UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    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  September  30,  1998
                                    --------------------

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     16-1234823
                             --------     ----------
              (State or other jurisdiction of      (I.R.S. Employer
            incorporation or organization)     Identification Number)


             72 South Main Street, Canandaigua, New York      14424
             -------------------------------------------      -----
            (Address of principal executive offices)      (Zip Code)


                                 (716) 394-4260
                                 --------------
               Registrant's telephone number, including area code


     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.  [X]  Yes   [  ]  No


     Indicate  the  number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practical  date.

                   Class     Outstanding at November 10, 1998
                   -----     --------------------------------
                      Common stock, $50.00 par     159,618


<PAGE>
<TABLE>

<CAPTION>

                CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

                                INDEX TO FORM 10-Q

                                SEPTEMBER 30, 1998



PART I -- FINANCIAL INFORMATION                                        Page
                                                                     ---------  
<S>                                                                  <C>        <C>
Item 1.  Financial Statements

Condensed consolidated balance sheets at September 30, 1998 and
  December 31, 1997.                                                         1

Condensed consolidated statements of income for the three month
  and nine month periods ended September 30, 1998 and 1997.                  3

Condensed consolidated statements of stockholders' equity for the
  nine month period ended September 30, 1998 and 1997.                       4

Condensed consolidated statements of cash flows for the nine
  month period ended September 30, 1998 and 1997.                            5

Notes to condensed consolidated financial statements at September
                                                                     30, 1998.  6

Item 2.  Management's Discussion and Analysis of Financial
  Condition and Results of Operations                                        8

Item 3.  Qualitative and Quantitative Disclosures about Market Risk
 This information is incorporated by reference in Part I, Item 2,
 Interest Rate Sensitivity and Asset/Liability Management Review.           12
-------------------------------------------------------------------              



PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings                                                  16
Item 2.  Changes in Securities                                              16
Item 3.  Defaults Upon Senior Securities                                    16
Item 4.  Submission of Matters to a Vote of Security Holders                16
Item 5.  Other Information                                                  16
Item 6.  Exhibits and Reports on Form 8-K                                   16

SIGNATURES                                                                  17
</TABLE>


<PAGE>

<PAGE>
PART  I  --  FINANCIAL  INFORMATION
Item  1.  Financial  Statements
<TABLE>

<CAPTION>

                     CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheets (unaudited)
                       (Dollars in thousands, except per share data)


                                                              September 30,   December 31,
                                                                  1998            1997
                                                             ---------------  -------------
<S>                                                          <C>              <C>
ASSETS
-----------------------------------------------------------                                
Cash and due from banks                                      $       23,434         19,397 
Interest-bearing deposits with other banks                              421            250 
Securities:
Securities available for sale, at fair value                            356            394 
Securities held-to-maturity (fair value of $72,195 in 1998           70,851         70,987 
                                                             ---------------  -------------
and $71,284 in 1997)
Total securities                                                     71,207         71,381 
                                                             ---------------  -------------
Loans:
Commercial, financial & agricultural                                 49,908         37,610 
Commercial mortgage                                                  82,483         81,035 
Residential mortgage                                                 77,485         87,786 
Consumer-indirect                                                    82,294         73,211 
Consumer-other                                                       14,587         15,245 
Other                                                                 2,769         12,138 
Loans held for sale                                                   3,960          2,119 
                                                             ---------------  -------------
Total loans                                                         313,486        309,144 
Less:  Allowance for loan losses                                     (3,368)        (3,153)
                                                             ---------------  -------------
Loans - net                                                         310,118        305,991 
                                                             ---------------  -------------
Premises and equipment - net                                         11,213         11,184 
Accrued interest receivable                                           2,476          2,372 
FHLB and FRB stock                                                    3,548          3,118 
Other assets                                                          5,704          5,249 
                                                             ---------------  -------------
Total Assets                                                 $      428,121        418,942 
                                                             ===============  =============

</TABLE>





                                   (Continued)



                                     Page 1
<PAGE>
<TABLE>

<CAPTION>



                    CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

              Condensed Consolidated Balance Sheets (unaudited), continued
                      (Dollars in thousands, except per share data)


                                                           September 30,   December 31,
                                                               1998            1997
                                                          ---------------  -------------
<S>                                                       <C>              <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------                                
Deposits:
Non-interest bearing                                      $       64,496         73,297 
Interest bearing                                                 290,136        251,464 
                                                          ---------------  -------------
Total deposits                                                   354,632        324,761 
FHLB advances                                                     28,149         50,667 
Accrued interest payable and other liabilities                     3,612          2,582 
                                                          ---------------  -------------
Total Liabilities                                                386,393        378,010 
                                                          ---------------  -------------

Stockholders' Equity:
Common stock, $50 par value; 240,000 shares authorized;
162,208 issued and outstanding in 1998 and 1997                    8,110          8,110 
Additional paid-in-capital                                         8,489          8,489 
Retained earnings                                                 25,830         24,742 
Treasury stock at cost (2,387 and 1,642 shares,
respectively)                                                       (797)          (528)
Accumulated other comprehensive income                                96            119 
                                                          ---------------  -------------
Total Stockholders' Equity                                        41,728         40,932 
                                                          ---------------  -------------
Total Liabilities and Stockholders' Equity                $      428,121        418,942 
                                                          ===============  =============













<FN>

See  notes  to  condensed  consolidated  financial  statements
</TABLE>




                                     Page 2
<PAGE>

<PAGE>
<TABLE>

<CAPTION>

                              CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

                           Condensed Consolidated Statements of Income (unaudited)
                                (Dollars in thousands, except per share data)


