equipment  rental  expense  resulting  from the
purchase of data processing equipment that was being leased. Higher depreciation
expense on the purchased equipment partially offset this reduction.

Other operating expenses rose from $1.1 million in 1993 to $1.3 million in 1994,
a 19% increase.  Expenses  attributable to the new branch comprised  $133,000 of
this increase.  The balance  occurred from increases in a broad range of expense
categories  due  primarily to a higher volume of  operations,  offset in part by
lower legal fees.

Income tax expense as a percentage  of pre-tax  income  increased  from 17.8% in
1993 to 36.7% in 1994.  This increase was  attributable to a decrease in 1993 in
the federal deferred tax valuation  allowance along with higher levels of income
subject to state corporate income tax.
<PAGE>
                                       17

Item 8.       Financial Statements and Supplementary Data

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                                                          Year Ended December 31,
                                                                                                       ============================
Dollars in thousands, except per share data                                                                   1995             1994
====================================================================================================================================
<S>                                                                                                       <C>               <C> 
Assets
Cash and due from banks (Note 2) ...............................................................          $  3,344          $  3,331
Federal funds sold (Note 3) ....................................................................             6,950            23,800
Interest-bearing deposits with banks ...........................................................               321              --
Investment securities available for sale (Note 4) ..............................................            30,609             7,173
Investment securities held to maturity (Market value of $24,434
       in 1995 and $44,118 in 1994) (Note 5) ...................................................            24,494            46,578
Loans held for sale (Note 1) ...................................................................               555               470
Loans (Note 6) .................................................................................            44,739            25,563
Less: Reserve for possible loan losses (Note 7) ................................................               650               625
                                                                                                          --------          --------
Net loans ......................................................................................            44,089            24,938
                                                                                                          --------          --------
Premises and equipment (Note 8) ................................................................             2,288             1,740
Accrued interest receivable ....................................................................               955             1,149
Other real estate owned ........................................................................               212               307
Other assets (Note 9) ..........................................................................               593             1,576
                                                                                                          --------          --------
Total assets ...................................................................................          $114,410          $111,062
                                                                                                          ========          ========
Liabilities and Stockholders' Equity
Deposits:
       Demand ..................................................................................          $ 12,925          $ 16,448
       Savings .................................................................................            37,019            39,615
       Time ....................................................................................            50,945            47,878
                                                                                                          --------          --------
Total deposits (Note 10) .......................................................................           100,889           103,941
Short-term borrowings (Note 11) ................................................................             3,661              --
Accrued expenses and other liabilities .........................................................             1,215             1,284
Long-term debt (Note 12) .......................................................................             1,749               249
                                                                                                          --------          --------
Total liabilities ..............................................................................           107,514           105,474

Commitments and contingencies (Note 21)

Stockholders' equity (Note18):
        Preferred stock, no par value: Authorized 100,000 shares;
               eight shares issued and outstanding in 1995 .....................................               200              --
        Common stock, par value $10: Authorized 400,000 shares;
               outstanding 111,141 shares in 1995 and 1994 .....................................             1,120             1,120
       Surplus .................................................................................               886               886
       Retained earnings .......................................................................             4,856             4,194
       Less:
              Net unrealized loss on investment securities available for sale ..................               141               587
              Treasury stock, at cost - 839 shares .............................................                25                25
                                                                                                          --------          --------
Total stockholders' equity .....................................................................             6,896             5,588
                                                                                                          --------          --------
Total liabilities and stockholders' equity .....................................................          $114,410          $111,062
                                                                                                          ========          ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                                       18

CITY NATIONAL BANCSHARES CORPORATION
 AND SUBSIDIARIES

Consolidated Statement of Changes
in Stockholders' Equity                                                 
<TABLE>
<CAPTION>
                                                                                               Net Unrealized
                                                                                               Gain (Loss) on
                                                                                                   Investment
                                                            Common        Preferred  Retained      Securities        Treasury
Dollars in thousands, except per share data                  Stock  Surplus   Stock  Earnings Available for Sale    Stock     Total
===================================================================================================================================
<S>                                                         <C>      <C>      <C>      <C>         <C>            <C>       <C>    
Balance, December 31, 1992 ...............................  $  987   $  793   $  --    $1,601      $  --          $  (25)   $ 3,356
Net income ...............................................      --       --      --       980         --              --        980
Proceeds from sale of common stock .......................     133       93      --        --         --              --        226
                                                            -------  ------- -------   -------    -------         -------    -------
Balance, December 31, 1993 ...............................   1,120      886      --     2,581         --             (25)     4,562
Net income ...............................................      --       --      --     1,724         --              --      1,724
Net unrealized gain on investment securities upon ........      --       --      --        --         68              --         68
       adoption of a change in accounting principles
Change in unrealized gain (loss) on investment ...........      --       --      --        --       (655)             --       (655)
       securities available for sale
Dividends paid ($1.00 per share) .........................      --       --      --      (111)        --              --       (111)
                                                            -------  ------- -------   -------    -------         -------    -------
Balance, December 31, 1994 ...............................   1,120      886      --     4,194       (587)            (25)     5,588
Net income ...............................................      --       --      --       802         --              --        802
Proceeds from sale of preferred stock ....................      --       --     200        --         --              --        200
Change in unrealized gain (loss) on investment ...........      --       --      --        --        446              --        446
       securities available for sale
Dividends paid ($1.25 per share) .........................      --       --      --      (140)        --              --       (140)
                                                            -------  ------- -------   -------    -------         -------    -------
Balance, December 31, 1995 ...............................  $1,120   $  886   $ 200     $4,856    $ (141)         $  (25)   $ 6,896
                                                            =======  ======= =======   =======    =======         =======    =======
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
                                       19

