SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                               FORM 10-K/A Amendment #1

               Annual Report Pursuant to Section 13 or Section 15(d) of
                         The Securities Exchange Act of 1934

                     For the fiscal year ended December 31, 1995
                            Commission File Number 2-80325

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

                New York                               16-1185097
            (State of Incorporation)                (I.R.S.  Employer
                                                     Identification No.)

           44 Liberty Street
             Bath, New York                              14810
            (Address of principal                      (zip code)
             executive offices)
                                    (607) 776-9661
                 (Registrant's telephone number, including area code)

             Securities registered pursuant to Section 12 (b) of the Act:
                                         None

             Securities registered pursuant to Section 12 (g) of the Act:
                         Common Stock Par Value $5 per Share

       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 such shorter period that
       the Registrant was required to file such reports), and (2) has been
       subject to such filing requirements for the past 90 days.

                 Yes    X                  No ______

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

           State the aggregate market value of the voting stock held by non-
       affiliates of the registrant as of January 31, 1996.

           Common stock, $5.00 par value - $40,987,020

           Indicate the number of shares outstanding of each of the
       Registrant's classes of common stock as of January 31, 1996.

           683,117 shares, common stock, $5.00 par value

           Documents incorporated by reference

           1)  Proxy statement for 1996 Annual Meeting - Part III<PAGE>

<PAGE>
       PART I

       ITEM 1.  Business

           Bath National Corporation (BNC or the "Company") is a one bank      
       holding company which was incorporated in 1982, and registered under
       the Bank Holding Company Act of 1956.  BNC has no non-bank affiliates. 
       The Company functions primarily as the holder of stock of BNB
       (described below) and assists in the management of BNB as appropriate. 
       The Company is a legal entity separate and distinct from BNB.  The
       right of the Company to participate in any distribution of the assets
       or earnings of BNB is subject to the principal claims of creditors of
       BNB, except to the extent that claims, if any, of the Company itself as
       a creditor may be recognized.  BNC derives all of its income from
       dividends paid to it by the Bank.

           Bath National Bank (BNB or "the Bank"), BNC's only subsidiary, has
       approximately 134 employees.  BNB is a full service commercial bank,
       with trust powers.  The Bank offers personal and business checking
       accounts, savings accounts, money market checking accounts, various
       types of certificates of deposit, commercial loans,
       consumer/installments loans, real estate loans, safe deposit boxes and
       provides such services as banking by mail, drive up teller service,
       night depository, money orders, bond coupon redemptions, cashier and
       travelers checks, credit cards, direct deposit of social security
       funds, wire transfers and automatic teller services (ATM's).  The Bank
       also offers individual retirement accounts.  The Bank is a member of
       the Federal Deposit Insurance Corporation to the extent permitted by
       law.  BNB is included in the Company's consolidated financial
       statements.

       The following discussion of the business of the Company (primarily that
       of BNB) contains certain statistical information concerning the
       Company's operations.

       Market Area and Competition:

       The primary market areas of the Bank include Dundee, Hammondsport,
       Wayland, Hornell, Atlanta, Naples and Bath, New York  from which the
       Bank draws principally all of its business.

       The area has a well developed system of financial institutions,
       including banks, savings and loan associations, and credit unions.  
       The Bank encounters aggressive competition for both deposit and loan
       customers.  The Bank is required to compete with financial institutions
       which are subsidiaries of larger bank holding companies.  The financial
       institutions located in the Bank's market area offer all of the
       services which the Bank offers.  Neither the Company nor the Bank has
       any foreign operations.<PAGE>

<PAGE>
       Consolidated Average Balances
<TABLE>
       The following is a presentation of average assets, liabilities and
       equity of the Company for the years ended December 31, 1995 and 1994,
       with respect to each major category of assets, liabilities and equity.
<CAPTION>
                                                    AVERAGE ASSETS
                                                (dollars in thousands)

                                           Year Ended         Year Ended
                                        December 31, 1995  December 31, 1994
       <S>                                  <C>                <C>
       Interest Earning
         Deposits with Banks                $  3,800           $  4,300  
       Taxable Investment Securities          36,000             29,100
       Non-Taxable Investment Securities      22,600             20,000
       Federal Funds Sold                      3,500              2,000
       Net Loans                             142,900            137,700

            Total Earning Assets             208,800            193,100

       Other Assets                           16,400             16,500

            Total Assets                    $225,200           $209,600

                                            
                                            AVERAGE LIABILITIES AND EQUITY
                                               (dollars in thousands)

        Non-Interest Bearing
            Deposits                        $ 26,300           $ 25,600
        Interest Bearing Deposits:
            Savings                           48,100             50,600
            NOW Accounts                      32,400             36,300
            Money Market Accounts             13,000             17,400
            Time Deposits                     72,000             51,500
        Federal Home Loan Bank Borrowings      1,400                  0
        Securities Sold Under Agreement to          
          Repurchase                           3,100                  0
        Other Liabilities                      1,400              1,200
        Federal Funds Purchased                  500              1,300
                                              
            Total Liabilities                198,200            183,900

        Common Stock                           3,400              3,200
        Additional Paid in Capital             4,400              3,500
        Retained Earnings                     19,200             19,000

            Total Equity                      27,000             25,700

            Total Liabilities
              and Equity                    $225,200           $209,600 <PAGE>
 