                                                     Three months ended   Nine months ended
                                                        September 30,       September 30,
                                                     -------------------  -----------------              
                                                            1998                1997          1998     1997
                                                     -------------------  -----------------  -------  ------
<S>                                                  <C>                  <C>                <C>      <C>
Interest income:
Loans, including fees                                $             6,919              6,400  $20,035  18,501
Securities                                                         1,017                915    3,006   2,933
Federal funds sold and other                                           8                 11       46      13
                                                     -------------------  -----------------  -------  ------
Total interest income                                              7,944              7,326   23,087  21,447
                                                     -------------------  -----------------  -------  ------
Interest expense:
Deposits                                                           2,773              2,388    7,797   7,125
Borrowings                                                           363                448    1,501     919
                                                     -------------------  -----------------  -------  ------
Total interest expense                                             3,136              2,836    9,298   8,044
                                                     -------------------  -----------------  -------  ------
Net interest income                                                4,808              4,490   13,789  13,403
Provision for loan losses                                            212                260      641     725
                                                     -------------------  -----------------  -------  ------
Net interest income after provision for loan losses                4,596              4,230   13,148  12,678
                                                     -------------------  -----------------  -------  ------

Other income:
Service charges on deposit accounts                                  504                395    1,281   1,202
Trust                                                                585                404    1,724   1,236
Other                                                                523                 74    1,401     542
                                                     -------------------  -----------------  -------  ------
Total other income                                                 1,612                873    4,406   2,980
                                                     -------------------  -----------------  -------  ------

Operating expenses:
Salaries & employee benefits                                       2,716              2,346    7,395   6,694
Occupancy                                                            773                719    2,296   1,964
Stationery, supplies & postage                                       222                131      577     432
Other                                                                984                680    2,998   2,206
                                                     -------------------  -----------------  -------  ------
Total operating expenses                                           4,695              3,876   13,266  11,296
                                                     -------------------  -----------------  -------  ------

Income before income taxes                                         1,513              1,227    4,288   4,362
Provision for income taxes                                           459                160    1,434   1,017
                                                     -------------------  -----------------  -------  ------
Net income                                           $             1,054              1,067  $ 2,854   3,345
                                                     ===================  =================  =======  ======

Basic earnings per share                             $              6.57               6.64  $ 17.79   20.77
                                                     ===================  =================  =======  ======

<FN>

See  notes  to  condensed  consolidated  financial  statements.
</TABLE>


                                     Page 3
<PAGE>
<TABLE>

<CAPTION>

                                CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

                      Condensed Consolidated Statements of Stockholders' Equity (unaudited)
                           For the nine month period ended September 30, 1998 and 1997
                                  (Dollars in thousands, except per share data)


                                            Accumulated
                                             Additional    Other
                                               Common     Paid in  Retained   Treasury   Comprehensive
                                               Stock      Capital  Earnings     Stock        Income       Total
                                            ------------  -------  ---------  ---------  --------------  -------
<S>                                         <C>           <C>      <C>        <C>        <C>             <C>
Balance at January 1, 1998                  $      8,110    8,489    24,742       (528)            119   40,932 
Comprehensive income:
Change in unrealized
gain on securities
available-for-sale, net
of taxes of $15                                        -        -         -          -             (23)     (23)
Net income                                             -        -     2,854          -               -    2,854 
                                            ------------  -------  ---------  ---------  --------------  -------
Total comprehensive
income                                                 -        -     2,854          -             (23)   2,831 
                                            ------------  -------  ---------  ---------  --------------  -------
Cash dividend - $11.00 per
share                                                  -        -    (1,766)         -               -   (1,766)
Sale of 10 shares of treasury stock                    -        -         -          3               -        3 
Purchase of 755 shares of treasury stock               -        -         -       (272)              -     (272)
                                            ------------  -------  ---------  ---------  --------------  -------
Balance at September 30, 1998               $      8,110    8,489    25,830       (797)             96   41,728 
                                            ============  =======  =========  =========  ==============  =======

Balance at January 1, 1997                  $      8,110    8,489    22,616       (174)             78   39,119 
Comprehensive income:
Change in unrealized
gain on securities
available-for-sale, net
of taxes of $15                                        -        -         -          -              35       35 
Net income                                             -        -     3,345          -               -    3,345 
                                            ------------  -------  ---------  ---------  --------------  -------
Total comprehensive income                             -        -     3,345          -              35    3,358 
                                            ------------  -------  ---------  ---------  --------------  -------
Cash dividend - $10.00 per share                       -        -    (1,609)         -               -   (1,609)
Sale of 139 shares of treasury stock                   -        -        (2)        44               -       42 
Purchase of 1,161 shares of treasury stock
                                                       -        -         -       (375)              -     (375)
                                            ------------  -------  ---------  ---------  --------------  -------
Balance at September 30, 1997               $      8,110    8,489    24,350       (505)            113   40,557 
                                            ============  =======  =========  =========  ==============  =======
<FN>



See  notes  to  condensed  consolidated  financial  statements.
</TABLE>



                                     Page 4
<PAGE>
<TABLE>

<CAPTION>

                            CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

                       Condensed Consolidated Statements of Cash Flows (unaudited)
                       For the nine month period ended September 30, 1998 and 1997
                              (Dollars in thousands, except per share data)


                                                                                September 30,
                                                                               ---------------      

