UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q





|[X]  |                                                       | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|---- | ----------------------------------------------------- | ----------------------------------------------------------------------------------------
|     | For the quarterly period ended March 31, 2003        
|     | OR                                                   
|[  ] |                                                       | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|     | For the transition period from__________ to__________

Commission File Number: 2-94863

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



|                                                                                   |  |                                               
|---------------------------------------------------------------------------------- |  | ----------------------------------------------
|New York(State or other jurisdiction of
incorporation or organization)             |  | 16-1234823(IRS Employer Identification Number)
|                                                                                   |  |                                               
|72 South Main Street
Canandaigua, New York(Address of principal executive offices) |  | 14424(Zip code)                               

(585) 394-4260



|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, and (2) has been subject to such filing requirements for the past 90 days
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Yes   X                                                                                                                                                                                                                                                             



|Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12-b-2 of he Exchange Act).
|---------------------------------------------------------------------------------------------------------------------
|Yes                                                                                                                  



|The number of shares outstanding of each of the issuer's classes of common stock was 477,203 shares of common stock, par value $20.00, outstanding as at April 30, 2003.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------













|SAFE HARBOR STATEMENT"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This report contains certain "forward-looking statements" intended to qualify for the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When used or incorporated by reference in the Company's disclosure documents, the words "anticipate," "estimate," "expect," "continue," "project," "target," "goal," "budget" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, but not limited to (1) economic conditions, (2) real estate market, and (3) interest rates. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected or budgeted. These forward-looking statements speak only as of the date of the document. The Company expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------











CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIESINDEX TO FORM 10-QMARCH 31, 2003





|PART I -- FINANCIAL INFORMATION                                                                  |  | PAGE
|------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                 |  |     
|Item 1.  Financial Statements (Unaudited)                                                        |  |     
|                                                                                                 |  |     
|Condensed consolidated balance sheets at March 31, 2003 and December 31, 2002                    |  | 4   
|                                                                                                 |  |     
|Condensed consolidated statements of income for the three-month periods ended                    |  | 5   
|March 31, 2003 and 2002.                                                                         |  |     
|                                                                                                 |  |     
|Consolidated statements of stockholders' equity for the three-month periods ended                |  |     
|March 31, 2003 and 2002                                                                          |  | 6   
|                                                                                                 |  |     
|Consolidated statements of cash flows for the three-month periods ended March 31, 2003 and 2002. |  | 7   
|                                                                                                 |  |     
|Notes to consolidated financial statements.                                                      |  | 8   
|                                                                                                 |  |     
|Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations   |  |     
|                                                                                                 |  | 9   
|                                                                                                 |  |     
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                               |  | 13  
|                                                                                                 |  |     
|Item 4. Controls and Procedures                                                                  |  | 14  
|                                                                                                 |  |     
|PART II -- OTHER INFORMATION                                                                     |  |     
|                                                                                                 |  |     
|Item 1.  Legal Proceedings                                                                       |  | 15  
|                                                                                                 |  |     
|Item 2.  Changes in Securitiesand Use of Proceeds                                                |  | 15  
|                                                                                                 |  |     
|Item 3.  Defaults Upon Senior Securities                                                         |  | 15  
|                                                                                                 |  |     
|Item 4.  Submission of Matters to a Vote of Security Holders                                     |  | 15  
|                                                                                                 |  |     
|Item 5.  Other Information                                                                       |  | 15  
|                                                                                                 |  |     
|Item 6.  Exhibits and Reports on Form 8-K                                                        |  | 15  
|                                                                                                 |  |     
|SIGNATURES                                                                                       |  | 16  
|                                                                                                 |  |     
|CERTIFICATIONS                                                                                   |  | 17  
|                                                                                                 |  |     
|EXHIBITS                                                                                         |  | 19  







|PART I  FINANCIAL INFORMATION
|-----------------------------
|Item 1. Financial Statements 

CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETSMarch 31, 2003 (Unaudited) and December 31, 2002 
(dollars in thousands, except per share data)





|                                                                         |   | March 31, |   | December 31, |  
|------------------------------------------------------------------------ | - | --------- | - | ------------ | -
|                                                                         |   | 2003      |   | 2002         |  
|                                                                         |   |           |   |              |  
|Assets                                                                   |   |           |   |              |  
|Cash and due from banks                                                  | $ | 36,556    |   | 34,667       |  
|Interest-bearing deposits with other financial institutions              |   | 26,235    |   | 3,990        |  
|Federal funds sold                                                       |   | -         |   | 11,200       |  
|Securities:                                                              |   |           |   |              |  
|- Available for sale, at fair value                                      |   | 45,278    |   | 46,215       |  
|- Held-to-maturity (fair value of $119,820 in 2003 and $121,533 in 2002) |   | 115,126   |   | 117,028      |  
|Loans:                                                                   |   |           |   |              |  
|Commercial, financial and agricultural                                   |   | 109,764   |   | 109,317      |  
|Commercial mortgage                                                      |   | 268,277   |   | 264,132      |  
|Residential mortgage                                                     |   | 87,194    |   | 90,332       |  
|Consumer-auto indirect                                                   |   | 89,472    |   | 89,747       |  
|Consumer-other                                                           |   | 21,803    |   | 22,371       |  
|Other                                                                    |   | 1,103     |   | 1,606        |  
|Loans held for sale                                                      |   | 8,225     |   | 9,320        |  
|                                                                         |   |           |   |              |  
|Total loans                                                              |   | 585,838   |   | 586,825      |  
|Less:  Allowance for loan losses                                         |   | (6,191    | ) | (6,162       | )
|                                                                         |   |           |   |              |  
|Loans - net                                                              |   | 579,647   |   | 580,663      |  
|Premises and equipment - net                                             |   | 16,517    |   | 16,727       |  
|Accrued interest receivable                                              |   | 4,610     |   | 3,915        |  
|Federal Home Loan Bank stock and Federal Reserve Bank stock              |   | 2,200     |   | 2,200        |  
|Other assets                                                             |   | 9,528     |   | 9,098        |  
|                                                                         |   |           |   |              |  
|Total Assets                                                             | $ | 835,697   |   | 825,703      |  
|                                                                         |   |           |   |              |  
|                                                                         |   |           |   |              |  
|                                                                         |   |           |   |              |  