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Income
<TABLE>
<CAPTION>
                                                                                                 Year Ended December 31,
                                                                                ====================================================
Dollars in thousands, except per share data                                               1995              1994               1993
====================================================================================================================================
<S>                                                                                  <C>               <C>                <C>    
Interest income
Interest and fees on loans .................................................         $   3,607         $   2,194          $   1,795
Interest on Federal funds sold and securities
        purchased under agreements to resell ...............................               279               815                450
Interest on other short term investments ...................................               192              --                 --
Interest on deposits with banks ............................................                10              --                 --
Interest and dividends on investment securities:
        Taxable ............................................................             3,269             2,503              2,260
        Tax-exempt .........................................................               113                84                  4
                                                                                     ---------         ---------          ---------
Total interest income ......................................................             7,470             5,596              4,509
                                                                                     ---------         ---------          ---------
Interest expense
Interest on deposits .......................................................             2,653             1,869              1,304
Interest on short-term borrowings ..........................................               156               179                145
Interest on long-term debt .................................................                20                20                 20
                                                                                     ---------         ---------          ---------
Total interest expense .....................................................             2,829             2,068              1,469
                                                                                     ---------         ---------          ---------
Net interest income ........................................................             4,641             3,528              3,040
Provision (credit) for possible loan losses (Note 7) .......................               486            (1,464)               (23)
                                                                                     ---------         ---------          ---------
Net interest income after provision (credit)
         for possible loan losses ..........................................             4,155             4,992              3,063
                                                                                     ---------         ---------          ---------
Other operating income
Service charges on deposit accounts ........................................               711               484                401
Other income (Note 13) .....................................................               642               855                144
Net gains on sales of investment securities (Notes 4 and 5) ................                10                36                353
                                                                                     ---------         ---------          ---------
Total other operating income ...............................................             1,363             1,375                898
                                                                                     ---------         ---------          ---------
Other operating expenses
Salaries and other employee benefits (Note 15) .............................             2,455             1,984              1,501
Occupancy expense (Note 8) .................................................               153               123                153
Equipment expense (Note 8) .................................................               274               200                241
Other expenses (Note 13) ...................................................             1,363             1,338              1,124
                                                                                     ---------         ---------          ---------
Total other operating expenses .............................................             4,245             3,645              3,019
                                                                                                                          ---------
Income before income tax expense and cumulative
        effect of accounting change ........................................             1,273             2,722                942
Income tax expense (Note 14) ...............................................               471               998                168
                                                                                     ---------         ---------          ---------

Income before cumulative effect of accounting change .......................               802             1,724                774
Cumulative effect of accounting change (Note 14) ...........................              --                --                  206
                                                                                     ---------         ---------          ---------
Net income .................................................................         $     802         $   1,724          $     568
                                                                                     =========         =========          =========
Net income per share (Note 18) Primary:
Income before cumulative effect of accounting change .......................         $    7.22         $   15.51          $    7.88
Cumulative effect of accounting change .....................................              --                --                 2.09
                                                                                     ---------         ---------          ---------
Net income per share .......................................................         $    7.22         $   15.51          $    9.97
                                                                                     =========         =========          =========
Fully diluted:
Income before cumulative effect of accounting change .......................         $    6.53         $   13.90          $    7.03
Cumulative effect of accounting change .....................................              --                --                 1.83
                                                                                     ---------         ---------          ---------
Net income per share .......................................................         $    6.53         $   13.90          $    8.86
                                                                                     =========         =========          =========
Primary average shares outstanding .........................................           111,141           111,141             98,267
Fully diluted average shares outstanding ...................................           124,991           124,991            112,117
                                                                                     =========         =========          =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
                                       20

CITY NATIONAL BANCSHARES CORPORATION                                    
AND SUBSIDIARY                                  
                                        
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                                                     Year Ended December 31,      
                                        
In thousands                                                                            1995                1994               1993
====================================================================================================================================
<S>                                                                                 <C>                 <C>                <C> 
Operating activities
Net income ......................................................................   $    802            $  1,724           $    980
Adjustments to reconcile net income to net cash from operating activities:
    Depreciation and amortization ...............................................        191                 120                 90 
    Provision (credit) for possible loan losses .................................        486              (1,464)
    Amortization of premium, net of discount accretion
         on investment securities ...............................................        151                 423                297
    Net gains on sales of investment securities .................................        (10)                (36)              (353)
    Gains and commissions on loans held for sale ................................       (122)                (64)               (32)
Decrease (increase) in accrued interest receivable ..............................        194                (655)               (35)
Deferred income tax expense .....................................................         16                 578                 12
Decrease in other real estate owned .............................................         95                  --                 --
Decrease (increase) in other assets .............................................        984              (1,314)               (89)
(Decrease) increase  in accrued expenses and other liabilities ..................       (369)                556                 76
Premium paid on branch acquisition ..............................................         --                 (90)                --
                                                                                    ---------           ---------          ---------
Net cash provided by (used in) operating activities .............................      2,418                (222)               923
                                                                                    ---------           ---------          ---------
Investing activities
Loans originated for sale .......................................................     (4,594)             (6,525)            (4,344)
Proceeds from sale of loans held for sale .......................................      4,631               6,118              4,376
Increase in loans ...............................................................     (8,256)                 --                 --
Purchase of loans from Resolution Trust Corporation .............................    (11,479)             (2,370)
Increase in interest-bearing deposits with banks ................................       (321)                 --                 --
Proceeds from recoveries of loans previously charged off ........................         97               1,549                150
Proceeds from sales of investment securities available for sale .................         --               2,382             10,032
Proceeds from calls of investment securities held to maturity ...................      2,170                  --                 --
Proceeds from maturities of investment securities available for sale,
      including principal payments ..............................................      1,524               3,660              2,729
Proceeds from maturities of investment securities held to maturity,
      including principal payments ..............................................      8,957               5,597             15,114
Purchases of investment securities available for sale ...........................     (2,745)            (10,484)           (10,484)
Purchases of investment securities held to maturity .............................    (10,669)            (17,315)           (20,931)
Purchases of premises and equipment .............................................       (739)               (737)              (125)
                                                                                    ---------           ---------          ---------
Net cash used in investing activities ...........................................    (21,424)            (17,887)            (6,840)
                                                                                    ---------           ---------          ---------
Financing activities
Deposits assumed in branch acquisition ..........................................         --              25,209                 --
(Decrease) increase in deposits .................................................     (3,052)             14,297              6,582
Increase (decrease) in short-term borrowings ....................................      3,661              (5,000)             5,000
Proceeds from issuance of long-term debt ........................................      1,500                  --                 --
Proceeds from issuance of common stock ..........................................         --                  --                226
Proceeds from issuance of preferred stock .......................................        200                  --                 --
Dividends paid ..................................................................       (140)               (111)                --
                                                                                    ---------           ---------          ---------
Net cash provided by financing activities .......................................      2,169              34,395             11,808
                                                                                    ---------           ---------          ---------
Net (decrease) increase in cash and cash equivalents ............................    (16,837)             16,286              5,891