</TABLE>
<PAGE>
<TABLE>
        The following is a presentation of an analysis of the net interest    
        earnings of the Company for years ended December 31, 1995 and 1994,
        respectively, with respect to each major category of interest-earning
        assets and interest-bearing liabilities:
<CAPTION>
                                          Year Ended December 31, 1995
                                             (dollars in thousands)   
                                                     Interest
                                       Average       Earned        Average
                 Assets                 Amount       or Paid    Yield or Rate 

        <S>                            <C>           <C>            <C>
        Interest-Earning
         Deposits with Banks           $  3,800      $    224       5.89%
        Taxable Investment Securities    36,000         2,391       6.64%
        Non-Taxable Investment      
         Securities <F1>                 22,600         1,748       7.73%
        Federal Funds Sold                3,500           214       6.11%
        Net Loans <F1><F2><F3>          142,900        13,652       9.55%

             Total Earning Assets      $208,800      $ 18,229       8.73% 


                 Liabilities

        Savings Deposits               $ 48,100      $  1,458       3.03%
        Now Deposits                     32,400           567       1.75%
        Money Market Deposits            13,000           400       3.07%
        Time Deposits                    72,000         3,856       5.36%
        Federal Home Loan Bank
         Borrowings                       1,400            70       5.00%
        Repurchase Agreements             3,000           170       5.66%
         Federal Funds Purchased            500            30       6.00%

        Total Interest-Bearing
             Liabilities                170,400         6,551       3.84%


        Interest Income/Earning Assets                              8.73%

        Interest Expense/Earning Assets                             3.14%

        Net Yield                                                   5.59%
<FN>

        <F1> Non-Taxable interest is stated on a tax-equivalent basis, using a
             marginal tax rate of 34%.

        <F2>Net Loans includes non-accrual loans of $435,000.

        <F3> Includes Loan Fees Totaling $65,000 and discount revenue of       
            345,000.                                                         
</TABLE>

<PAGE>                <PAGE>
 

<TABLE>
  
        Analysis of Net Interest Earnings, Continued
<CAPTION>
                                          Year Ended December 31, 1994
                                             (dollars in thousands)   
                                                     Interest
                                       Average       Earned        Average
                 Assets                 Amount       or Paid    Yield or Rate 

        <S>                           <C>            <C>            <C>     
        Interest-Earning
         Deposits with Banks             4,300           259        6.02%
        Taxable Investment Securities   29,100         1,906        6.55%
        Non-Taxable Investment    
         Securities <F1>                20,000         1,723        8.61%
        Federal Funds Sold               2,000            78        3.90%
        Net Loans <F2><F3>             137,700        11,943        8.67%

             Total Earning Assets     $193,100       $15,909        8.24%


                 Liabilities

        Savings Deposits                50,600         1,513        2.99%
        Now Deposits                    36,300           664        1.82%
        Money Market Deposits           17,400           454        2.61%
        Time Deposits                   51,500         1,876        3.64%
        Federal Funds Purchased          1,300            60        4.61%

        Total Interest-Bearing
             Liabilities              $157,100        $4,567        2.91%


        Interest Income/Earning Assets                               8.24%

        Interest Expense/Earning Assets                             2.36%

        Net Yield                                                   5.88%

<FN>
        <F1>Non-Taxable interest is stated on a tax-equivalent basis, using a
            marginal tax rate of 34%.

        <F2> Net Loans includes non-accrual loans of $454,000.

        <F3> Includes Loan Fees Totaling $49,000. <PAGE>
 

</TABLE>
<PAGE>
        Rate/Volume Analysis of Net Interest Income

        The effect on interest income, interest expense, and net interest
        income in the periods indicated, of changes in average balances
        (volume) and changes in rate from the corresponding prior period is
        shown in the tabulation on the following page.  The effect of a
        change in average balance has been determined by applying the average
        rate in the earlier period to the change in average balances. 
        Changes resulting from rate variance from the prior period have been
        determined by applying the average volume in their earlier period to
        the change in average rate from the earlier to the later period. 
        Changes in interest due to both rate and volume have been allocated
        to changes due to volume and changes due to rate based on the
        percentage relationship of such variances to each other.  The final
        column entitled "Total Change" indicates the total change in the
        gross interest income or expense over the prior year as indicated in
        the later year's statement of income.

        The Rate/Volume Analysis for the years ended December 31, 1995 and
        1994, appear in their entirety on the following page.   <PAGE>
 

<PAGE>
<TABLE>
                  December 31, 1995 compared with December 31, 1994
                                  (dollars in thousands)
<CAPTION>
                               Changes in net interest income as a result of:
        <S>                                <C>        <C>       <C>   
                                                                  Total
                                            Volume     Rate      Change
        Interest earned on:
          Interest-earning
           deposits with banks             $  (30)    $   (5)   $   (35)
          Taxable Investment
           Securities                         452         33        485
          Non-Taxable
              Investment Securities           224       (199)        25
          Federal Funds Sold                   58         78        136
          Net Loans                           451      1,258      1,709

        Total Interest Income               1,155      1,165      2,320

        Interest paid on:
          Interest-bearing
              deposits                        375      1,609      1,984 

        Change in net interest
           income                          $  780     $ (444)    $  336


</TABLE>
<TABLE>
        
                    December 31, 1994 compared with December 1993
                                    (dollars in thousands)
<CAPTION>
                               Changes in net interest income as a result of:

                                                                Total  
                                            Volume     Rate    Change
        <S>                               <C>       <C>       <C>
        Interest earned on:
          Interest-earning
           deposits with banks            $  (33)   $  (28)   $  (61)  
          Taxable Investment
           Securities                       (741)     (129)     (870)
          Non-Taxable
              Investment Securities          453      (291)      162
          Federal Funds Sold                 (41)       19       (22)
          Net Loans                        1,338       123     1,461  

        Total Interest Income                976      (306)      670 
         
        Interest paid on 
          Interest-bearing
              deposits                        38      (144)     (106)

        Change in net interest
           income                         $  938    $ (162)   $  776  <PAGE>
 
</TABLE>
<PAGE>

        Investments

        Investment securities comprised approximately 27% of the Bank's
        assets at December 31, 1995, with loans comprising approximately 64%
        of total assets.  The Bank invests primarily in obligations of the
        United States or its agencies or obligations guaranteed as to
        principal and interest by the United States or its agencies, tax
        exempt municipal securities and certificates of deposit issued by
        other financial institutions.  The Bank's policy is to invest in
        highly rated bonds.  The Bank also enters into Federal Funds
        transactions with its principal correspondent bank, and acts as a net
        seller of such funds.  The sale of Federal Funds amounts to a short-
        term loan from the Bank to another bank.

        A tabulation of the Bank's investments is included in its entirety on
        the following page. <PAGE>
 
<PAGE>
<TABLE>

        The following table presents, at December 31, 1995 and 1994, the book
        value and market value of the Bank's investments.  The table also
        indicates the amount of investments due in (1) one year or less, (ii)
        one to five years, (iii) five to ten years, and (iv) over ten years.
<CAPTION>
                                          1995                1994
         Investment         Book     Market   Avg.   Book     Market   Avg.
          Category          Value    Value    Yield  Value    Value    Yield
                            (rounded in thousands)   (rounded in thousands)
                     

        Obligations of U.S. 
           Treasury and other U.S.
           Agencies and Corporations:

          <S>               <C>      <C>      <C>    <C>      <C>      <C>  
          0 - 1 year        $18,352  $18,233  6.83%  $ 4,640  $ 4,406  6.79%
          1 - 5 years        10,012   10,085  6.26%    8,726    8,158  6.01%  
          5 - 10 years        4,775    4,661  6.09%    5,004    4,383  6.16%  
          Over 10 years                                   21       19  7.19%


        Obligations of States and
           Political subdivisions


          0 - 1 year        $ 2,313    2,351  6.49%  $ 2,349  $ 2,373  6.56%  
          1 - 5 years         5,803    5,897  4.92%    5,661    5,677  5.74%  
          5 - 10 years       15,558   15,768  4.73%   11,624   10,669  4.70%
          Over 10 years         845      869  5.46%    1,287    1,184  5.34%


        Other Securities


          0 - 1 year            895      907  5.14%      135      135  7.41%
          1 - 5 years         2,133    2,186  8.31%    3,150    3,127  7.90%
          5 - 10 years        1,342    1,562  9.02%    1,343    1,399  9.01%
          Over 10 years       2,430    2,418  7.94%    2,304    2,546  8.90%

        Total Securities    $64,458  $64,937         $46,244  $44,076
</TABLE>
        Yields are computed on a tax equivalent basis using a marginal tax
        rate of 34%.

        A total of $45,320 of investments was pledged to secure public
        deposits. <PAGE>
 

<PAGE>
        Loan Portfolio:

        The bank engages in a full complement of lending activities,
        including commercial, consumer/instalment, real estate loans and
        accounts receivable financing.  At December 31, 1995, loans secured
        by real estate comprised 52% of the total loan portfolio.  At
        December 31, 1995 none of the real estate loans were being held
        specifically for resale in the secondary market.

        Loans Outstanding:
<TABLE>
        The following table presents various categories of loans contained in
        the Bank's loan portfolio on the dates indicated and the total amount
        of all categories on these dates:
<CAPTION>
                                                  Year Ended December 31,
                                                  (dollars in thousands)


                Loan Type                         1995                1994

        <S>                                     <C>                 <C>
        Commercial, Financial and
             Agricultural                       $ 38,325            $ 31,520

        Real Estate - Mortgage                    78,666              82,217

        Installment Loans to Individuals          29,765              24,097

        All Other                                  3,247               3,945

            Sub-Total                            150,003             141,779

        Allowance for Loan Losses                  1,650               1,725


               Loans - Net                      $148,353            $140,054

</TABLE>
<TABLE>
        Maturity Distribution and Interest Sensitivity:

        The following tabulation presents an analysis of maturities of loans
        as of December 31, 1995, stated in thousands of dollars:
<CAPTION>
                                                     Years To Maturity
        <S>                         <C>         <C>      <C>       <C> 
             Loan Type              1 or less   1 - 5    Over 5    Total
        
        Commercial, Financial,
           and Agricultural         $ 7,941     $15,330  $15,054   $38,325

</TABLE>
        Demand loans, loans having no stated schedule of repayments and no
        stated maturity are reported as due in one year or less. <PAGE>
 
<PAGE>

        The following is a presentation of an analysis of sensitivities of    
        commercial, financial and agricultural loans to changes in interest
        rates as of December 31, 1995, stated in thousands of dollars:

        [S]                                               [C]
        Loans due after 1 year with predetermined         $  8,874
             Interest Rates


        Loans due after 1 year with floating
             Interest Rates                               $ 21,510

<PAGE>
















          
           <PAGE>


        Non-Performing Loans and Leases:

        The following table presents, for the period indicated, the aggregate
        amount of non-accrual, past due and restructured loans:
[CAPTION]
        [S]                                  [C]                  [C]

                                             Year Ended            Year Ended
             Type of Loan                     12/31/95              12/31/94

        Loans accounted for on non-accrual
        basis                                $435,000              $454,000

        Number of loans                             9                    17

        Accruing Loans Past due 90 Days
        or more as to principal or
        interest payments                     209,000               324,000

        Number of loans                            17                    17

        Loans not included above which
        are troubled debt restructuring <F1>     ----               290,000

        Number of loans                             0                     2
[FN]
        <F1>These are loans whose terms have been restructured to provide a   
            reduction or deferral of interest or principal because of a       
            deterioration in the financial position of the borrower.