|Liabilities and Stockholders' Equity                                    |   |         |   |         |  
|----------------------------------------------------------------------- | - | ------- | - | ------- | -
|Deposits:                                                               |   |         |   |         |  
|Demand:                                                                 |   |         |   |         |  
|Non-interest bearing                                                    | $ | 97,964  |   | 103,020 |  
|Interest bearing                                                        |   | 85,820  |   | 81,971  |  
|Savings and money market                                                |   | 358,942 |   | 334,274 |  
|Time deposits                                                           |   | 211,014 |   | 225,134 |  
|                                                                        |   |         |   |         |  
|Total deposits                                                          |   | 753,740 |   | 744,399 |  
|Borrowings                                                              |   | 1,034   |   | 1,048   |  
|Guaranteed Preferred Beneficial Interest in Company's Subordinated Debt |   | 19,435  |   | 19,409  |  
|Accrued interest payable and other liabilities                          |   | 6,502   |   | 7,430   |  
|                                                                        |   |         |   |         |  
|Total Liabilities                                                       |   | 780,711 |   | 772,286 |  
|                                                                        |   |         |   |         |  
|                                                                        |   |         |   |         |  
|Stockholders' Equity:                                                   |   |         |   |         |  
|Common stock, $20 par value; 2,000,000 shares authorized;               |   |         |   |         |  
|486,624 shares issued in 2003 and 2002                                  |   | 9,732   |   | 9,732   |  
|Additional paid-in capital                                              |   | 6,958   |   | 6,958   |  
|Retained earnings                                                       |   | 39,184  |   | 37,655  |  
|Treasury stock at cost (9,421 shares in 2003 and 2002)                  |   | (1,159  | ) | (1,159  | )
|Accumulated other comprehensive income                                  |   | 271     |   | 231     |  
|                                                                        |   |         |   |         |  
|Total Stockholders' Equity                                              |   | 54,986  |   | 53,417  |  
|                                                                        |   |         |   |         |  
|Total Liabilities and Stockholders' Equity                              | $ | 835,697 |   | 825,703 |  
|                                                                        |   |         |   |         |  
|                                                                        |   |         |   |         |  
|                                                                        |   |         |   |         |  

See accompanying notes to consolidated financial statements.







|CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEFor the three-month periods ended March 31, 2003 and 2002 (Unaudited)
(dollars in thousands, except per share data)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                                                        |   |        |  |       
|----------------------------------------------------------------------- | - | ------ |  | ------
|                                                                        |   | 2003   |  | 2002  
|                                                                        |   |        |  |       
|Interest income:                                                        |   |        |  |       
|Loans, including fees                                                   | $ | 9,741  |  | 9,570 
|Securities                                                              |   | 1,568  |  | 1,072 
|Other                                                                   |   | 44     |  | 88    
|                                                                        |   |        |  |       
|Total interest income                                                   |   | 11,353 |  | 10,730
|                                                                        |   |        |  |       
|Interest expense:                                                       |   |        |  |       
|Deposits                                                                |   | 2,622  |  | 3,738 
|Borrowings                                                              |   | 9      |  | 9     
|Guaranteed Preferred Beneficial Interest in Company's Subordinated Debt |   | 267    |  | -     
|                                                                        |   |        |  |       
|Total interest expense                                                  |   | 2,898  |  | 3,747 
|                                                                        |   |        |  |       
|Net interest income                                                     |   | 8,455  |  | 6,983 
|Provision for loan losses                                               |   | 390    |  | 241   
|                                                                        |   |        |  |       
|Net interest income after provision for loan losses                     |   | 8,065  |  | 6,742 
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|Other income:                                                           |   |        |  |       
|Service charges on deposit accounts                                     |   | 1,203  |  | 1,076 
|Trust income                                                            |   | 781    |  | 901   
|Net gain on sale of mortgage loans                                      |   | 813    |  | 294   
|Other operating income                                                  |   | 324    |  | 445   
|                                                                        |   |        |  |       
|Total other income                                                      |   | 3,121  |  | 2,716 
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|Operating expenses:                                                     |   |        |  |       
|Salaries and employee benefits                                          |   | 4,087  |  | 3,940 
|Occupancy                                                               |   | 1,404  |  | 1,241 
|Marketing and public relations                                          |   | 354    |  | 280   
|Office supplies, printing and postage                                   |   | 315    |  | 252   
|FDIC insurance                                                          |   | 30     |  | 90    
|Other operating expenses                                                |   | 1,310  |  | 1,221 
|                                                                        |   |        |  |       
|Total operating expenses                                                |   | 7,500  |  | 7,024 
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|Income before income taxes                                              |   | 3,686  |  | 2,434 
|Income taxes                                                            |   | 1,131  |  | 718   
|                                                                        |   |        |  |       
|Net income                                                              | $ | 2,555  |  | 1,716 
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|Basic earnings per share                                                | $ | 5.35   |  | 3.60  
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|Diluted earnings per share                                              | $ | 5.27   |  | 3.57  
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       
|                                                                        |   |        |  |       