Cash and cash equivalents at beginning of year ..................................     27,131              10,845              4,954
                                                                                    ---------           ---------          ---------
Cash and cash equivalents at end of year ........................................    $10,294             $27,131            $10,845
                                                                                    =========           =========          =========
Cash paid during the year:
Interest ........................................................................   $  2,719            $  1,768           $  1,442
Income taxes ....................................................................        991                 102                  5

Supplemental schedule for noncash investing activities:
Real estate acquired in settlement of loans .....................................        212                 307                 --
Transfers of investment securities held to maturity
       to (from) investment securities available for sale .......................     21,836              (6,437)             3,998
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
                                       21

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 and
securities purchased under agreements to resell.

Investment securities held to maturity and investment securities available for 
sale

On January 1, 1994,  the  Corporation  adopted the  provisions  of  Statement of
Financial   Accounting  Standards  ("SFAS")  No.  115  "Accounting  for  Certain
Investments  in Debt and Equity  Securities".  SFAS 115 addresses the accounting
and  reporting  for   investments  in  equity   securities   that  have  readily
determinable fair values and for all investments in debt securities.

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  to the  earlier  of  maturity  or call date and
accretion of discount to maturity.

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
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 reported as a separate component of stockholders' equity, net of deferred
tax. 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  portfolio  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.

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 factors indicating doubtful collectibility no
longer exist.

The Bank originates  mortgage loans for sale.  Premiums received from purchasers
on sales of  conventional  nonguaranteed  one-to-four  family mortgage loans are
recorded as income when received.
<PAGE>
                                       22

Once the  determination to sell a loan has been made, it is transferred to loans
held for sale and carried at the lower of remaining  principal balance or market
value.

As of January 1, 1995,  the  Corporation  adopted the provisions of Statement of
Financial  Accounting  Standards No. 114 "Accounting by Creditors for Impairment
of a Loan" and Statement No. 118  "Accounting  by Creditors for  Impairment of a
Loan Income Recognition and Disclosure".  These statements require that impaired
loans be  measured  based on the  present  value of  expected  future cash flows
discounted at the loan's effective  interest rate or, at the loans's  observable
market  price of the  fair  value of the  collateral  if the loan is  collateral
dependent.

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.
Where  impaired  loans are carried at the present value of expected  future cash
flows, any change in such value is included with the provision for possible loan
losses. There have been no impaired loans recorded during 1995.

Reserve for possible 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  possible  loan  losses is  maintained  at a level  determined
adequate to provide for potential  losses on loans.  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 possible 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 in
subsequently occurring 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 possible 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 3 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  acquired  through  foreclosure  or  deed  in lieu of
foreclosure is carried at the lower of cost or fair value less estimated cost to
sell.  When a property  is  acquired,  the excess of the loan  balance  over the
estimated  fair  value is charged  to the  reserve  for  possible  loan  losses.
Operating  results of other  real  estate  owned,  including  rental  income and
operating expenses, are included in "Other expenses".

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. Such timing
differences include depreciation and the provision for possible loan losses.
<PAGE>
                                       23

The  Corporation  adopted the  provisions  of Statement of Financial  Accounting
Standards ("SFAS") No. 109,  Accounting for Income Taxes" as of January 1, 1993.
Under the asset and  liability  method of SFAS  109,  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.

The Corporation previously provided for income taxes under Accounting Principles
Board  Opinion  No.  11,  which  provided  for  deferred  income  taxes  on  all
significant  items of income  and  expenses  that are  recognized  in  different
periods for financial reporting and income tax purposes.

The  cumulative  effect of this  change in the method of  accounting  for income
taxes has been included in the 1993 consolidated statement of income.

Net income per share

Primary  income per share is  calculated  by dividing net income by the weighted
average number of shares  outstanding.  Shares  issuable upon  conversion of the
subordinate debentures have been excluded from the computation of primary income
per share as they are not considered to be common stock equivalents.  On a fully
diluted basis, both net income and shares outstanding are adjusted to assume the
conversion of the convertible subordinate debentures from the date of issue.

Reclassifications

Certain  reclassifications  have  been  made to the 1994  and 1993  consolidated
financial statements in order to conform with the 1995 presentation.

Note 2   Restrictions on cash and due from banks

The Bank is required to maintain a reserve balance with the Federal Reserve Bank
based primarily on deposits levels.  These reserve balances averaged $857,000 in
1995 and $1,120,000 in 1994.