                                                                                    1998          1997
                                                                               ---------------  --------
<S>                                                                            <C>              <C>
Cash flow from operating activities:
Net income                                                                     $        2,854     3,345 
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization                                                           1,582     1,147 
Accretion and amortization                                                               (143)     (104)
Provision for loan losses                                                                 641       729 
Writedown of other real estate owned                                                       50         - 
Deferred income taxes                                                                    (231)        - 
Originations of loans held for sale                                                   (78,227)  (22,416)
Proceeds from sale of loans held for sale                                              76,386    22,416 
(Increase) decrease in accrued interest receivable                                       (104)      (56)
(Increase) in other assets                                                               (703)   (1,287)
Increase in accrued interest payable and other liabilities                              1,045        28 
                                                                               ---------------  --------
Net cash from operating activities                                                      3,150     3,802 
                                                                               ---------------  --------

Cash flows from investing activities:
Securities held to maturity:
Proceeds from calls and maturities                                                     24,352    29,955 
Purchases                                                                             (24,073)  (30,126)
Purchase of FRB & FHLB stock                                                             (430)   (1,074)
Loans made, net of principal payments                                                  (2,927)  (36,499)
Fixed asset purchases, net                                                             (1,477)   (2,543)
Proceeds from sale of other real estate                                                 1,057         - 
Investment in minority owned subsidiary                                                  (762)     (678)
                                                                               ---------------  --------
Net cash used by investing activities                                                  (4,260)  (40,965)
                                                                               ---------------  --------

Cash flows from financing activities:
Net increase in demand, savings and short term deposits                                19,288    24,584 
Proceeds from issuance of certificates of deposit net of matured certificates          10,583       123 
Net overnight FHLB advances                                                           (10,406)   21,392 
Proceeds from term FHLB advances                                                        7,900         - 
Principal repayments on term FHLB advances                                            (20,012)        - 
Proceeds from sale of treasury stock                                                        3        42 
Purchase of treasury stock                                                               (272)     (375)
Dividends paid                                                                         (1,766)   (1,609)
                                                                               ---------------  --------
Net cash provided by financing activities                                               5,318    44,157 
                                                                               ---------------  --------

Net increase in cash & cash equivalents                                                 4,208     6,994 
Cash & cash equivalents - beginning of period                                          19,647    19,173 
                                                                               ---------------  --------
Cash & cash equivalents-end of period                                          $       23,855    26,167 
                                                                               ===============  ========

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest                                                                       $        9,208     8,078 
                                                                               ===============  ========
Taxes                                                                          $        1,462       581 
                                                                               ===============  ========
Supplemental disclosure of non-cash investing activity:
Additions to other real estate owned acquired through foreclosure,
net of loans to facilitate sales                                               $            -     1,420 
                                                                               ===============  ========

<FN>

See  notes  to  condensed  consolidated  financial  statements.
</TABLE>


                                     Page 5
<PAGE>

                CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES
        Notes to Condensed Consolidated 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, 1997 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 generally accepted accounting
principles  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 and nine-month periods
ended  September 30, 1998 are not necessarily indicative of the results that may
be  expected  for  the  year  ended December 31, 1998.  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, 1997.

Amounts  in  prior  periods'  condensed  consolidated  financial  statements are
reclassified whenever necessary to conform with the current year's presentation.

(2)     Comprehensive  Income
        ---------------------

On  January  1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income."  This  statement  establishes  standards  for  reporting and display of
comprehensive  income  and its components (revenues, expenses, gains and losses)
in  a  full  set  of  general-purpose financial statements. Comprehensive income
includes  a  company's reported net income adjusted for items that are currently
accounted  for  as  direct  entries to stockholders' equity, such as the mark to
market  adjustment  on securities available for sale. The Company's only sources
of comprehensive income are net income and changes in unrealized gains (losses),
net of taxes, on available-for-sale securities.  Accumulated other comprehensive
income represents the net unrealized gains or losses on securities available for
sale as of the balance sheet date. The adoption of this statement resulted in no
reclassification  of  prior period amounts, because the Company has not realized
any gains or losses on the sale of its available-for-sale securities in the past
three  years.

(3)     New  Accounting  Pronouncements
        -------------------------------

FASB  Statement  No.  134  entitled  "Accounting  for Mortgage-Backed Securities
Retained  after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking  Enterprise"  was  issued  in  October  1998.  This  statement  requires
enterprises  engaged  in mortgage banking activities to classify mortgage-backed
securities  and  other  beneficial  interests retained after a securitization of
mortgage  loans  held for sale based on their ability and intent to sell or hold
those  assets.  While this statement is effective for the Company for the fiscal
quarter  beginning  January  1,  1999  and  earlier  adoption  is permitted, the
statement  is not expected to impact the Company, because it does not securitize
mortgage  loans  held  for  sale.





                                     Page 6
<PAGE>
FASB  Statement  No.  133  entitled  "Accounting  for Derivative Instruments and
Hedging  Activities"  was  issued  in  June  1998.  This  statement  establishes
comprehensive  accounting  and reporting requirements for derivative instruments
and  hedging  activities.  The  statement  requires  companies  to recognize all
derivatives  as  either  assets or liabilities, with the instruments measured at
fair  value.  The accounting for gains and losses resulting from changes in fair
value of the derivative instrument depends on the intended use of the derivative
and  the  type of risk being hedged.  The statement is effective for the Company
for  fiscal  quarters beginning January 1, 2000.  Earlier adoption is permitted.
Management anticipates adopting the provision of this statement in 2000, however
its  impact  has  not  yet  been  evaluated.

FASB Statement No. 132 entitled "Employers' Disclosures about Pensions and Other
Post  Retirement  Benefits" was issued in February 1998.  This statement revises
employers'  disclosures  about  pension and other post retirement benefit plans.
It  does  not  change  the  measurement  or  recognition  of  these plans.   The
statement  is  effective  for the Company's December 31, 1998 year end financial
reporting  and  will  not  impact the Company's financial position or results of
operations  as the Company does not sponsor any plans covered by this statement.