See accompanying notes to consolidate financial statements







|CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFor the three-month periods ended March 31, 2003 and 2002 (Unaudited)
(dollars in thousands, except per share data)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                |   |        |  |            |   |          |   |  |          |   |  | Accumulated   |  |  |        |  
|------------------------------- | - | ------ |  | ---------- | - | -------- | - |  | -------- | - |  | ------------- |  |  | ------ | -
|                                |   |        |  | Additional |   |          |   |  |          |   |  | Other         |  |  |        |  
|                                |   | Common |  | Paid in    |   | Retained |   |  | Treasury |   |  | Comprehensive |  |  |        |  
|                                |   | Stock  |  | Capital    |   | Earnings |   |  | Stock    |   |  | Income        |  |  | Total  |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Balance at December 31, 2002    | $ | 9,732  |  | 6,958      |   | 37,655   |   |  | (1,159   | ) |  | 231           |  |  | 53,417 |  
|Comprehensive income:           |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Change in unrealized gain on    |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|securities available for sale,  |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|net of taxes of $23             |   | -      |  | -          |   | -        |   |  | -        |   |  | 40            |  |  | 40     |  
|Net income                      |   | -      |  | -          |   | 2,555    |   |  | -        |   |  | -             |  |  | 2,555  |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Total comprehensive income      |   |        |  |            |   |          |   |  |          |   |  |               |  |  | 2,595  |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Cash dividend - $2.15 per share |   | -      |  | -          |   | (1,026   | ) |  | -        |   |  | -             |  |  | (1,026 | )
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Balance at March 31, 2003       | $ | 9,732  |  | 6,958      |   | 39,184   |   |  | (1,159   | ) |  | 271           |  |  | 54,986 |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Balance at December 31, 2001    | $ | 8,110  |  | 8,553      |   | 32,428   |   |  | (1,218   | ) |  | 259           |  |  | 48,132 |  
|Change in par value of stock    |   | 1,622  |  | (1,622     | ) | -        |   |  | -        |   |  | -             |  |  | -      |  
|Comprehensive income:           |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Change in unrealized gain on    |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|securities available for sale,  |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|net of taxes of $29             |   | -      |  | -          |   | -        |   |  | -        |   |  | 43            |  |  | 43     |  
|Net income                      |   | -      |  | -          |   | 1,716    |   |  | -        |   |  | -             |  |  | 1,716  |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Total comprehensive income      |   |        |  |            |   |          |   |  |          |   |  |               |  |  | 1,759  |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Cash dividend - $2.05 per share |   | -      |  | -          |   | (978     | ) |  | -        |   |  | -             |  |  | (978   | )
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|Balance at March 31, 2002       | $ | 9,732  |  | 6,931      |   | 33,166   |   |  | (1,218   | ) |  | 302           |  |  | 48,913 |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  
|                                |   |        |  |            |   |          |   |  |          |   |  |               |  |  |        |  



See accompanying notes to consolidated financial statements





|CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSFor the three-month periods ended March 31, 2003 and 2002 (Unaudited)
(dollars in thousands)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                                                     |   | 2003    |   |  |  | 2002    |  
|-------------------------------------------------------------------- | - | ------- | - |  |  | ------- | -
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Cash flow from operating activities:                                 |   |         |   |  |  |         |  
|Net income                                                           | $ | 2,555   |   |  |  | 1,716   |  
|Adjustments to reconcile net income to                               |   |         |   |  |  |         |  
|net cash provided by operating activities:                           |   |         |   |  |  |         |  
|Depreciation, amortization and accretion                             |   | 734     |   |  |  | 551     |  
|Provision for loan losses                                            |   | 390     |   |  |  | 241     |  
|Deferred income tax benefit                                          |   | (107    | ) |  |  | (110    | )
|Undistributed loss from minority owned entities                      |   | (4      | ) |  |  | (4      | )
|Net gain on sale of mortgage loans                                   |   | (813    | ) |  |  | (294    | )
|Originations of loans held for sale                                  |   | (67,108 | ) |  |  | (44,382 | )
|Proceeds from sale of loans held for sale                            |   | 69,016  |   |  |  | 49,348  |  
|Increase in accrued interest receivable and other assets             |   | (876    | ) |  |  | (1,597  | )
|Decrease in accrued interest payable and other liabilities           |   | (928    | ) |  |  | (1,089  | )
|                                                                     |   |         |   |  |  |         |  
|Net cash provided by operating activities                            |   | 2,859   |   |  |  | 4,380   |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Cash flow from investing activities:                                 |   |         |   |  |  |         |  
|Proceeds from call of FHLB stock                                     |   | -       |   |  |  | 315     |  
|Purchase of FHLB stock                                               |   | -       |   |  |  | (202    | )
|Securities available-for-sale:                                       |   |         |   |  |  |         |  
|Proceeds from maturities and calls                                   |   | 1,000   |   |  |  | -       |  
|Securities held to maturity:                                         |   |         |   |  |  |         |  
|Proceeds from maturities and calls                                   |   | 6,292   |   |  |  | 59,347  |  
|Purchases                                                            |   | (4,484  | ) |  |  | (59,809 | )
|(Decrease) increase in loans, net                                    |   | (631    | ) |  |  | 6,989   |  
|Fixed asset purchases - net                                          |   | (403    | ) |  |  | (326    | )
|Cash received from sale of other real estate                         |   | -       |   |  |  | 314     |  
|                                                                     |   |         |   |  |  |         |  
|Net cash provided by investing activities                            |   | 1,774   |   |  |  | 6,628   |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Cash flow from financing activities:                                 |   |         |   |  |  |         |  
|Net increase (decrease) in demand, savings and money market deposits |   | 23,461  |   |  |  | (5,386  | )
|Net increase (decrease) in time deposits                             |   | (14,120 | ) |  |  | 4,244   |  
|Principal repayments on long-term borrowings                         |   | (14     | ) |  |  | (12     | )
|Dividends paid                                                       |   | (1,026  | ) |  |  | (978    | )
|                                                                     |   |         |   |  |  |         |  
|Net cash provided by (used in) financing activities                  |   | 8,301   |   |  |  | (2,132  | )
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Net increase in cash and cash equivalents                            |   | 12,934  |   |  |  | 8,876   |  
|Cash and cash equivalents - beginning of period                      |   | 49,857  |   |  |  | 46,641  |  
|                                                                     |   |         |   |  |  |         |  
|Cash and cash equivalents - end of period                            | $ | 62,791  |   |  |  | 55,517  |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Supplemental disclosures of cash flow information:                   |   |         |   |  |  |         |  
|Cash paid during the period for:                                     |   |         |   |  |  |         |  
|Interest                                                             | $ | 3,254   |   |  |  | 3,913   |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Income taxes                                                         | $ | 345     |   |  |  | 136     |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|Additions to other real estate acquired through foreclosure          | $ | 162     |   |  |  | -       |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  
|                                                                     |   |         |   |  |  |         |  