Note 3   Federal funds sold and securities purchased under agreements to resell

At  December  31,  1995 and  1994,  there  were no  securities  purchased  under
agreements to resell,  while the average balance during 1995 and 1994 was $0 and
$4,779,000,  respectively.  The maximum balance at any month-end during 1994 was
$15 million.

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 as of December 31 of investment  securities
available for sale were as follows:

                                  Gross      Gross
                   Amortized Unrealized Unrealized     Market
1995 In thousands       Cost      Gains     Losses      Value
===============================================================
U.S. Treasury securities
  and obligations of U.S.
  government agencies$14,670    $   276    $   165    $14,781
Other securities:
  Mortgage-backed     15,613         93        339     15,367
  Equity securities      461         -          -         461
---------------------------------------------------------------
Total                $30,744    $   369    $   504    $30,609
===============================================================

                                  Gross      Gross
                   Amortized Unrealized Unrealized     Market
1994 In thousands       Cost      Gains     Losses      Value
===============================================================
U.S. Treasury 
  securities         $ 2,298     $   -       $  56    $ 2,242
Mortgage-backed
  securities           5,379         -         448      4,931
---------------------------------------------------------------
Total                $ 7,677     $   -       $ 504    $ 7,173
===============================================================

At  December  31,  1995,  the  Corporation  held  structured  notes with a total
amortized  cost  of  $4,459,000  and  a  related  market  value  of  $4,330,000,
reflecting gross unrealized  depreciation of $129,000.  There were no structured
notes in the available for sale portfolio at December 31, 1994. The  Corporation
also held  structured  notes in the held to maturity  portfolio  at December 31,
1995 and December 31, 1994.
<PAGE>
                                       24

The  amortized  cost and the market  values of  investments  in debt  securities
available for sale  presented  below as of December 31, 1995 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           $  4,288   $  4,281
Due after one year but within five years:
  U.S. Treasury securities and obligations
    of U.S. Government agencies              7,235      7,211
  Mortgage-backed securities                 7,219      7,209
Due after ten years:
  U.S. Treasury securities and obligations
    of U.S. Government agencies              3,147      3,289
  Mortgage-backed securities                 8,394      8,158
--------------------------------------------------------------
Total                                      $30,283    $30,148
==============================================================

There were no sales of  investment  securities  available  for sale during 1995.
During 1994, proceeds from the sale of investment  securities available for sale
were $2,382,000. Gross gains of $36,000 were realized on these sales.

All interest and  dividends on  investment  securities  available  for sale were
taxable in 1995, 1994 and 1993.

Investment securities available for sale having an amortized cost of $27,948,000
were pledged to secure public funds at December 31, 1995.

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
1995 In thousands         Value      Gains     Losses      Value
=================================================================
U.S. Treasury securities
  and obligations of U.S.
  Government agencies   $12,124    $   184   $     79    $12,229
Obligations of state and
  political subdivisions  2,536         26         18      2,544
Other securities:
  Mortgage-backed         9,834         35        208      9,661
-----------------------------------------------------------------
Total                   $24,494    $   245    $   305   $ 24,434
==================================================================

At  December  31,  1995,  the  Corporation  held  structured  notes with a total
amortized  cost  of  $3,750,000  and  a  related  market  value  of  $3,673,000,
reflecting gross unrealized depreciation of $72,000.  Comparable amounts as of a
year earlier were $11,019,000, $10,401,000 and $618,000, respectively.

                                     Gross      Gross
                           Book Unrealized Unrealized     Market
1994 In thousands          Value      Gains     Losses      Value
==================================================================
U.S. Treasury securities
  and obligations of U.S.
  Government agencies   $23,367     $   12     $  948    $22,431
Obligations of state and
  political subdivisions  2,216         -         193      2,023
Other securities:
  Mortgage-backed        20,725         -       1,331     19,394
  Other debt                200         -          -         200
  Other equity               70         -          -          70
------------------------------------------------------------------
Total                   $46,578     $   12    $ 2,472    $44,118
==================================================================
<PAGE>
                                       25

The book value and the market value of  investment  securities  held to maturity
presented below as of December 31, 1995 are distributed by contractual maturity,
including  mortgage-backed  securities,  which have shorter  average  lives as a
result of prepayment assumptions.
                                              Book     Market
In thousands                                 Value      Value
===============================================================
Due after one year but within five years:
  U.S. Treasury securities and obligations
    of U.S. Government agencies           $  8,620   $  8,661
  Mortgage-backed securities                 6,969      6,978
  Obligations of states and political 
    subdivisions                               558        568
Due after five years but within ten years:
  U.S. Treasury securities and obligations
    of U.S. Government agencies              3,300      3,365
  Mortgage-backed securities                   904        890
  Obligations of states and political 
    subdivisions                             1,978      1,976
Due after ten years:
  U.S. Treasury securities and obligations
    of U.S. Government agencies                204        203
  Mortgage-backed securities                 1,961      1,793
---------------------------------------------------------------
Total                                      $24,494     $24,434
===============================================================

There  were no sales  of  securities  held to  maturity  in 1995 or 1994,  while
$2,170,000 of investment  securities  were called prior to maturity during 1995,
resulting in gains of $10,000.

Interest and dividends on investment securities held to maturity was as follows:

In thousands                       1995       1994       1993
==============================================================
Taxable                         $ 2,594    $ 1,795    $ 1,642
Tax-exempt                          113         84          4
--------------------------------------------------------------
Total                           $ 2,707    $ 1,879    $ 1,646
==============================================================

Investment  securities held to maturity having a book value of $16,758,000  were
pledged to secure public funds at December 31, 1995.