FASB Statement No. 131 entitled "Disclosures about Segments of an Enterprise and
Related  Information" was issued in September 1997.  This Statement is effective
for  the  Company  beginning  with  its  year  end  December  31, 1998 financial
statements.  The  statement  establishes  standards for the way public companies
report information about operating segments in their annual financial statements
and  requires  that  those companies report selected information about operating
segments  in  interim  financial  reports  issued  to  shareholders.  It  also
establishes  standards  for  related  disclosures  about  products,  services,
geographic areas and major customers.  This statement may increase the Company's
financial  disclosures  but  will  have  no  impact  on  operating  results.




























                                     Page 7
<PAGE>

<PAGE>

Item  2. Management's Discussion and Analysis of Financial Condition and Results
of  Operations
     September  30,  1998

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  for  the  year  ended December 31, 1997
contained  in  the Company's Form 10-K and includes certain known trends, events
and  uncertainties that are reasonably expected to have a material effect on the
Company's  financial  position  or  operating  results.

Forward-looking  Statements
---------------------------

When  used  or  incorporated by reference in the Company's disclosure documents,
the  words  "anticipate,"  "estimate," "expect," "project," "target," "goal" and
similar  expressions, as well as discussion regarding the "Year 2000 issue," 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 or projected. 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.

Overview
--------

At September 30, 1998 the Company's assets reached a record $428 million.  Total
assets  increased  $9.2 million or 2.2% in the first nine months of 1998.  Loans
increased  $4.1  million or 1.4% while securities decreased $.2 million or 0.1%.
During  the same period, deposits increased $29.9 million or 9.2% and borrowings
(from  the  FHLB)  decreased  $22.5  million  or  44.4%. Funds generated through
deposit  inflows  were  used  to  increase  loan  originations  and  reduce FHLB
borrowings  during  the  period.

Net  income  for the three-month period ended September 30, 1998 remained steady
at  $1.1  million  as  compared  to the same period in 1997.  Basic earnings per
share  decreased  by $.07 or 1.0% over the same period, primarily due to a lower
tax rate for the first nine months of 1997. For the nine month period net income
declined  $.5  million or 14.7% and basic earnings per share decreased by  $2.99
or 14.4%. The decrease in net income for the nine month period was a result of a
significant  legal  expense  reimbursement in 1997 relating one large credit and
one-time  charges  taken  in the first half of 1998 related to the completion of
the  Company's  core  banking system conversion. Also a portion of the increased
operating  expenses  was  derived  from  one  of  the Company's mortgage banking
subsidiaries,  which  was  not  acquired  until  late  1997;  and, the Company's
effective  tax rate increased to 33% from 23% for the nine month period. For the
three  and  nine  months ended September 30, 1998, net interest income increased
$.3  million or 7.1% and $.4 million or 2.9%, respectively over the same periods
in  1997  and  is reflective of the growth in interest income from the Company's
indirect automobile loan portfolio offset by the growth in interest expense from
FHLB  borrowings  during  the  same  period.

The  quality  of  the  Company's assets continued to improve with non-performing
loans less than 1% of total loans at September 30, 1998.  The allowance for loan
losses exceeds the balance of nonperforming loans at the period end.  Other real
estate  owned  also  continues  to  decline.  As  a  result  of these trends the
provision  for  loan  loss declined to $.6 versus $.7 for the nine-month periods
ended  September  30,  1998  and  1997,  respectively.

                                     Page 8
<PAGE>
Financial  Condition  and  Results  of  Operations
--------------------------------------------------

As  of  September  30, 1998, total assets of the Company were $428.1 million, up
from  $418.9  million  at  year  end  1997.  Cash and equivalents increased $4.2
million  to $23.9 million.  Securities showed a minor decrease of $.2 million to
$71.2  million.  Net  loans  increased  $4.1  million to $310.1 million, and all
other  assets  rose $1.0 million to $22.9 million.  The growth in loans has come
in  the  second and third quarters of 1998, following a $10.0 million decline in
the  first  quarter.  Although  market interest rates continue to result in loan
portfolio  payoffs  and  refinancings,  the Company continues to encounter local
loan  demand  for  commercial  and  residential  mortgages,  as well as indirect
automobile  loans, and anticipates further portfolio loan growth into the fourth
quarter.

Total  deposits  at  September  30,  1998  were $354.6 million and were up $29.8
million  from  December  31, 1997. For the same period borrowings from FHLB were
down  $22.6  million  to  $28.1  million.  Other  liabilities  increased by $1.0
million to $3.6 million. The decline in borrowings is a direct result of deposit
growth.  Deposit growth since December 31, 1997 has come in all interest-bearing
types: interest-bearing demand up $7.8 million, savings and money market up $1.5
million  and certificates of deposit up $17.1 million.  Deposit growth is coming
from  a  number  of  sources, including the introduction of our Generations Gold
suite  of  accounts,  our  Business  Choice Sweep account, our "CD Specials" and
non-interest bearing accounts.  Historically, the Company's fourth quarter shows
some  deposit runoff. Management anticipates the November opening of our Webster
Community  Office  will have somewhat of an offsetting effect on this historical
trend.