See notes to financial statements





CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

Notes to Financial Statements (Unaudited)



|(1)   Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and with generally accepted accounting principles for interim financial information. Such principles are applied on a basis consistent with those reflected in the December 31, 2002 Form 10-K Report of the Company filed with the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  Management has prepared the financial information included herein without audit by independent certified public accountants.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three-month period ended March 31, 2003, is not necessarily indicative of the results that may be expected for the year ending December 31, 2003.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2002.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Amounts in prior periods' condensed consolidated financial statements are reclassified whenever necessary to conform to the current year's presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



|(2)   Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company's incentive stock option program for employees authorizes grants of options to purchase up to 48,000 shares of common stock.  In 2003, the Board of Directors granted 8,142 non-qualified options to management under the Company's incentive compensation plan for 2002's performance (7,941 in 2002 for 2001's performance).  The options were granted with an exercise price equal to the estimated fair value of the common stock on the grant date.  The options are exercisable at times varying from three years to twenty-seven years.  The options are fully vested and have no set expiration date.
|The Company applies APB Opinion No. 25 in accounting for its stock option plan, and accordingly, no compensation cost has been recognized for its fixed-award stock options in the condensed consolidated statement of income.  Had compensation cost been determined based on the fair value at the grant date of the stock options using valuation models consistent with the approach of SFAS No. 123, the Company's net income and earnings per share for the year-to-date periods in 2003 and 2002 would have been reduced to the pro forma amounts indicated below (net income in thousands):                      





|For the three months ended March 31, |   | 2003  |  | 2002 
|------------------------------------ | - | ----- |  | -----
|                                     |   |       |  |      
|                                     |   |       |  |      
|Net income as reported               | $ | 2,555 |  | 1,716
|Compensation expense, net of taxes   |   | 182   |  | 210  
|Pro forma                            |   | 2,373 |  | 1,506
|                                     |   |       |  |      
|Earnings per share:                  |   |       |  |      
|As reported:                         |   |       |  |      
|Basic                                | $ | 5.35  |  | 3.60 
|Diluted                              |   | 5.27  |  | 3.57 
|Pro forma:                           |   |       |  |      
|Basic                                | $ | 4.97  |  | 3.16 
|Diluted                              |   | 4.90  |  | 3.13 



|The weighted average fair value of options granted during 2003 and 2002 was $31.74 and $37.46, respectively.  The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Grant year              |  | 2003       |  | 2002      
|----------------------- |  | ---------- |  | ----------
|                        |  |            |  |           
|Dividend yield          |  | 2.49%      |  | 2.60%     
|Risk-free interest rate |  | 3.83%      |  | 5.07%     
|Life                    |  | 12.2 years |  | 13.2 years
|Volatility              |  | 12.99%     |  | 13.30%    





|(3)   Dividends Per Share                                                                                                                                                    
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company declared a semi-annual $2.15 per share dividend on common stock on January 8, 2003, which was paid on February 3, 2003 to shareholders of record January 8, 2003.



|(4)   Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of shares outstanding during the period.  Diluted earnings per share includes the maximum dilutive effect of stock issueable upon conversion of stock options. Calculations for the three-month periods ended March 31, 2003, and 2002 follow (dollars in thousands, except share data):





|                                             |   | 2003    |  | 2002   
|-------------------------------------------- | - | ------- |  | -------
|                                             |   |         |  |        
|Basic Earnings Per Share:                    |   |         |  |        
|Net income applicable to common shareholders | $ | 2,555   |  | 1,716  
|Weighted average common shares outstanding   |   | 477,203 |  | 476,661
|                                             |   |         |  |        
|Basic earnings per share                     | $ | 5.35    |  | 3.60   
|                                             |   |         |  |        
|                                             |   |         |  |        
|                                             |   |         |  |        
|                                             |   |         |  |        
|Diluted Earnings Per Share:                  |   |         |  |        
|Net income applicable to common shareholders | $ | 2,555   |  | 1,716  
|Weighted average common shares outstanding   |   | 477,203 |  | 476,661
|Effect of assumed exercise of stock options  |   | 7,560   |  | 3,932  
|                                             |   |         |  |        
|Total                                        |   | 484,763 |  | 480,593
|                                             |   |         |  |        
|Diluted earnings per share                   | $ | 5.27    |  | 3.57   
|                                             |   |         |  |        
|                                             |   |         |  |        
|                                             |   |         |  |        
|                                             |   |         |  |        







|(5)   Common Stock Sale                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|On February 27, 2003, 1,640 shares of the Company's common stock were sold in an open-market transaction at an average price of $188.43 per share.
The Company's stock is not actively traded nor is it traded in the over-the-counter market. In addition, it is not listed with a national securities exchange. Due to the limited number of transactions, the weighted average sale price may not be indicative of the actual market value of the Company's stock.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(6)   Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Reportable segments are comprised of the Company and its banking subsidiary operations (Bank) and CNB Mortgage (CNBM), as their performance is evaluated on an individual operating basis.  The interim period reportable segment information for the three months ended  March 31, 2003 and 2002 follows. (dollars in thousands):                                                                                                                                   





|                                                       |   | 2003   |   | 2002
|------------------------------------------------------ | - | ------ | - | ----
|                                                       |   |        |   |     
|                                                       |   | Bank   |   | CNBM
|                                                       |   |        |   |     
|Revenues (net interest income and non-interest income: |   |        |   |     
|From external customers                                | $ | 11,413 |   | 163 
|Intersegment                                           |   | (662   | ) | 662 
|                                                       |   |        |   |     
|Total segment revenues                                 | $ | 10,751 |   | 825 
|                                                       |   |        |   |     
|                                                       |   |        |   |     
|                                                       |   |        |   |     
|                                                       |   |        |   |     
|Net income:                                            |   |        |   |     
|Bank                                                   | $ | 2,555  |   |     
|CNBM                                                   |   | 354    |   |     
|                                                       |   |        |   |     
|Total segment net income                               |   | 2,909  |   |     
|Eliminations                                           |   | (354   | ) |     
|                                                       |   |        |   |     
|Total net income                                       | $ | 2,555  |   |     
|                                                       |   |        |   |     
|                                                       |   |        |   |     
|                                                       |   |        |   |     
|                                                       |   |        |   |     