Note 6   Loans

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

In thousands                                  1995       1994
==============================================================
Commercial                                 $18,002    $13,079
Real estate                                 26,764     12,121
Installment                                    372        470
--------------------------------------------------------------
Total loans                                 45,138     26,670
Less: Unearned income                          399        107
--------------------------------------------------------------
Loans                                      $44,739    $25,563
==============================================================

Loans guaranteed by the Small Business Administration  totalling $7,881,000 were
pledged as  collateral  for future  borrowings  under a note  issued to the U.S.
Treasury Department at December 31, 1995. Such borrowings totalled $3,661,000 at
December 31, 1995.

Nonperforming  loans include loans which are  contractually  past due 90 days or
more or on which  interest  income is still being  accrued,  renegotiated  loans
whose terms have been modified due to the borrower's financial  difficulties and
nonaccrual loans.

At December 31, nonperforming loans were as follows:

In thousands                                  1995       1994
==============================================================
Nonaccrual loans                            $  839     $  312
Loans with interest or principal 90
  days or more past due and still accruing      31         29
--------------------------------------------------------------
Total nonperforming loans                   $  870     $  341
==============================================================
<PAGE>
                                       26

The effect of nonaccrual loans on income before taxes is presented below.

In thousands                       1995       1994       1993
==============================================================
Interest income foregone          $  52      $  68      $  94
Interest income received            (55)       (90)       (41)
--------------------------------------------------------------
                                  $  (3)     $ (22)     $  53
==============================================================

At December 31, 1995,  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.

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.

The Bank believes its lending  policies and procedures  adequately  minimize the
potential  exposure to such risk and that adequate  provisions for possible loan
losses are provided for all known and inherent risk.

Note 7   Reserve for possible loan losses

Transactions in the reserve for possible loan losses are summarized as follows:

In thousands                       1995       1994       1993
==============================================================
Balance, January 1                $ 625      $ 700      $ 650
Provision (credit) for possible loan
  losses                            486     (1,464)       (23)
Recoveries of loans previously
  charged off                        98      1,549        150
--------------------------------------------------------------
                                  1,209        785        777
Less: Charge-offs                   559        160         77
--------------------------------------------------------------
Balance, December 31              $ 650      $ 625      $ 700
==============================================================

Included in 1994 is the $1,425,000  recovery of a loan previously charged off in
1989, along with the related effects on the provision (credit) for possible loan
losses.

Note 8   Premises and equipment

A summary of premises and equipment at December 31 follows:

In thousands                                  1995       1994
--------------------------------------------------------------
Land                                        $  240     $  240
Premises                                       733        678
Furniture and equipment                      1,091        879
Building improvements                        1,341        892
--------------------------------------------------------------
Total cost                                   3,405      2,689
Less: Accumulated depreciation 
  and amortization                           1,117        949
--------------------------------------------------------------
Net book value                              $2,288     $1,740
--------------------------------------------------------------

Depreciation  and  amortization   expense  charged  to  operations  amounted  to
$191,000, $120,000, and $90,000 in 1995, 1994, and 1993, respectively.

Note 9   Other assets

At December  31,  1994,  other  assets  included a  $1,305,000  deposit with the
Resolution Trust  Corporation  representing a deposit on a residential  mortgage
loan  portfolio  that the Bank was  negotiating  to  purchase.  The  deposit was
applied when the loans were purchased in January, 1995.
<PAGE>
                                       27

Note 10  Deposits

Deposits at December 31 are presented below.

In thousands                                  1995       1994
==============================================================
Noninterest bearing
  Demand                                  $ 12,925   $ 16,448
  Savings                                      469        469
  Time                                      11,319     12,898
--------------------------------------------------------------
Total noninterest bearing deposits          24,713     29,815
--------------------------------------------------------------
Interest bearing
  Savings                                   36,550     39,146
  Time                                      39,626     34,980
--------------------------------------------------------------
Total interest bearing deposits             76,176     74,126
--------------------------------------------------------------
Total deposits                            $100,889   $103,941
==============================================================

Time  deposits  issued  in  amounts  of  $100,000  or more  have  the  following
maturities at December 31:

In thousands                                  1995       1994
==============================================================
Three months or less                       $20,265    $15,647
Over three months but within six months      3,085      1,008
Over six months but within twelve months     2,557        450
Over twelve months                           5,760      9,340
--------------------------------------------------------------
Total deposits                             $31,627    $26,445
==============================================================

Interest  expense on  certificates of deposits of $100,000 or more was $895,000,
$469,000 and $345,000 in 1995, 1994 and 1993, respectively.

Note 11   Short-term borrowings

Information regarding short-term borrowings at December 31 is presented below.
<TABLE>
<CAPTION>
                                                      Average       Average    Maximum
                                      Interest Rate   Balance      Interest    Balance
                           December 31  December 31    During   Rate During     at any
Dollars in thousands           Balance      Balance  the Year      the Year  Month-end
=======================================================================================
 
<S>                            <C>           <C>      <C>            <C>       <C>   
1995
Federal funds purchased and securities
  sold under repurchase
  agreements                   $   -            -%    $   70         4.87%     $2,000
Demand note issued
  to the U.S. Treasury          3,661        5.37      2,710         5.61       7,541
---------------------------------------------------------------------------------------
Total                          $3,661        5.37%    $2,780         5.63%     $9,541
=======================================================================================
1994
Federal funds
  purchased                    $   -           -%     $    4        4.18%      $   -
Demand note issued
  to the U.S. Treasury             -           -       4,302        4.16        5,000
---------------------------------------------------------------------------------------
Total                          $   -           -      $4,306        4.16%      $5,000
=======================================================================================
</TABLE>

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  $6,071,000,  along  with  loans  guaranteed  by the Small
Business Administration totalling $7,881,000.
<PAGE>
                                       28

Note 12  Long-term debt

In thousands                                  1995       1994
==============================================================
5.25% capital note, due December 28, 2005   $1,500    $     -
8.00% mandatory convertible debentures,
  due July 1, 2003                             249        249
--------------------------------------------------------------
Total                                       $1,749      $ 249
==============================================================

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 or the  issuance  of rights or options to purchase
shares of common stock at a price of less than $18 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.