        Accrual of interest income is discontinued on loans when, in the
        opinion of management, collection of such interest income becomes
        doubtful.  When a loan is reclassified to non-accrual status, all
        accrued interest is immediately charged against current income. 
        Accrual of interest on such loans is resumed only when, in
        management's judgment, the collection of said loan is probable.  At
        that time, any accrued interest previously written off is restored
        through current income.  Payments received on non-accrual loans are
        applied to principal.

        Interest income for the year ended December 31, 1995 would have
        included approximately $60,100 interest income for the above non-
        accrual loans if they had kept current in accordance with their
        original terms.  No interest income was included in income for 1995
        for the non-accrual loans.

        The Bank has not identified significant potential problem loans which
        cause management to have serious doubts as to the ability of such
        borrowers to comply with the present loan repayment terms.

        The Bank has no foreign loans.

        There are no concentrations of credit.<PAGE>

<PAGE>
        Summary of Loan Loss Experience:
<TABLE>
        An analysis of the loan loss experience is furnished in the following
        table for the periods indicated, as well as the allocation of the
        allowance for loan losses.  Loans are presented net of unearned
        income.
<CAPTION>
                                                   Year Ended December 31,
                                                   (dollars in thousands)

                                                    1995              1994
        <S>                                       <C>              <C>
        Allowance balance at beginning
          of the year                             $ 1,725          $  1,600


        Loans Charged Off:
          Real Estate                                                     9
          Commercial, Financial & Agricultural        212                59
          Installment Loans to Individuals            146               180
          Credit Cards                                 31                28
                 Total                                389               276


        Recoveries of Loans Previously Charged Off
          Real Estate                                  17                  
          Commercial, Financial & Agricultural         96                40
          Installment Loans to Individuals             65               271
          Credit Cards                                  4                13
                 Total                                182               324   

        Additions charged to 
              Operations                              132                77

        Allowance Balance at end of the year        1,650          $  1,725

        Average loans                            $142,900          $137,700 

        Ratio of net charge-offs during the
              period to Average loans during
              the period                           .15%               -.03% <PAGE>
 

</TABLE>
<PAGE>
<TABLE>
        At December 31, 1995, the allowance balance was allocated as follows:
<CAPTION>


                                                            % of loans
                                           Amount           in each type
                Loan Type              (in thousands)       to total loans   
        <S>                              <C>                 <C>         
        Commercial, Financial
           and Agricultural              $1,100               26.87%          
               

        Real Estate - Mortgage               50               52.61%

        Installment loans to individuals    500               18.35%

        All Other                                              2.17%


                       Total             $1,650              100.00%
</TABLE>
<TABLE>


        At December 31, 1994, the allowance balance was allocated as follows:
<CAPTION>

                                                            % of loans
                                           Amount           in each type
                Loan Type              (in thousands)       to total loans
        <S>                                <C>                 <C>           
        Commercial, Financial
           and Agricultural                $1,175               21.33%

        Real Estate - Mortgage                 50               57.99%

        Installment loans to individuals      500               17.00%

        All Other                                                3.68%


                       Total               $1,725              100.00%

</TABLE>
<PAGE>
                









           <PAGE>
 


        Loan Loss Reserve:


        In considering the adequacy of the Bank's allowance for possible loan
        losses and, thus, the amount of additions of the allowance charged to
        operating expense in 1995, management has focused on the fact that as
        of December 31, 1995, 26% of outstanding loans are in the category of
        commercial loans.  Commercial loans are generally considered by
        management as having greater risk than other categories of loans in
        the Bank's loan portfolio.

        Management considers loans to finance 1-4 family, owner occupied
        property to have minimal risk due to the fact that these loans
        represent conventional residential real estate mortgages where the
        amount of the original loan does not exceed 80% of the appraised
        value of the collateral.

        The Bank's Board of Directors monitors the loan portfolio monthly to
        enable it to evaluate the adequacy of the allowance for loan losses
        quarterly and to implement its policy of identification and isolation
        of potential problem loans.  The loans are rated and the reserve
        established based on an assigned rating.  The provision for loan
        losses charged to operating expenses is based on this established
        reserve.  Factors considered by the Board in rating the loans include
        delinquent loans, underlying collateral value, payment history,
        financial condition of the borrowers, and local and general economic
        conditions affecting collectibility.

        While no assurance can be given, management believes that losses
        during 1996 will be no more than the losses during 1995.  Although
        management of the Company believes that the allowance (as
        supplemented by projected provisions and recoveries) is adequate to
        absorb anticipated losses, there can be no assurance that the Company
        will not sustain losses in any given period which could be
        substantial in relation to the size of the allowance or in relation
        to the estimates set forth above.