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7)   Impact of Accounting Standard Adoption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The Company adopted Financial Accounting Standards Board (FASB) Statement No. 143, "Accounting for Asset Retirement Obligations," which requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and accrete the liability over time. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.  Since the Company had no transactions covered by this statement, its adoption had no impact on the Company's financial condition or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|The Company also adopted FASB Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Statement 146 replaces Issue 94-3. Since the impact of adoption is dependent upon any future exit or disposal activity decisions, of which there were none, adoption of the statement had no impact on the Company's financial condition or results of operations.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              





|Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                        
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Management's discussion and analysis supplements management's discussion and analysis contained in the Company's Form 10-K for the year ended December 31, 2002.                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|OverviewThe Company's assets grew modestly to $835.7 million at March 31, 2003, driven by continued growth in deposits.  This represents a 1.2% increase over year-end 2002 and a 15.4% increase over the March 31, 2002 balance.  Net income rose 48.9% to $2.6 million for the first three months of 2003 compared to $1.7 million for the same period of 2002, driven mainly by higher net interest income and net gain on sale of mortgage loans.  Year-to-date 2003 results are ahead of budget.





|Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Three months ended March 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|At March 31, 2003, total assets of the Company were $835.7 million, up $10.0 million or 1.2% from $825.7 million at December 31, 2002. Cash and cash equivalents (cash, balances with other financial institutions, and federal funds sold) increased $12.9 million to $62.8 million, as a result of deposit growth.  Management retained this deposit growth in cash equivalents in anticipation of purchasing short-term Treasury securities; however, the overnight yield on interest-bearing deposits was higher than the yield on short-term Treasury securities. There was little change in the securities portfolios, decreasing $2.8 million in total due to maturities and calls in excess of purchases. Net loans decreased $1.0 million to $579.6 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Total deposits at March 31, 2003, were $753.7 million and were up a net $9.3 million from December 31, 2002.  During this period, $7.7 million of nationally marketed time deposits matured. The newest nine offices contributed $11.3 million of the quarter's deposit growth, with over $4.8 million coming from the new Brighton office. Municipalities' total deposit balance (collateralized principally by held-to- maturity investments) increased approximately $3.8 million for the quarter.  Due to continued local deposit growth, management did not renew the matured nationally marketed time deposits, which were originated in 2000, and management does not anticipate selling nationally marketed time deposits during 2003. Overall deposit growth during the quarter came in core interest-bearing accounts (checking, savings and money market).  Consumers and businesses continue to seek a positive return for their money, but are also retaining it in a more liquid form, reducing time deposit balances.   Additionally, management's tiered pricing of time deposits is focused on offering higher rates to customers in the "choice" packages, reducing the number of and balances in single-product customer accounts. There was no material change in borrowings.  Other liabilities decreased by $1.0 million to $6.5 million, largely due to payment of retirement plan liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Net interest income increased $1.5 million or 21.1% for the quarter over the same quarter in 2002, driven by both higher net interest-earning balances and lower overall cost of funds.  For the quarter ended March 31, 2003, average interest earning assets increased $88.4 million to $753.9 million from $665.5 million for the 2002 quarter.  The tax-equivalent yields on these assets were 6.30% and 6.62%, respectively, the decrease resulting from the decline in market interest rates.  For the same periods, average interest-bearing liabilities increased $76.4 million to $658.5 million from $582.1 million.  The costs of these liabilities were 1.76% and 2.57%, respectively, reflecting management's efforts to lower deposit costs in tandem with market rate declines, which began late in the first quarter of 2002.   The net effect of these yield and cost decreases was an increased spread of 49 basis points and an increased net interest margin (tax-equivalent net interest income to average earning assets) of 41 basis points to 4.77%.  The difference between spread and margin reflects the contribution of non-interest-bearing deposits - 23 basis points in 2003 and 32 basis points in 2002 - which dropped in 2003 due to the lower proportion of non-interest-bearing deposits to total interest-earning assets. The growth in interest-earning assets and interest-bearing liabilities had a $0.9 million positive impact on net interest income for the quarter ended March 31, 2003, while the increase in spread had $0.6 million positive impact on net interest income as compared to the first quarter of 2002.
While management will continue its focus on maintaining and improving net interest margin and spread, it is unlikely the improvements seen in this quarter will be repeated in future quarters of 2003 as there is little room to reduce deposit rates further vis-à-vis local competition.   Compounding this will be additional reductions in yields on earning asset as maturing assets are reinvested in similar assets carrying lower interest rates. Refer to Interest Rate Sensitivity and Asset / Liability Management Review section for a further discussion of interest rate risk management.





|Other income for the quarter ended March 31 2003, improved to $3.1 million from $2.7 million. Service charges on deposit accounts increased $0.1 million to $1.2 million at March 31, 2003, on growth in the number of deposit accounts.  However, while the number of accounts increased year on year, new product offerings - "CNB Options" - and higher balances provided customers more fee waiver opportunities, particularly with ATM surcharges.  Trust income decreased $0.1 million on lower fee income from a lower market value of assets under management. Net gain on the sale of mortgage loans was $0.8 million in 2003 versus $0.3 million in 2002 with both periods characterized by heavy mortgage origination and sales activity.  Other operating income declined $0.1 million to $0.3 million on lower fee income from outsourced credit card operations.Operating expenses increased $0.5 million or 6.8% for the quarter ended March 31, 2003, to $7.5 million versus $7.0 million for the 2002 third quarter.  This increase came in all expense categories, except FDIC insurance premiums, which declined with the Bank's return to "well-capitalized" categorization.  Salary and benefits were up $0.1 million due to both wage increases and benefit expenses.  Occupancy costs were up $0.2 million due to general franchise growth.  Marketing expenses increased $0.1 million due to the timing of expenditures.  Other operating expenses were up $0.1 million.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The Company's quarterly effective tax rate increased to 30.7% in 2003 from 29.5% in 2002.  This increase is attributable to 2003's higher overall income, which resulted in the Company's marginal federal income tax rate to increase to 35% from 34%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         