On December 29, 1995, the  Corporation  issued a $1.5 million  capital note to a
subsidiary  of a major  insurance  company,  due December 28, 2005.  Interest is
payable  semiannually  on June  30 and  December  31,  with  principal  payments
commencing semiannually in June, 2001.

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.

Under the most restrictive  covenant,  $923,000 was available for the payment of
dividends at December 31, 1995.

Note 13  Other operating income and expenses

The following table presents the major items of other operating income and 
expenses:
In thousands                       1995       1994       1993
==============================================================
Other operating income
Income from loans purchased from
  Resolution Trust Corporation prior
  to loan closing                 $ 198      $ 339   $     -
Unrecorded interest income collected
  on loans charged off in 1989       -         175         -
Service fee income                  162        158         42
Other operating expenses
Professional fees                   181        234        277
FDIC deposit insurance              168        201        161
Stationery and supplies expense     115        147         87
Data processing                     115        103         75
==============================================================

Income  from loans  purchased  from the  Resolution  Trust  Corporation  ("RTC")
represents  income  earned from $1.3  million of funds which were  committed  to
loans  acquired  from  the RTC in  January  1995  in  connection  with a  branch
acquisition,  as well as interest on the difference  between the amount of loans
committed and the aforementioned $1.3 million.  This income was recorded because
of the RTC's  agreement  to  compensate  the Bank on the entire loan  commitment
balance,  whether or not the loans were purchased.  The amounts were recorded as
other operating  income because there were no earning assets for which to record
interest income.
<PAGE>
                                       29
Note 14  Income taxes

The components of income tax expense are as follows:
In thousands                       1995       1994       1993
==============================================================
Current
Federal                           $ 571      $ 413      $  55
State                               103          7          1
--------------------------------------------------------------
Total current income tax expense    674        420         56
--------------------------------------------------------------
Deferred
Federal                            (172)       407        148
State                               (31)       171        (36)
--------------------------------------------------------------
Total deferred income tax expense  (203)       578        112
--------------------------------------------------------------
Total income tax expense            471        998        168
Deferred tax benefit on unrealized 
  loss on investment securities 
  available for sale                105        390         -
--------------------------------------------------------------
                                  $ 366      $ 608      $ 168
==============================================================

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

In thousands                       1995       1994       1993
==============================================================
Federal income tax at statutory 
  rate                            $ 433      $ 925      $ 320
Increase (decrease) in income tax
  expense resulting from:
  State income taxes, net of federal
    benefit                          48        118        (23)
  Tax-exempt income                 (34)       (26)        (1)
  Life insurance                     (7)        -          -
  Decrease in federal valuation
    allowance                        (1)        -         (97)
  Other, net                         32        (19)       (31)
---------------------------------------------------------------
Total income tax expense          $ 471      $ 998      $ 168
===============================================================

The tax effects of temporary  differences  that give rise to deferred tax assets
and liabilities at December 31 are as follows:

In thousands                                  1995       1994
===============================================================
Deferred tax assets
Unrealized loss on investment securities
  available for sale                         $  55      $ 390
State net operating loss carryforward           -          13
Reserve for possible loan losses                -          -
Other                                           40         26
---------------------------------------------------------------
Total deferred tax assets                       95        429
Less: Valuation allowance                        7          8
---------------------------------------------------------------
Deferred tax asset                              88        421
---------------------------------------------------------------
Deferred tax liabilities
Reserve for possible loan losses               343        537
Premises and equipment                          14         20
Investment securities held to maturity           3          4
--------------------------------------------------------------
Deferred tax liability                         360        561
--------------------------------------------------------------
Net deferred tax (liability) asset           $(272)     $(140)
==============================================================

The net deferred  liability  represents  the  anticipated  federal and state tax
liability to be incurred in future years upon the  utilization of the underlying
tax attributes  comprising this balance.  Management believes,  based on current
estimates of future  taxable  earnings,  that more likely than not there will be
sufficient taxable income in future years to realize the deferred tax asset.

The valuation  allowance  amounted to $74,000 at December 31, 1993 and $8,000 at
December 31, 1994 and 1995,  decreasing  by $1,000 and $66,000 in 1995 and 1994,
respectively.

The valuation  allowance at December 31, 1995 is  attributable  to the state tax
benefit of deductible timing differences.
<PAGE>
                                       30

Note 15  Employee benefit plans

In 1994,  the  Corporation  established  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 Corporation  provides
matching contributions of 25% of the first 4% of basic participant  contribution
along  with a 1%  discretionary  contribution,  subject  to a vesting  schedule.
Contributions to the plan amounted to $36,000 in 1995 and $33,000 in 1994.

The  aforementioned  plan replaced a  noncontributory  retirement plan which was
terminated  in 1994.  Proceeds  from the  termination  were rolled over into the
employee savings plan.

The  Corporation  awards  profit  sharing  bonuses to its officers and employees
based on the achievement of certain performance  objectives.  Bonuses charged to
operating  expense in 1995,  1994 and 1993  amounted to  $119,000,  $120,000 and
$70,000, respectively.

Note 16  Preferred stock

On December 28, 1995 the Corporation issued $200,000 of 6% noncumulative 
perpetual preferred stock.  Dividends are payable annually on February 28.