<PAGE>



















                                                                              <PAGE>


        Deposits

        The bank offers a wide range of commercial and consumer deposit
        accounts, including non-interest bearing checking accounts, money
        market checking accounts (consumer and commercial), individual
        retirement accounts, time certificates of deposit and regular savings
        accounts.  The sources of deposits are residents, businesses and
        employees of businesses within the Bank's market area.

        The Bank pays competitive interest rates on time and savings
        deposits.  In addition, the Bank utilizes a service charge fee
        schedule competitive with other financial institutions in the Bank's
        market area,  covering such matters as maintenance fees on checking
        accounts, per item processing fees on checking accounts, returned
        check charges and the like.
<TABLE>
        The following table presents, for the periods indicated, the average
        amount of and average rate paid on each of the major deposit
        categories:
<CAPTION>
                                            Year Ended          Year Ended
                                             12/31/95            12/31/94
        <S>                                 <C>       <C>      <C>      <C>  
                                            Amount    Rate     Amount   Rate
        Deposit Category                           (dollars in thousands)

        Non-Interest Bearing Demand
               Deposits                     $27,400            $25,600

        NOW Deposits                         32,400   1.73%    $36,300  1.82%

        Money Market Deposits                13,300   3.07%    $17,400  2.61%

        Savings Deposits                     46,500   3.04%    $50,600  2.99%

        Time Deposits                        78,100   5.36%    $51,500  3.64%
         (including certificates of deposit)
</TABLE>
<TABLE>

        The following presents time certificates of deposit (amounts in
        thousands) of $100,000 or more and amounts of their maturities:
<CAPTION>
                                                      Maturity

                                          3 Months                      Over
                                             or       3-6      6-12      12
                                            Less    Months    Months   Months
        <S>                               <C>       <C>       <C>      <C> 
        Time Certificates of Deposit      $9,713    $3,674    $2,552   $611 <PAGE>
 
</TABLE>
<PAGE>
<TABLE>
        Return on Equity and Assets

        Returns on average consolidated assets and average consolidated
        equity for the periods indicated and certain other data are as
        follows:
<CAPTION>
                                                            Year Ended
                                                           December 31,

                                                     1995          1994
        <S>                                          <C>           <C>
        Return on Average Assets <F1>                 1.50%         1.64%
        Return on Average Equity <F2>                12.51%        13.38%
        Dividend Payout Ratio <F3>                      48%           94%
        Equity to Assets Ratio <F4>    
                     (Average)                       11.99%        12.26%
<FN>
        <F1> Net income divided by average assets
        <F2> Net income divided by average equity
        <F3> Dividends declared per share divided by net income per share
        <F4> Average equity divided by average assets
</TABLE>
        Liquidity and Asset/Liability Management

        Liquidity is the capacity of a banking enterprise to meet customer
        loan demand, depositor withdrawals and other financial obligations. 
        The most immediate and efficient source of liquidity for the Bank is
        a $11.5 million line of credit with the Federal Home Loan Bank of NY. 
        Based upon the current level of stock ownership, the Bank is
        authorized to borrow up to $6.8 million.  In addition, the Bank has a
        borrowing line with a correspondent bank in the amount of $2 million. 
        Other sources of liquidity include repayment of loans, sale of loans
        and securities maturing within one year, although the usefulness of
        such securities for liquidity purposes is limited to the extent that
        such securities are pledged.  See Note 3 of Notes to Consolidated
        Financial Statements.  Day to day changes in cash needs caused by
        flows of customer funds in and out of the Bank are generally
        reflected in adjustments to the federal funds position.               
                                   

        Liquidity is managed on the liability side mainly by the Company's
        ability to attract sources of funds (such as large denomination
        certificates of deposit) to supplement maturing earning assets.

        Closely related to the concept of liquidity is the management of the
        Company's asset/liability mix and interest rate sensitivity.  The
        Board of Directors of the Company has the overall responsibility for
        the implementation, communication, coordination and control of the
        asset/liability and interest rate sensitivity policies for the
        Company and the Bank.  These policies are implemented by an
        Asset/Liability Management Committee which is charged with the
        responsibility of assuring balance sheet flexibility primarily with
        respect to liquidity and interest rate sensitivity.  Current,
        prospective and unanticipated liquidity requirements are provided for
        by attempting to preserve the high quality of marketable assets, by
        managing the maturity structure of those assets and by maintaining
        discretionary access to short-term funding sources.  The Management
        of interest rate sensitive asset and liability differentials,
        referred to as "gaps", has become increasingly important as a result
        of the more volatile interest rate environment.  The continuing<PAGE>
<PAGE>

        deregulation of the banking industry has greatly increased the        


        Liquidity and Asset/Liability Management, Continued

        interest rate sensitivity of the Company's deposit base and has made
        the monitoring of the "gap" between interest rate sensitive assets
        and liabilities critical to continued profitability.  It is
        management's policy to seek to achieve a relatively balanced interest
        rate sensitivity position, with a goal of achieving stability in
        earnings performance, regardless of interest rate volatility.

        The table on page 28 under the caption "Interest Rate Sensitivity
        Analysis" provides information on interest sensitive assets and
        liabilities.

        Correspondent Banking

        Correspondent banking involves the provision of services by one bank
        to another bank which cannot provide that service for itself from an
        economic or practical standpoint.  The Bank is required to purchase
        correspondent services offered by larger banks, including purchase 
        of federal funds, security safekeeping, investment services, and wire
        transfer services. 