|Liquidity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The Board of Directors has set general liquidity guidelines, which can be summarized as: the ability to generate adequate amounts of cash to meet the demand from depositors who wish to withdraw funds, for borrowers who require funds, and to fund capital expansion.  Liquidity is produced by cash flows from operating, investing, and financing activities of the Company.
Liquidity needs generally arise from asset origination and deposit outflows. Liquidity needs can increase when asset generation (loans and investments) exceed net deposit inflows.  Conversely, liquidity needs are reduced when the opposite occurs.  In these instances, the needs are funded through short-term Federal Home Loan Bank of New York (FHLB) borrowings, while excess liquidity is sold into the Federal Funds market.
The Company has two primary sources of non-customer (wholesale) liquidity: the FHLB and the Federal Reserve Bank of New York. At March 31, 2003, residential mortgage loans with a carrying value of approximately $37.0 million were pledged as collateral to secure up to $34.1 million for the Bank's advances and letters of credit from the FHLB, of which $4.8 million was utilized at March 31, 2003.  Indirect automobile loans, with a carrying value of approximately $85.6 million, were pledged as collateral for a $68.5 million line of credit from the Federal Reserve Bank of New York, none of which was outstanding at March 31, 2003.
Secondarily, the Company uses the liquidity source of time deposit sales in the national brokered market.  This source may be used from time to time to manage both liquidity and interest rate risk as conditions may require.  The balance of these so-called "brokered deposits" amounted to $5.3 million at March 31, 2003, versus $13.0 million at year-end 2002. Management does not anticipate raising brokered deposits for the remainder of 2003, as local deposit growth is expected to outpace asset growth.
For the three months ended March 31, 2003, the Company generated $12.9 million in net cash and equivalents versus $8.9 million for the same period in 2002.
Net cash provided by operating activities was $2.9 million in 2003, versus $4.4 million in 2002.  Both the largest source and use of operating cash in 2003 and 2002 were loans held for sale.  Activity in 2003 was significantly higher than in 2002 due to the effects of the continuing strong mortgage refinancing market. Excluding the effects of loans held for sale, operating activities provided $1.8 million of cash for the first three months of 2003 versus a use of $0.3 million for the same period of 2002.
Cash provided by investing activities was $1.8 million in 2003 versus $6.6 million in 2002.  Net securities activities accounted for the majority of investing activities in both years.  In 2003, net loan originations booked as assets were lower than 2002's, as much of the originations were sold in the secondary market, as noted above.  While this strategy slowed on-balance-sheet loan growth, it also contributed to the Company's improved net interest margin.
Cash provided by financing activities was $8.3 million in 2003 versus a use of $2.1 million in 2002.  The main contributor in both years was deposit activity, with 2003 exhibiting a higher growth than 2002's. In both periods, borrowing activities were minimal.
For the remainder of 2003, cash for growth is expected to come primarily from customer sources.  Customer deposit growth is mainly expected to come from Monroe County sources.
Less material, but a part of the Company's ongoing operations, and expected to be funded through normal operations, are liquidity uses such as lease obligations, long-term debt repayments, and other funding commitments. There has been no material change from the information presented in the Company's Form 10-K for the year ended December 31, 2002.





|Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|The Company and Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company's and Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company's and Bank's assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. The Company's and Bank's capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|As of March 31, 2003, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action.  This represents an improvement from March 31, 2002, when the Bank was classified as "adequately capitalized", and comes as a result of Bank capital raised through the Trust Preferred issuance.   Management anticipates no change in this classification for the foreseeable future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





|Allowance for Loan Losses and Non-Performing Assets                                                                               
|----------------------------------------------------------------------------------------------------------------------------------
|Allowance for Loan Losses                                                                                                         
|Changes in the allowance for loan losses for the three-month periods ended March 31, 2003, and 2002 follow (dollars in thousands):



|                                                    |   | March 31,
|--------------------------------------------------- | - | ---------
|                                                    |   |          
|                                                    |   | 2003     
|                                                    |   |          
|Balance at beginning of period                      | $ | 6,162    
|Provision for loan losses                           |   | 390      
|Loans charged off                                   |   | (525     
|Recoveries on loans previously charged off          |   | 164      
|                                                    |   |          
|Balance at end of period                            | $ | 6,191    
|                                                    |   |          
|                                                    |   |          
|                                                    |   |          
|                                                    |   |          
|Allowance as a percentage of total period end loans |   | 1.05%    
|                                                    |   |          
|                                                    |   |          
|                                                    |   |          
|                                                    |   |          
|Allowance as a percentage of non-performing loans   |   | 59.9%    
|                                                    |   |          
|                                                    |   |          
|                                                    |   |          



|The increase in the provision for loan losses for the three-month period ended March 31, 2003, relative to 2002 is primarily related to an increase in net loan charge-offs for the respective periods.  As discussed more fully in the Company's Form 10-K for the year ended December 31, 2002, management determines the amount necessary in the allowance for loan losses based upon a number of factors.  Management, based on its assessment of the loan portfolio, believes the amount of the allowance for loan losses at March 31, 2003 is adequate at $6.2 million.  In order to be at that amount, provisions charged to the income statement are necessary.  These amounts will vary from period to period, including this three-month period.
During 2003 the Company has incurred a higher amount of loan charge-offs as local and national economic conditions impact the Company's borrowers.  However, recoveries of loans previously charged-off improved in 2003 from 2002.
The increase in the allowance for loan losses from $5.6 million at March 31, 2002, to $6.2 million at March 31, 2003, is due to overall loan portfolio growth. While the quality of some loans in the portfolio has declined, as evidenced by the increase in non-performing loans, principally commercial related, those loans continue to be adequately collateralized.   This has impacted the ratio of allowance to non-performing loans, which has decreased.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Impaired Loans                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Information on impaired loans for the three-month periods ended March 31, 2003, and 2002 and twelve months ended December 31, 2002, follow (dollars in thousands):