Note 17  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  CNBC,  CNB's  sole
stockholder.  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,  the Bank could declare  dividends in 1996 without prior
OCC  approval of up to  $2,453,000  plus the Bank's net profit up to the date of
the  declaration,  subject to the  restrictive  covenants  under  long-term debt
agreements included in Note 12.
<PAGE>
                                       31

Note 18  Net income per share

The following table summarizes the computation of net income per share.

In thousands, except per share data  1995       1994       1993
================================================================
Net income
Net income applicable to
  primary common shares            $  802     $1,724     $  980
Interest expense on convertible
  subordinated debentures,
  net of income taxes                  13         13         13
----------------------------------------------------------------
Net income applicable to fully diluted
  common shares                    $  815     $1,737     $  993
================================================================
Number of average shares
Primary                           111,141    111,141     98,267
----------------------------------------------------------------
Fully diluted:
  Average common shares
    outstanding                   111,141    111,141     98,267
  Average convertible subordinate
     debentures converted to
     common shares                 13,850     13,850     13,850
----------------------------------------------------------------
                                  124,991    124,991    112,117
================================================================
Net income per share
Income before cumulative effect of
  accounting change and
  extraordinary item
  Primary                          $ 7.22     $15.51     $ 7.88
  Fully diluted                      6.53      13.90       7.03
Cumulative effect of accounting change
  Primary                              -          -        2.09
  Fully diluted                        -          -        1.83
Net income
  Primary                            7.22      15.51       9.97
  Fully diluted                      6.53      13.90       8.86
================================================================

Note 19       Related party transactions

Various directors and executive  officers 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 1995 and 1994.  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 $366,000 and
$191,000 at December 31, 1995 and 1994, respectively. The highest amount of such
indebtedness   during  1995  and  1994   amounted  to  $375,000  and   $191,000,
respectively. During 1995, $191,000 of new loans were made.

Note 20  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.
<PAGE>
                                       32

The following  methods and assumptions  were used to estimate the fair values of
significant  financial  instruments  at December 31, 1995, the date on which the
Corporation adopted the provision of Statement of Financial Accounting Standards
No. 107 .

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 available for sale are reported at their fair values based
on quoted  market  prices.  The fair  values of  investment  securities  held to
maturity were also based upon 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, 1995 and 1994. 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, 1995.

The following  table presents the carrying  amounts and fair values of financial
instruments at December 31, 1995:
                                           Carrying       Fair
In thousands                                  Value      Value
===============================================================
Financial assets:
Cash and short-term investments            $10,615    $10,615
Investment securities available for sale    30,609     30,609
Investment securities held to maturity      24,495     24,434
Loans                                       44,644     43,064

Financial liabilities:
Deposits                                  $100,889   $ 99,570
Short-term borrowings                        3,661      3,661
Long-term debt                               1,749      1,107
===============================================================

Note 21  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.

Note 22  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.
<PAGE>
                                       33

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  31,1995  the Bank had  mortgage  commitments  of  $702,500,  unused
corporate   lines  of  credit  of  $11,600,000  and  $1,650,000  of  other  loan
commitments.

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

Condensed Balance Sheet
                                                 December 31,
==============================================================
In thousands                                  1995       1994
==============================================================
Assets
Cash and cash equivalents                   $    4     $    4
Investment in subsidiary                     8,143      5,833
Due from subsidiary                            249        249
Other assets                                    11         10
--------------------------------------------------------------
Total assets                                $8,655     $5,847
==============================================================
Liabilities and stockholders' equity
Other liabilities                           $   10     $   10
Long-term debt                               1,749        249
--------------------------------------------------------------
Total liabilities                            1,759        259
Stockholders' equity                         6,896      5,588
--------------------------------------------------------------
Total liabilities and stockholders' equity  $8,655     $5,847
==============================================================

Condensed Statement of Income
                                       Year Ended December 31,
==============================================================
In thousands                       1995       1994       1993
==============================================================
Income
Dividends from subsidiary        $  141     $  112    $    -
Interest from subsidiary             20         20         20
--------------------------------------------------------------
Total income                        161        132         20
--------------------------------------------------------------
Expenses
Interest expense                     20         20         20
--------------------------------------------------------------
Total expense                        20         20         20
--------------------------------------------------------------
Income before equity in undistributed
  net income of subsidiary          141        112         -
Equity in undistributed income
  of subsidiary                     661      1,612        980
--------------------------------------------------------------
Net income                       $  802    $ 1,724     $  980
==============================================================
<PAGE>
                                       34


Condensed Statement of Cash Flows
                                       Year Ended December 31,
=================================================================
In thousands                          1995       1994       1993
=================================================================
Operating activities
Net income                          $  802     $1,724      $ 980
Adjustments to reconcile net income
  to cash from (used in) operating activities:
    Equity in undistributed net income
      of subsidiary                   (661)    (1,612)      (980)
    Increase in other assets            (1)        -          (8)
    Increase in other liabilities       -          -           8
-----------------------------------------------------------------
Net cash from operating activities     140        112         -
-----------------------------------------------------------------
Investing activities
Capital contribution to subsidiary  (1,700)        -        (226)
------------------------------------------------------------------
Net cash applied to investing 
  activities                        (1,700)        -        (226)
------------------------------------------------------------------
Financing activities
Proceeds from issuance of
  long-term debt                     1,500         -          -
Proceeds from issuance of common stock  -          -         226
Proceeds from issuance of preferred
  stock                                200         -          -
Dividends paid                        (140)      (111)        -
-----------------------------------------------------------------
Net cash from (applied to) financing
  activities                         1,560       (111)       226
-----------------------------------------------------------------
Increase in cash and cash equivalents   -           1         -
Cash and cash equivalents at
  beginning of year                      4          3          3
-----------------------------------------------------------------
Cash and cash equivalents at
  end of year                        $   4      $   4      $   3
=================================================================

Note 24  Summary of quarterly financial information (unaudited)