        Data Processing

        The Bank's installation includes a full complement of hardware and
        software to enable the Bank to provide total processing of its own
        work on a daily basis with the exception of complete ATM processing. 
        The Bank utilizes a service center as its link to the ATM Networks.

        Facilities

        The Bank's main office is located in a freestanding building built on
        property located in Bath, New York.  The Bank has a drive through
        teller facility adjacent to its main office.  The Bank owns a branch
        in Bath, which in addition to drive through teller facilities, houses
        its Electronic Data Processing installation and Mortgage Department.

        The Bank also operates branch offices in Dundee, Hammondsport,
        Hornell, Atlanta, Naples and Wayland, New York.  These branches are 
        equipped with both ATM's and teller stations.  All of the offices
        with the exception of our Atlanta Office, have drive-up teller
        facilities.

        The Company's offices are located in the Bank's main office.

        The construction of our Naples Office was completed during 1995 and
        was opened for business on January 2, 1996.

        Employees

        The Bank presently employs approximately 134 persons on a full-time
        equivalent basis, including four senior officers.  It is anticipated
        that the Bank will hire additional persons as needed on a full-time
        basis, including additional tellers and customer service
        representatives.<PAGE>

<PAGE>
        The Bank offers certain fringe benefits to its full time employees
        including life insurance, health benefits and participation in a
        profit sharing plan/401k plan.







        Monetary Policies 

        The results of operations of the Bank are affected by credit policies
        of monetary authorities, particularly the Federal Reserve Board.  The
        instruments of monetary policy employed by the Federal Reserve Board
        include open market operations in US Government securities, changes
        in the discount rate on member bank borrowings and changes in reserve
        requirements against member bank deposits.  In view of changing
        conditions in the national economy and in the money markets, as well
        as the effect of action by monetary and fiscal authorities, including
        the Federal Reserve Board, no prediction can be made as to possible
        future changes in interest rates, deposit levels, loan demand or the
        business and earnings of the Bank.

        Supervision and Regulation

        The Company and the Bank operate in a highly regulated environment,
        with their business activities governed by statutes, regulations and
        administrative policies.  The business activities of the Company and
        the Bank are closely supervised by a number of regulatory agencies,
        including the Board of Governors of the Federal Reserve System
        ("Federal Reserve Board") in the case of the Company, and in the case
        of the Bank, the Office of the Comptroller of the Currency
        ("Comptroller") and the Federal Deposit Insurance Corporation
        ("FDIC").

        The Company is regulated by the Federal Reserve Board under the
        Federal Bank Holding Company Act of 1956, as amended.

        A bank holding company must obtain Board approval before acquiring,
        directly or indirectly, ownership or control of any voting shares of
        a bank or bank holding company if, after such acquisition, it would
        own or control 5% or more of such shares (unless it already owns or
        controls a majority of such shares).  Board approval must also be
        obtained before any bank or bank holding company merges or
        consolidates with another bank holding company.  Furthermore, any
        acquisition by a bank holding company of 5 percent or more of the
        voting shares, or of all or substantially all of the assets, of a
        bank located in another state is subject to approval provided in the
        Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.  
          
        A bank holding company and its subsidiaries are prohibited from       
        engaging in certain tie-in arrangements in connection with the
        extension of credit or the lease or the sale of any property or the
        furnishing of services.  The subsidiary bank of a bank holding
        company is also subject to certain restrictions imposed by the
        Federal Reserve Act on any extensions of credit to the bank holding
        company or any of its subsidiaries, thereof, and on the taking of
        such stocks or securities as collateral for loans,  The Federal<PAGE>

<PAGE>
        Reserve Board possesses cease and desist powers over bank holding
        companies if their actions represent unsafe or unsound practices or
        violations of law.

        A bank holding company is generally prohibited from acquiring more
        than five percent of any class of voting securities of any company
        which is not a bank and from engaging in any business other than the
        business of banking or managing and controlling banks.  However,
        there are certain activities which have been identified by the
        Federal Reserve Board to be so closely related to banking as to be a 



        Supervision and Regulations, Continued

        proper incident thereto and thus permissible for bank holding
        companies provided that the Federal Reserve Board has notice of or
        has consented to the acquisition.

        In addition to the traditional activities of banks such as lending
        and accepting deposit functions, the Bank is permitted to engage in,
        by way of example, the following types of activities: acting as
        investment or financial advisor to subsidiaries and certain outside
        companies; leasing personal and real property or acting as a broker
        with respect thereto; providing management consulting advice to non-
        affiliated banks and non-bank depository institutions; providing
        consumer financial counseling services; operating collection agencies
        and credit bureaus; providing data processing and data transmission
        services; acting as an insurance agent or underwriter with respect to
        limited types of insurance; performing real estate appraisals;
        arranging commercial real estate equity financing; providing
        securities brokerage services; providing certain types of courier
        services; and underwriting and dealing in obligations of the United
        States, the states and their political subdivisions.