For the three months ending September 30, 1998, average interest earning assets,
increased  $32.3  million  to $388.1 million from $355.8 million at December 31,
1997.  The  yields  on  these  assets  were  8.19%  and 8.35%, respectively; the
decline resulting from mortgage loan refinancings.  For the same period, average
interest  bearing  liabilities  increased  $25.2  million to $310.2 million from
$285.0  at  December  31,  1997.  Rates paid on these liabilities were 4.04% and
3.94%,  respectively.  This  26  basis  point  drop in interest spread had a $.3
million  negative  impact on net interest income for the quarter ended September
30,  1998.  In  1998 the Company's net interest margin has declined to 4.96% and
4.83% for the three and nine month periods ended September 30, 1998 versus 5.19%
for  the  year  ended  December  31,  1997.  The declining trend on net interest
margin  and  spread  showed  some  leveling  off  in  the third quarter of 1998;
however,  market  reaction  to  the Federal Reserve Board's recent interest rate
cuts  may  result  in furthering this trend.  Refer to Interest Rate Sensitivity
and  Asset  /  Liability  Management  Review  section  for a further discussion.

Other  income  for  the  quarter ended September 30, 1998 nearly doubled to $1.6
million  over  the  same quarter in 1997.  The increase was reflected in service
charges,  attributed  increased  transaction  volume  and changes in account fee
structures;  trust  income, due to growth in assets under management; and other,
due to increased commissions at the Company's mortgage banking subsidiary - Home
Town  Funding.

Operating  expenses  increased  $.8  million for the quarter ended September 30,
1998  to $4.7 million versus $3.9 million for the 1997 second quarter, reflected
mostly  in  salaries  and  other  operating  expenses.  The  increase  in  both
categories for the period was due primarily to the Company's acquisition of Home
Town  Funding  in  late  1997.

Capital  Adequacy
-----------------

Total  stockholders'  equity  was  $41.7  million  at  September 30, 1998, which
represents an increase of $.8 million or 1.9% from $40.9 million at December 31,
1997.  Stockholders'  equity  increased  by $2.9 million due to  net income, but
was  offset  by  $.02  million  of  unrealized  losses  on  available  for  sale
securities, dividends of $1.8 million and net purchases of treasury stock of $.3
million  for  the  nine  month  period  ended  September  30,  1998.
                                     Page 9
<PAGE>
At  September  30,  1998  the  Company  and  its banking subsidiary exceeded the
minimum  regulatory  guidelines  for  all  capital ratios (Tier 1 - 4% and Total
Risk-Based  Capital  -  8%).  The  Company  and  Bank  also exceeded the minimum
regulatory  guideline  for  leverage  ratio  of  5%  for  "well-capitalized"
institutions.  The  table below illustrates the Corporation's regulatory capital
ratios  at September 30, 1998, under current requirements.  The Bank's ratios do
not  differ  materially  from  the  Company's.  (dollars  in  thousands):
<TABLE>

<CAPTION>



                                                               Amount   Ratio
                                                               -------  ------
<S>                                                            <C>      <C>
Total capital (to risk weighted assets)                        $41,728   13.3%
Tier 1 capital (to risk weighted assets)                       $41,290   13.1%
Tier I capital (to average assets)                             $41,290    9.8%
Leverage ratio (Tier 1 capital to total assets less goodwill)  $41,290    9.7%
</TABLE>



Dividends  Per  Share  and  Earnings  Per  Share
------------------------------------------------

Dividends  paid to shareholder in 1998 increased to $11.00 per share or 10% over
1997.  A  semi-annual  dividend of $5.50 was paid on February 1, 1998 and August
1,  1998.  Comparative 1997 amounts were $4.75 in February and  $5.25 in August,
totaling  $10.00.

Basic  earnings  per  common  share is based upon the weighted average number of
common  shares  and  equivalents  (stock options) outstanding during the period.
Since  there are no potentially dilutive securities outstanding at September 30,
1998,  diluted earnings per share is not presented.  The weighted average number
of  common  shares  outstanding  for the three month periods ended September 30,
1998  and  1997  were  160,356  and  160,639, respectively. The weighted average
number  of  common shares outstanding for the nine month periods ended September
30,  1998  and  1997 were 160,450 and 161,074, respectively.  Net income used in
the calculation of basic earnings per share is net income shown on the condensed
consolidated  statements  of  income  for  the  respective  periods.

Allowance  for  Loan  Losses  and  Non-Performing  Assets
---------------------------------------------------------

Allowance  for  Loan  Losses
----------------------------
<TABLE>

<CAPTION>

Changes  in  the  allowance  for  loan  losses  for the nine month periods ended
September  30,  1998  and  1997  are  as  follows  (dollars  in  thousands):


                                                      September 30,
                                                     ---------------     
                                                          1998         1997
                                                     ---------------  ------
<S>                                                  <C>              <C>
Balance at beginning of period                       $        3,153   2,675 
Provision for loan losses                                       641     725 
Loans charged off                                              (859)   (605)
Recoveries on loan previously charged off                       433     245 
                                                     ---------------  ------
Balance at end of period                             $        3,368   3,040 
                                                     ===============  ======

Allowance as a percentage of total period end loans            1.07%   1.04%
                                                     ===============  ======

Allowance as a percentage of non performing loans             109.7%   58.9%
                                                     ===============  ======
</TABLE>


                                     Page 10
<PAGE>
At  September  30,  1998,  the  recorded investment in loans that are considered
impaired  totaled  $2.6 million as compared to $3.1 million at December 31, 1997
and  $4.4  million  at  September  30, 1997.  The average recorded investment in
impaired  loans  during the nine month periods ended September 30, 1998 and 1997
were  approximately $2.6 million and $4.7 million, respectively.  For those same
periods  interest  income  recognized  on  impaired  loans  was  not  material.