|                                         |   | Three Months |  | Twelve Months |  | Three Months
|---------------------------------------- | - | ------------ |  | ------------- |  | ------------
|                                         |   | Ended        |  | Ended         |  | Ended       
|                                         |   | March 31,    |  | December 31,  |  | March 31    
|                                         |   | 2003         |  | 2002          |  | 2002        
|                                         |   |              |  |               |  |             
|                                         |   |              |  |               |  |             
|Recorded investment at period end        | $ | 10,241       |  | 11,007        |  | 7,201       
|Impaired loans as percent of total loans |   | 1.75%        |  | 1.87%         |  | 1.38%       
|Impaired loans with related allowance    | $ | 540          |  | 377           |  | 238         
|Related allowance                        | $ | 213          |  | 311           |  | 238         
|Average investment during period         | $ | 10,635       |  | 8,990         |  | 7,644       





|Reflecting an improvement in credit risk, impaired loans declined $0.7 million from December 31, 2002, to March 31, 2003.  In addition, impaired loans as a percentage of total loans outstanding have also improved, declining to 1.75% at March 31, 2003 versus 1.87% at December 31, 2002.   Impaired loans did increase year-on-year, reflective of the impact of local and national economic conditions on borrowers. Interest income recognized on impaired loans during the periods was not material.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







|Non-Performing Assets 
|----------------------
|Non-Performing Assets 
|(Dollars in thousands)



|                                               |   |           |  |              |  |          
|---------------------------------------------- | - | --------- |  | ------------ |  | ---------
|                                               |   | March 31, |  | December 31, |  | March 31,
|                                               |   | 2003      |  | 2002         |  | 2002     
|                                               |   |           |  |              |  |          
|Loans past due 90 days or more and accruing:   |   |           |  |              |  |          
|Commercial, financial & agricultural           | $ | 8         |  | 16           |  | 7        
|Real estate-commercial                         |   | -         |  | -            |  | 48       
|Real estate-residential                        |   | -         |  | 154          |  | 43       
|Consumer                                       |   | 92        |  | 151          |  | 212      
|                                               |   |           |  |              |  |          
|Total past due 90 days or more and accruing    |   | 100       |  | 321          |  | 310      
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|Loans in non-accrual status:                   |   |           |  |              |  |          
|Commercial, financial & agricultural           |   | 2,793     |  | 2,938        |  | 2,806    
|Real estate-commercial                         |   | 7,063     |  | 7,241        |  | 4,174    
|Real estate-residential                        |   | 385       |  | 501          |  | 221      
|Consumer                                       |   | -         |  | 327          |  | -        
|                                               |   |           |  |              |  |          
|Total non-accrual loans                        |   | 10,241    |  | 11,007       |  | 7,201    
|                                               |   |           |  |              |  |          
|Total non-performing loans                     |   | 10,341    |  | 11,328       |  | 7,511    
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|Other real estate owned                        |   |           |  |              |  |          
|Commercial                                     |   | 583       |  | 421          |  | 1,094    
|Residential                                    |   | 80        |  | -            |  | -        
|                                               |   |           |  |              |  |          
|Total other real estate owned                  |   | 663       |  | 421          |  | 1,094    
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|Total non-performing assets                    | $ | 11,004    |  | 11,749       |  | 8,605    
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|Non-performing loans to total period-end loans |   | 1.77%     |  | 1.93%        |  | 1.44%    
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|Non-performing assets to total period-end      |   |           |  |              |  |          
|loans and other real estate                    |   | 1.87%     |  | 2.00%        |  | 1.64%    
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          
|                                               |   |           |  |              |  |          



|The Company has no restructured loans.                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                             
|Total non-performing loans decreased $1.0 million to $10.3 million at March 31, 2003, from December 31, 2002, and was due to a combination of loans returning to accrual status, paying off, and charged off.  Total non-performing loans increased over the twelve-month period by $2.8 million and is due to the impact of the generally slower economic conditions on the Company's borrowers.            
|                                                                                                                                                                                                                                                                                                                                                                                                             
|At March 31, 2003, other real estate owned consisted of two commercial properties totaling $0.6 million and one residential property.  The Company continues to actively pursue liquidation of these properties.  Weaker economic conditions and an increase in non-performing assets from March 2002 may result in the Company foreclosing on more loans, resulting in increases in other real estate owned.



|Other Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In April 2003, the Financial Accounting Standards Board (FASB) issued Statement No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133.  The new guidance amends Statement 133 for decisions made as part of the Derivatives Implementation Group process that effectively required amendments to Statement 133, in connection with other Board projects dealing with financial instruments, and regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an "underlying" and the characteristics of a derivative that contains financing components. The amendments improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. The Statement is applicable to the Company's mortgage banking operations, but is not expected to materially impact the Company's financial condition or results of operations.  This Statement is effective for contracts entered into or modified after June 30, 2003, with some minor exceptions.
|None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