        The Company and the Bank are subject to regulatory capital
        requirements imposed by the Federal Reserve Board and the
        Comptroller, respectively, which generally parallel each other.  In
        1989, the Federal Reserve Board issued new risk-based capital
        guidelines for bank holding companies which make regulatory capital
        requirements more sensitive to differences in risk profiles of
        various banking organizations.  These capital adequacy guidelines
        issued by the Federal Reserve Board are applied to bank holding
        companies on a consolidated basis with the banks owned by the holding
        company.  These new requirements were phased in over a three year
        period.  The new guidelines provided that by the end of 1990, banking
        organizations must have had capital (as defined in the new rules)
        equivalent to 7.25% of weighted risk assets.  By the end of 1992,
        when the guidelines became fully effective, banking organizations
        were required to have capital equivalent to 8% of risk assets.  The
        risk weights assigned to assets are based primarily on credit risk. 
        Depending upon the riskiness of a particular asset, it is assigned to
        a risk category.  For example, securities with an unconditional
        guarantee by the United States Government are assigned to the lowest
        risk category, whereas a risk weight of 50% is assigned to loans
        secured by owner-occupied, one to four family residential mortgages. 
        The aggregate amount of assets assigned to each risk category is
        multiplied by the risk weight assigned to that category to determine
        the weight values, which are added together to determine total risk-
        weighted assets.
<PAGE>
        The Federal Reserve Board and the Comptroller have each issued
        minimum capital leverage ratios to be used in tandem with the risk-
        based guidelines in assessing the overall capital rules.  Bank
        holding companies and national banks are required to maintain a ratio
        of 3% "Tier 1" capital to total assets (net of goodwill).  "Tier 1"
        capital includes common stockholder's equity, non-cumulative
        perpetual preferred stock and minority interests in the equity
        accounts of consolidated subsidiaries.






        Supervision and Regulation Continued

        Both the risk-based capital guidelines and the leverage ratio are
        minimum requirements, applicable only to top-rated banking
        institutions.  Institutions operating at or near these levels are
        expected to have well-diversified risk, excellent asset quality, high
        liquidity, good earnings and in general, have to be considered strong
        banking organizations, rating composite 1 under the CAMEL rating
        system for banks or the BOPEC rating system for bank holding
        companies.  Institutions with a lower rating and institutions with
        high levels of risk or experiencing or anticipating significant
        growth would be expected to maintain ratios 100 to 200 basis points
        above the stated minimums.
<TABLE>
        The Company's ratio of capital to assets, as defined by the
        regulations, as of the end of each of its last three fiscal years has
        been as follows:
<CAPTION>
                                    TIER I                  TOTAL RISK
                                LEVERAGE RATIO          BASED CAPITAL RATIO

                                              
                               Required    Company     Required     Company
                               Minimum      Ratio      Minimum       Ratio  
        <S>                     <C>        <C>          <C>         <C>
        For year ended
           December 31, 1995    3.00%      11.96%       8.00%       20.33%
        For year ended
           December 31, 1994    3.00%      12.26%       8.00%       20.26%
        For year ended
           December 31, 1993    3.00%      11.78%       8.00%       18.54%
</TABLE>
        The scope of regulation and permissible activities of the Company and
        the Bank is subject to change by future federal and state
        legislation.

        The Bank is subject to supervision by the Comptroller and the Federal
        Deposit Insurance Corporation.  Various federal and state laws and
        regulations apply to many aspects of the operations of the Bank,
        including capital adequacy, reserves on deposits, loans, investments,
        mergers and acquisitions, and the establishment of branch offices and
        facilities.  Restrictions on rates of interest payable by banks on
        deposits have been essentially eliminated.  The capital adequacy
        guidelines of the Comptroller are substantially the same as those of
        the Federal Reserve Board.<PAGE>
<PAGE>

        All of the revenue of the Company available for the payment of
        dividends on the Common Stock results from amounts paid to the
        Company by the Bank.  The Bank is required by Federal law to obtain
        governmental approval for the payment of dividends to the Company if
        the total of all dividends declared by the Bank in any year will
        exceed the total of the Bank's net profits (as defined and
        interpreted by regulation) for that year and the retained net profits
        (as defined) for the proceeding two years less any required transfers
        to surplus.  As of January 1, 1996 the Bank could have declared
        aggregate dividends of approximately $3.9 million without the
        approval of regulatory authorities.






        Supervision and Regulation Continued

        The Comptroller has authority to prohibit a national bank from
        engaging in conduct which, in his opinion, constitutes an unsafe or
        unsound practice in conducting its business.  Thus, depending upon
        the financial condition of the bank in question and other factors,
        the Comptroller may assert that the payment of dividends or other
        funds from a subsidiary bank to a bank holding company could
        constitute, under certain circumstances, an unsafe or unsound banking
        practice.  In addition, the capital guidelines of the Federal Reserve
        Board, the Comptroller and FDIC could limit the amount of dividends
        which the Company may pay in the future.  Furthermore, regulatory
        pressures to reclassify and charge off loans and to establish
        additional loan loss reserves can have the effect of reducing current
        operating earnings and thus impairing an institution's ability to pay
        dividends.

        If at any time, the Federal Reserve Board believes that an activity
        of the Company constitutes a serious risk to the financial safety,
        soundness, or stability of the Bank or the Company, and is
        inconsistent with sound banking principles or the purposes of the
        Bank Holding Company Act, the Federal Reserve Board may require the
        Company to terminate the activity or to terminate control over the
        Bank.