Total  non-performing  loans  decreased  over  the  twelve  month period by $2.8
million  to  $3.1  million  at September 30, 1998 as compared to $5.9 million at
September  30,  1997.  The decrease has come across all loan types - commercial,
residential  real estate and consumer loans.  Management attributes the decrease
to  a  combination  of strict underwriting procedures, strong collection efforts
and  a  relatively  stable  economic  cycle  in  the  Company's  market.

Other  real  estate  owned consists of five parcels of property, all commercial,
for $1.4 million. The decline in other real estate owned from the same period in
1997  is  a  result of the Company's foreclosure on $ 2.1 million in real estate
assets  in  May  1997  offset  by  the liquidation of portions of this and other
properties.   While  other  real  estate owned has trended downward during 1998,
the  Company  did  foreclose  on one commercial real estate property in October,
resulting  in  an  addition  of $263,000; however, total other real estate owned
remains  below  December  31,  1997's.

Non-Performing  Assets
<TABLE>

<CAPTION>

                                     Non-Performing Assets
                                     (Dollars in thousands)


                                                                        September 30,
                                                                       ---------------     
                                                                            1998         1997
                                                                       ---------------  ------
<S>                                                                    <C>              <C>
Loans past due 90 days or more and accruing
Commercial, financial & agricultural                                   $          245     264 
Real estate-commercial                                                            108     652 
Real estate-residential                                                           111     359 
Consumer                                                                           51     202 
                                                                       ---------------  ------
Total past due 90 days or more and accruing                                       515   1,477 
                                                                       ---------------  ------

Loans in non-accrual status
Commercial, financial & agricultural                                            1,440   1,333 
Real estate-commercial                                                            753   2,327 
Real estate-residential                                                           362     700 
Consumer                                                                            -      85 
                                                                       ---------------  ------
Total non-accrual loans                                                         2,555   4,445 
                                                                       ---------------  ------
Total non-performing loans                                                      3,070   5,922 
                                                                       ---------------  ------

Other real estate owned
Commercial                                                                      1,383   2,560 
Residential                                                                         -       - 
                                                                       ---------------  ------
Total other real estate owned                                                   1,383   2,560 
                                                                       ---------------  ------
Total non-performing assets                                            $        4,453   8,482 
                                                                       ===============  ======

Non performing loans to total period end loan                                    0.98%   1.77%
                                                                       ===============  ======

Non performing assets to total period end loans and other real estate            1.41%   2.92%
                                                                       ===============  ======
</TABLE>


The  Company  has  no  restructured  loans.

                                     Page 11
<PAGE>
Liquidity
---------

Liquidity is defined as the ability to generate adequate amounts of cash to meet
the  demand  for  cash from depositors who wish to withdraw funds, borrowers who
require  funds, and capital expansion.  Liquidity is produced by cash flows from
operating,  investing,  and  financing  activities  of  the  Company.

For the nine months ended September 30, 1998, net cash from operating activities
was  $3.2  million as compared to $3.8 million for the same period in 1997.  The
decrease  of  $.4  million  was  primarily  caused  by a decrease in net income.

Cash  used by investing activities was $4.3 million versus $40.9 million for the
nine  months  ended September 30, 1998 and 1997, respectively.  The reduction in
cash  used  in  investing  activities is primarily attributed to slower indirect
automobile  loan  growth  relative  to  1997.

Cash  provided  by financing activities was $5.3 million in 1998 versus of $44.2
million  in  1997.  Major  components  contributing  to  this  change were a net
increase  of  $29.8 million in deposits in 1998 versus $24.7 million in 1997 and
net  repayment  of  FHLB  advances  of $22.5 million in 1998 versus borrowing of
$21.4  million  in  1997.

At  September  30,  1998  the Company had additional borrowing capacity from the
FHLB  of  at  least  $12  million.

Interest  Rate  Sensitivity  and  Asset  /  Liability  Management  Review
-------------------------------------------------------------------------
(Quantitative  and  Qualitative  Disclosures  about  Market  Risk)
------------------------------------------------------------------

Recently  the  Federal Reserve Board lowered the federal funds rate (the rate on
interbank  borrowings)  twice  to  5.00%  from  5.50%.  In  reaction  to  these
reductions,  major  Wall  Street  banks lowered their prime rate. On October 30,
1998  the  Bank  lowered  its  prime rate 40 basis points to 8.29%. To partially
offset  the  anticipated  lower  interest  income,  the  Bank also lowered rates
between  15  to  25 basis points on interest checking, savings and insured money
market  ,as  well as short-term CD's were lowered.  The combined effect of these
actions  are  expected  to  cost  the  Company  less  than  $100,000  per  year.

Using  a simulation model (discussed in prior filings), net earnings projections
reflect  continued  growth  in  net  interest income when applying the declining
interest  rate  environment  as  of September 30, 1998 ("Base Case").  The table
below,  which  shows the Company's estimated net earnings sensitivity profile as
of September  30,  1998; assumes  no changes in  the operating environment, but
assumes interest  rates  increase/decrease  immediately (rate shock) and remain
unchanged  thereafter.  The  table  indicates the estimated impact on net income
under  the various interest rate scenarios as a percentage of Base Case earnings
projections.
<TABLE>

<CAPTION>



                      Changes in Interest       Estimated Percen-
                          Rates                  tage Change in
                       (basis points)           Future Net Income
                      --------------------    -------------------- 
                          12 Months                24 Months
                      --------------------    -------------------- 
<S>                   <C>                       <C>
 Base Case                --                       -- 
 +200                  (9.56)%                   (7.37) %
 +100                  (6.27)                    (5.18)
 -100                   5.56                      4.45 
 -200                   9.28                      7.09 
</TABLE>


                                     Page 12
<PAGE>

A  secondary method used to identify and manage the Company's interest rate risk
profile  is the static gap analysis. The following table presents an analysis of
the Company's interest rate-sensitivity gap position at September 30, 1998.  All
interest-earning  assets and interest-bearing liabilities are shown based on the

earlier  of  their contractual maturity or repricing date adjusted by forecasted
prepayment  and  decay  rates.  Asset  prepayment  and liability decay rates are
selected after considering the current rate environment, industry prepayment and
decay  rates  and  the  Company's historical experience. It should also be noted
that the interest rate sensitivity levels shown in the table could be changed by
external  factors  such  as  loan  prepayments or by factors controllable by the
Company  such  as  asset  sales.