|Item 3. Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Interest Rate Sensitivity and Asset / Liability Management Review                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|The Company realizes income principally from the differential or spread between the interest earned on loans, investments and other interest-earnings assets and the interest paid on deposits and borrowings. Loan volumes and yields, as well as the volume of and rates on investments, deposits and borrowings, are affected by market interest rates. Additionally, because of the terms and conditions of many of the Company's loan documents and deposit accounts, a change in interest rates could also affect the projected maturities of the loan portfolio and/or the deposit base, which could alter the Company's sensitivity to future changes in interest rates. Accordingly, management considers interest rate risk to be the Company's most significant market risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Interest rate risk management focuses on maintaining consistent growth in net interest income within Board-approved policy limits while taking into consideration, among other factors, the Company's overall credit, operating income, operating cost, and capital profile. The Company's Asset/Liability Committee (ALCO) includes the Bank's Chief Executive Officer, Chief Economist, Chief Financial Officer, Senior Vice President of Retail Services, Senior Vice President of Commercial Services and Senior Vice President of Sales and Marketing.  It reports to the Board of Directors on its activities to monitor and manage interest rate risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Management of the Company's interest rate risk requires the selection of appropriate techniques and instruments to be utilized after considering the benefits, costs and risks associated with available alternatives.  Since the Company does not utilize derivative financial instruments, management's techniques usually consider one or more of the following: (1) interest rates offered on products, (2) maturity terms offered on products, (3) types of products offered, and (4) products available to the Company in the wholesale market such as advances from the FHLB and brokered time deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|The Company uses an interest margin shock simulation model as one method to identify and manage its interest rate risk profile.  The model measures the Company's projected net interest income "at-risk" and resulting changes in net income and economic value of equity.  ALCO's principal focus is net interest income at risk. The model is based on expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporates market-based assumptions regarding the impact of changing interest rates on these financial instruments over a twelve-month period. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in interest rates are also incorporated into the model. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. While actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies, this model has proven an important tool for ALCO.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|The Company measures net interest income at risk by estimating the changes in net interest income resulting from instantaneous and sustained parallel shifts in interest rates of plus or minus 200 basis points over a twelve-month period.  This provides a basis or benchmark for ALCO to manage the Company's interest rate risk profile.  There has been no significant changes in market risk due to changes in interest rates from those disclosed in the Company's 2002 Form 10-K
For the remainder of 2003, management projects the general interest rate environment to remain stable for at least the next two quarters and rise modestly during the last quarter of the year as the economy shows signs of recovery and the need for low-cost funds to stimulate the market is reduced.
A second tool used by ALCO is its proprietary Cost of Funds model.  Model results are generated weekly and measure actual interest rates paid on deposit accounts and earned on loans and investments.  This model takes into consideration current interest rates, interest rate trends, product and portfolio spreads and projected and historical net interest income data.  Using this model, management can adjust rates and determine the financial impact on net interest income on a more frequent basis than the net interest income simulation model, which is prepared monthly.
A third method used to identify and manage the Company's interest rate risk profile is the static gap analysis. Interest sensitivity gap ("gap") analysis measures the difference between the assets and liabilities repricing or maturing within specific time periods. An asset-sensitive position indicates that there are more rate-sensitive assets than rate-sensitive liabilities repricing or maturing within specific time horizons, which would generally imply a favorable impact on net interest income in periods of rising interest rates and a negative impact in periods of falling rates. A liability-sensitive position would generally imply a negative impact on net interest income in periods of rising rates and a positive impact in periods of falling rates.
There has been no significant change in this measurement since December 31, 2002.





|Item 4. Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation within 90 days prior to the filing date of this report, that the Company's disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-14(c) and 15d-14(c)) are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the foregoing evaluation.







|PART II -- OTHER INFORMATION                                
|------------------------------------------------------------
|CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES           
|Item 1.  Legal proceedings                                  
|None                                                        
|Item 2.  Changes in securities and Use of Proceeds          
|None                                                        
|Item 3.  Defaults Upon Senior Securities                    
|None                                                        
|Item 4.  Submission of matters to a vote of security holders



|(a) The annual meeting of stockholders of Canandaigua National     
|-------------------------------------------------------------------
|Corporation was held on March 12, 2003, for the following purposes:
|                                                                   
|                                                                   
|Four directors were elected for a three-year term and              
|votes were cast as follows:                                        



|                     |  | Votes  
|-------------------- |  | -------
|                     |  |        
|Name                 |  | For    
|                     |  |        
|Caroline C. Shipley  |  | 299,717
|                     |  |        
|George W. Hamlin, IV |  | 299,717
|                     |  |        
|Sue S. Stewart       |  | 299,717
|                     |  |        
|David Hamlin, Jr.    |  | 299,717





|Item 5.  Other information
|--------------------------
|                          
|None                      







|Item 6.  Exhibits and reports on Form 8-K                                                                                                                                                                                                                                                                        
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)Exhibits                                                                                                                                                                                                                                                                                                      
|(99a.) Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(99b.) Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|                                                                                                                                                                                                                                                                                                                 
|(b) Reports on Form 8-K                                                                                                                                                                                                                                                                                          
|None                                                                                                                                                                                                                                                                                                             





|SIGNATURES                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES                                                                                                                                       
|Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|             |  | CANANDAIGUA NATIONAL CORPORATION                
|------------ |  | ------------------------------------------------
|             |  | (Registrant)                                    
|             |  |                                                 
|             |  |                                                 
|             |  |                                                 
|May 13, 2003 |  | /s/ George W. Hamlin, IV                        
|Date         |  | George W. Hamlin, IV, President and             
|             |  | Principal Executive Officer                     
|             |  |                                                 
|             |  |                                                 
|May 13, 2003 |  | /s/ Gregory S. MacKay                           
|Date         |  | Gregory S. MacKay, Treasurer                    
|             |  |                                                 
|             |  |                                                 
|May 13, 2003 |  | /s/ Lawrence A. Heilbronner                     
|Date         |  | Lawrence A. Heilbronner, Principal Financial and
|             |  | Accounting Officer                              





|CERTIFICATIONS
|--------------

|I, George W. Hamlin, IV, certify that:                                                                  
|--------------------------------------------------------------------------------------------------------
|I have reviewed this quarterly report on Form 10-Q of Canandaigua National Corporation and Subsidiaries.
|                                                                                                        
|                                                                                                        
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|                                                                                                        



|May 13, 2003 |  | /s/ George W. Hamlin, IV           
|------------ |  | -----------------------------------
|Date         |  | George W. Hamlin, IV, President and
|             |  | Principal Executive Officer        





|I, Lawrence A. Heilbronner, certify that:                                                               
|--------------------------------------------------------------------------------------------------------
|I have reviewed this quarterly report on Form 10-Q of Canandaigua National Corporation and Subsidiaries.
|                                                                                                        
|                                                                                                        
|                                                                                                        
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|                                                                                                        



|May 13, 2003 |  | /s/ Lawrence A. Heilbronner                     
|------------ |  | ------------------------------------------------
|Date         |  | Lawrence A. Heilbronner, Principal Financial and
|             |  | Accounting Officer                              







|EXHIBITS
|--------
|Exhibit 
|        
|(99) (a)
|        
|        
|        
|(99) (b)
|        
|