                                        1995
------------------------------------------------------------------
Dollars in thousands,      First     Second      Third     Fourth
  except per share data   Quarter   Quarter    Quarter    Quarter
==================================================================
Interest income          $1,736     $1,850     $1,911     $1,973
Interest expense            673        681        728        747
------------------------------------------------------------------
Net interest income       1,063      1,169      1,183      1,226
Provision (credit) for
  possible loan losses      122         (3)        32        335
Net gains (losses) on sales of
  investment securities      (1)        -          (1)        12
Other operating income      513        321        250        281
Other operating expenses    981      1,071      1,133      1,060
------------------------------------------------------------------
Income before income
  tax expense               473        422        267        112
Income tax expense          175        156         90         50
------------------------------------------------------------------
Net income                $ 298      $ 266      $ 177     $   62
==================================================================
Net income per share
  (primary)               $2.68      $2.39      $1.59     $  .56
==================================================================
Net income per share
  (fully diluted)         $2.41      $2.13      $1.42     $  .57
==================================================================
<PAGE>
                                       35

                                         1994
------------------------------------------------------------------
Dollars in thousands,      First     Second      Third     Fourth
  except per share data   Quarter   Quarter    Quarter    Quarter
==================================================================
Interest income          $1,072     $1,403     $1,562     $1,559
Interest expense            343        487        548        690
------------------------------------------------------------------
Net interest income         729        916      1,014        869
Provision (credit) for
  possible loan losses   (1,463)         5          5        (11)
Net gains (losses) on sales of
  investment securities      36         -          -          -
Other operating income      438        235        162        540
Other operating expenses    770        859        948      1,068
------------------------------------------------------------------
Income before income
  taxes                   1,860        287        223        352
Income tax expense          545         88         90        275
------------------------------------------------------------------
Net income               $1,315    $   199    $   133    $    77
==================================================================
Net income per share
  (primary)              $11.83     $ 1.79     $ 1.20     $  .69
==================================================================
Net income per share
  (fully diluted)        $10.54     $ 1.39    $   .79     $  .29
==================================================================

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial  Disclosure  There were no changes in or  disagreements  with accounts
during 1994.

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 June 8, 1995.

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

Financial  statement  schedules are omitted because they are not required or are
not  applicable  or the  required  information  is  shown  in  the  consolidated
financial statements or notes thereto.
<PAGE>
                                       36

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  are
                  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  article  of  incorporation
                  relating  to  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock Series A.
         (3)(c)   Amendments  to  the  Corporation's  article  of  incorporation
                  relating  to  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock Series B.
         (3)(d)   The amended by-laws of the Corporation are 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  are  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.
         (10)(a)  The Employees' Profit Sharing Plan of City National Bank of 
                  New Jersey is 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  is  incorporated  herein  by  reference  to
                  Exhibit (10)(b) of the Corporation's  Quarterly Report on Form
                  10-Q for the quarterly period ended June 30, 1993.
         (10)(c)  Limited Branch Purchase and Assumption Agreement dated May 6,
                  1994 by and between the RTC and City National Bank of New 
                  Jersey
         (10)(d)  Lease and Option Agreement dated May 6, 1994 by and between 
                  the RTC and City National Bank of New Jersey
         (10)(e)  Minority Call Option Agreement dated May 6, 1994 by and 
                  between the RTC and City National Bank of New Jersey
         (10)(f)  Indemnity  Agreement  dated May 6, 1994 by and between the RTC
                  and City  National  Bank of New Jersey  (10)(g)  The Order to
                  Cease and Desist issued by the Office of the  Comptroller of 
                  the Currency, dated May 23,
                  1989, with  Stipulation and Consent to Issuance of an Order to
                  Cease  and  Desist is  incorporated  herein  by  reference  to
                  Exhibit  (28)(a) of the  Corporation's  Annual  Report on Form
                  10-K for the year ended December 31, 1988.
         (10)(h)  The Capital Plan of City  National  Bank of New Jersey,  dated
                  May 14, 1991, is  incorporated  herein by reference to Exhibit
                  (28)(b) of the Corporation's  Current Report on Form 8-K dated
                  May 6, 1991.
         (10)(i)  The Amended and Restated Capital Plan, dated April 14, 1992 is
                  incorporated  herein by  reference  to Exhibit  (28)(c) of the
                  Corporation's Current Report on Form 8-K dated July 1, 1992.
         (10)(j)  The Consent Order issued by the Office of the  Comptroller  of
                  the Currency, dated January 21, 1992 is incorporated herein by
                  reference  to  Exhibit  (28)(i)  of the  Corporation's  Annual
                  Report on Form 10-K for the year ended December 31, 1991.
         (10(k)   Purchase and Assumption Agreement dated August 18, 1995 by and
                  between City National Bank of New Jersey and NatWest Bank N.A.
         (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, 1995.
         (21)     Subsidiaries of the registrant.  The required information is 
                  included on page 3.

(c)      No reports on Form 8-K were filed during the quarter ended December 31,
         1995.
<PAGE>
                                       37



                                                       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 30, 1996                    Date:      March 30, 1996

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 21, 1996
Douglas E. Anderson          Chairperson of the Board


/s/ Barbara Bell             Director,                            March 21, 1996
Barbara Bell


/s/ Leon Ewing               Director                             March 21, 1996
Leon Ewing


/s/ Eugene Giscombe          Director                             March 21, 1996
Eugene Giscombe


/s/ Norman Jeffries          Director                             March 21, 1996
Norman Jeffries


/s/ Louis E. Prezeau         Director,                            March 21, 1995
Louis E. Prezeau             President and Chief
                             Executive Officer

/s/ Lemar C. Whigham         Director                             March 21, 1995
Lemar C. Whigham
<PAGE>