<TABLE>

<CAPTION>

                                      Interest Rate Sensitivity Gap
                                           September 30, 1998
                                         (Dollars in thousands)


                                                            Maturity/Repricing Period
                                       ----------------------------------------------------------------
                                               Within 3             4 to 12    1 to 5    Over 5
                                                Months              Months      Years    Years    Total
                                        -----------------------  ----------   -------   ------   -------
<S>                                    <C>                         <C>        <C>       <C>      <C>
Interest-earning assets:
Interest-bearing deposits and federal
funds sold                                                    --        421        --       --       421
Securities                                                 7,390     20,378    34,886   12,101    74,755
Loans                                                     83,769      4,789   152,797   72,131   313,486
                                       --------------------------  ---------  --------  -------  -------
Total interest-earnings assets                            91,159     25,588   187,683   84,232   388,662
                                       --------------------------  ---------  --------  -------  -------

Interest-bearing liabilities:
NOW accounts                                              48,360         --        --       --    48,360
Money market                                              53,508         --        --       --    53,508
Savings                                                   64,097         --        --       --    64,097
Certificates of deposits                                  53,179     37,772    33,220       --   124,171
FHLB advances                                             23,300      1,524     2,520      805    28,149
                                       --------------------------  ---------  --------  -------  -------
Total interest-bearing
liabilities                                              242,444     39,296    35,740      805   318,285
                                       --------------------------  ---------  --------  -------  -------

Interest rate sensitivity gap                           (151,285)   (13,708)  151,943   83,427    70,377
                                       ==========================  =========  ========  =======  =======

Cumulative gap                                          (151,285)  (164,993)  (13,050)  70,377 
                                       ==========================  =========  ========  =======         

Cumulative gap as percent of total
assets                                                    (35.3%)    (38.5%)    (3.0%)    16.4%
                                       ==========================  =========  ========  =======         
</TABLE>


As  of  September  30,  1998, the Company's three-month gap is a negative $151.3
million,  which  is  $4  million less than one year ago.  While interest-earning
assets  in this period have increased $6.0 million, interest-bearing liabilities
have  only risen $2.0 million.  FHLB advances are down $8.7 million and deposits
rose  $10.7  million.

The  12 month cumulative gap is a negative $165.0 million down from a year ago's
negative  $168.0 million, again due primarily to reduced FHLB borrowings overall
and  extending  their  maturities.  However,  the cumulative gap as a percent of
total assets has declined to 38.5% at September 30, 1998 from 41.2% at September
30,  1997.



                                     Page 13
<PAGE>

The  period  gaps  continue to be positive in the 1 to 5 year range and forward.

As part of the Company's active asset liability management, the Company sold, in
October  1998,  $10  million of nationally brokered certificates of deposit with
maturities  ranging  from  two  to  three years. (These are not reflected in the
table  above).  The  Company  is  also  considering pursuing a means to market a
subordinated  debenture  issuance.


Year  2000
----------

The  Company  began  reviewing  its year 2000 conversion needs in 1996 and has a
project  committee  that  meets  to  review  the  status  of the conversion. The
committee  continues  to  direct  the  Company's  Year 2000 activities under the
framework  of  the  Federal Financial Institutions Examination Council's (FFIEC)
Five  Step  Program,  which  includes  the  following:
1.     Awareness  Phase
2.     Assessment  Phase
3.     Renovation  Phase
4.     Validation  Phase
5.     Implementation  Phase

The  Company  has  segregated  its systems into two main categories: (1) Mission
Critical  and  (2)  Other.  Mission Critical systems are those systems (hardware
and  software)  that  are vital to the successful continuance of the Canandaigua
National  Bank  and Trust's core banking and trust operations. Other systems are
those  used  by  the  Company  and  its  related  non-bank subsidiaries that are
considered  non-mission  critical.

A  comprehensive  review to identify the systems affected by the year 2000 issue
was  completed  in 1997 and an implementation plan was compiled and is currently
being  executed.  As  a  result of the procedures already completed, the Company
expects  to  upgrade  existing  systems  or  replace  some  systems  altogether.

Considerable progress has been made, including the replacement/conversion of the
Bank's  core  operating  systems.  It is anticipated that all remaining projects
will  be  completed  by internal staff. The Company does not expect to spend any
significant  amounts with outside contractors. Therefore, costs do not represent
any  material  incremental  costs, but rather will represent the redeployment of
existing  technology  resources.  In  the opinion of management our "opportunity
cost"  from  1996  through  2000  approximates $3.0 million and is based upon an
estimate  of  the  time  for  internal staff to complete testing and remediation
efforts multiplied by an estimated hourly rate.  Out-of-pocket costs for testing
and other services are estimated at no more than $300,000, most of which will be
expended  in  1999.

As  of  September  30,  1998,  for  Mission  Critical  systems,  the Company has
completed  steps  1  and  2  and  is  currently on steps 3 and 4 (Renovation and
Validation  Phases)  of  our Y2K Compliance Plan with a goal of completing these
phases  by December 31, 1998. The remaining systems to be converted/replaced are
vendor-supplied,  and  most vendors have provided the Company with certification
or  a  delivery  commitment letter. The Company presently believes that with the
conversion  to new systems, and vendor delivery of millennium-compliant systems,
all  material  year  2000  compliance  issues will be resolved no later than the
first  quarter  of  1999.

While  deemed  remote  by  management,  if  the  Company's systems were to cease
processing  due  to  a  year  2000  failure,  any  interruption  would likely be
short-lived.  And  because  substantially  all  of  our  income and expenses are
earned  (paid)  on  an  accrual  basis,  any anticipated direct losses which may
result  from  a  year  2000  related  system failure would not be expected to be
material  over  the  long  term.  The  Company


                                     Page 14
<PAGE>

can continue to earn (and pay) interest in the event of an operating disruption.
The Company assesses its worst case Year 2000 scenarios to include: (1) material
credit  losses  due  to  Year  2000  failures  adversely
affecting  its  commercial  banking  customer  base  and  (2)  liquidity  strain
resulting  from  potential  disruption  of  the  financial markets stemming from
significant  Year  2000  failures.

Because  of these potential risks, the Company has developed and is implementing
the  following  plans:


The  Company  has prepared a business continuity plan for its Bank operations to
consider  the  impact  of  Year  2000.  The  plan  will  include,  at a minimum:

1.     Identification  of  responsible  individual  or  team,  and key personnel
required  for   business  resumption.
2.     Development  of  a  recovery  plan  for  each  core  business  process.
3.     Creation  of  a master list of customer, clients, suppliers, institutions
that  share  data.
4.     An  inventory  of  machines,  documents,  electronic  files  required for
resumption.
5.     Identification  of  a  location  for  business  resumption.
6.     Creation  of  printouts  of  warehoused  (in-process)  transactions.
7.     Use  of  manual  processing  procedures  if  necessary.
8.     Training  of  key  personnel  to  implement  plan.

Testing  of  the  Business Resumption Contingency Plans will be performed during
1999.

The  Company  is  also  subject, either directly or indirectly, to the year 2000
issue  with  respect to external parties, particularly commercial loan customers
and  transaction processing parties.  The Bank is addressing its exposure to its
commercial  loan  customers  by  reviewing  customers'  plans  and  procedures
for remediating their year 2000 risk.  This review is carried out in the context
of  the  Bank's  annual  loan  review  process,  which includes a Y2K assessment
questionnaire  for completion by borrowers.   By September 30, 1998 the Bank had
reviewed  a  majority  of  its  commercial loan customers and had classified the
entire loan portfolio in a "high-medium-low Y2K risk" rating system.  Using this
system,  management  assessed  the  Bank's  risk  of  loan  loss.  Through  this
assessment  process the Company has concluded that no special provision for loan
loss  is  necessary  at  this  time  to  address  the  Y2K  risk.

The Company's most important third party vendors are the Federal Reserve Bank of
New  York (Fedline), NYCE, and NYACH.  Each of these vendors plays a role in the
payment  exchange  system,  such  as  check  clearing,  ATM  processing  and ACH
postings.  A failure of any or all of these vendors to carry out their functions
would  result  in  a  delay  in  posting customer transactions.  The Company has
established  testing  dates  with  each of these vendors.  For some, testing has
already  started.






                                     Page 15
<PAGE>

<PAGE>
PART  II  --  OTHER  INFORMATION

                CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARIES

Item  1.  Legal  proceedings

None

Item  2.  Changes  in  securities

None

Item  3.  Defaults  upon  senior  securities

None

Item  4.  Submission  of  matters  to  a  vote  of  security  holders

None

Item  5.  Other  information

At its regular monthly meeting in September 1998, the Board of Directors elected
James  S. Fralick a director of the Company.  Mr. Fralick is 56 years old and is
an  adjunct professor of economics at the University of Rochester's Simon School
and  Syracuse  University's  Maxwell  School.  Mr.  Fralick is also president of
Willow  Point Economics, LLC - a consulting firm producing economic analysis and
market  strategy  for  large institutional money managers and traders as well as
individual  investors.  From  1993 to January 1998 he was Principal and Director
of  European  Economic  Research at Morgan Stanley and Co.  Mr. Fralick has also
served  as the senior economist to the Board of Governors of the Federal Reserve
System.

Also  at  its  regular  monthly meeting in November 1998, the Board of Directors
elected  Richard  P.  Miller,  Jr.  a director of the Company.  Mr. Miller is 55
years  old  and  is the Senior Vice President and Chief Operating Officer of the
University  of  Rochester.  Mr. Miller has been an employee of the University of
Rochester  since  1987.

Item  6.  Exhibits  and  reports  on  Form  8-K
(a)     Exhibits
None

(b)     Reports  on  Form  8-K
None









                                     Page 16
<PAGE>


<PAGE>
                                   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.


<TABLE>

<CAPTION>



    CANANDAIGUA NATIONAL CORPORATION
-------------------------------------                 
(Registrant)
<S>                                    <C>


November 13, 1998                      /s/ George W. Hamlin, IV
-------------------------------------  -------------------------------
Date                                   George W. Hamlin, IV, President


November 13, 1998                      /s/ Gregory S. MacKay
-------------------------------------  -------------------------------
Date                                   Gregory S. MacKay, Treasurer

</TABLE>






























                                     Page 17
<PAGE>

<PAGE>