        On December 19, 1991, the Federal Deposit Insurance Corporation
        Improvement Act of 1991 (FDICIA) was enacted.  Among other things,
        FDICIA requires FDIC to establish a risk-based assessment system for
        FDIC deposit insurance.  FDICIA also contains provisions limiting
        certain activities and business methods of depository institutions,
        including limiting the acceptance of brokered deposits by certain
        depository institutions; placing restrictions on the terms of "bank
        investment contracts that may be offered by depository institutions.
        Finally, FDICIA provides for expanded regulation of depository
        institutions and their affiliates, including parent holding
        companies, by such institutions' appropriate Federal banking
        regulator, and requires the appropriate Federal banking regulator to
        take "prompt corrective action" with respect to a depository
        institution if such institution does not meet certain capital
        adequacy standards.
<PAGE>
        Governmental Policies and Legislation  


        The policies of regulatory authorities, including the Federal Reserve
        Board and the FDIC, have had a significant effect on the operating
        results of commercial banks in the past and are expected to do so in
        the future.  An important function of the Federal Reserve System is
        to regulate aggregate bank credit and money through such means as
        open market dealing in securities, establishment of the discount rate
        on member bank borrowings, and changes in reserve requirements
        against member bank deposits.  Policies at these agencies may be
        influenced by many factors, including inflation, unemployment, short-
        term changes in the international trade balance, and fiscal policies
        of the United States Government.

        The United States Congress has periodically considered and adopted
        legislation which has resulted in, and could result in, further
        deregulation of both banks and financial institutions.  Such
        legislation could modify or eliminate geographic restrictions on
        banks and bank holding companies and could modify or eliminate
        current prohibitions against the Company's engaging in one or more 

        Supervision and Regulation, Continued

        non-banking activities.  Such legislative changes could place the
        Company in more direct competition with other financial institutions,
        including mutual funds, securities brokerage firms, insurance
        companies and investment banking firms.  No assurance can be given as
        to whether any additional legislation will be adopted and as to the
        effect of such legislation on the business of the Company.

        Significant Accounting Policies

        In January 1993, the Bank adopted Statement of Financial Accounting
        Standards No. 109 (FAS 109), Accounting for Income Taxes.  The
        adoption of FAS 109, which did not have a material effect on the
        Bank's financial statements, changed the Bank's method of accounting
        for income taxes from the deferred method to an asset and liability
        approach.

        The Bank provides certain health care benefits for all retired
        employees that meet eligibility requirements.  Effective January 1,
        1993, the Bank adopted financial accounting Standards Board Statement
        No. 106 Employer Accounting for Postretirement Benefits other than
        pensions to account for its share of the cost of those benefits. 
        Under that Statement, the Bank's share of the estimated costs that
        will be paid after retirement is generally being accrued by charges
        to expense over the employees' active service periods to the dates
        they are fully eligible for benefits, except that the Bank's unfunded
        cost that existed at January 1, 1993 is being accrued primarily in a
        straight-line manner that will result in its full accrual by 2013. 
        Prior to 1993, the Bank expensed its share of costs as they were
        paid.

        The adoption of SFAS 106 in 1993 resulted in a pre-tax charge to 1993
        earnings of $88,210 ($.14 per share) to reflect the annual expense
        for postretirement benefits on an accrual basis, and a pre-tax charge
        to 1994 earnings of $132,888.  The charge for 1995 is $127,000.

        The accumulated postretirement benefit obligation was determined
        using a discount rate of 8.0 percent, and a health care cost trend
        rate of approximately 6.0 percent.<PAGE>

<PAGE>
        Increasing the assumed health care cost trend rates by one percentage
        point in each year and holding all other assumptions constant, would
        increase the accumulated postretirement benefit obligation as of
        December 31, 1995 by approximately $146,530 and increase the
        aggregate of the service and interest cost components of the net
        periodic post retirement benefit cost for 1995 by approximately
        $26,000.

        On May 31, 1993, the Financial Accounting Standards Board issued
        Statement of Financial Accounting Standards No. 114, "Accounting by
        Creditors for impairment of a loan" (SFAS 114).  SFAS 114 was amended
        by SFAS 118, "Accounting by Creditors for Impairment of a Loan -
        Income Recognition and Disclosure."  These Statements prescribe
        recognition criteria for loan impairment, generally related to
        commercial type loans, and measurement methods for certain impaired
        loans and all loans whose terms are modified in troubled debt
        restructurings subsequent to the adoption of these statements.  A
        loan is considered impaired when it is probable that the borrower
        will not repay the loan according to the original contractual terms
        of the loan agreement.                                                
                                     
        On January 1, 1995, the Bank adopted the provisions of SFAS 114 and
        SFAS 118 and has provided the required disclosures.  The effect of
        adoption of these Statements was not material to the financial
        statements.

        As a matter of policy, the Bank generally places impaired loans on
        nonaccrual status and recognizes interest income on such loans only
        on a cash basis upon receipt of interest payments from the borrower.
        Accrual of interest is discontinued on a loan when management
        believes, after considering economics, business conditions and
        collection efforts, that the borrower's financial condition is such
        that collection of interest is doubtful, or after three months of
        nonpayment, whichever is earlier.  Uncollectible interest previously
        accrued is charged off.  Income is subsequently recognized only to
        the extent cash payments are received until, in management's
        judgement, the borrower's ability to make periodic interest and
        principal payments is back to normal, in which case the loan is
        returned to accrual status.








        Significant Accounting Policies Continued

        In January 1994, the Bank approved the Financial Accounting Standards
        Board has also issued Statement No. 115, Accounting for Investments
        in Debt and Equity Securities.  The statement established accounting
        and reporting standards for investments in debt securities and
        investments in equity securities that have readily determinable fair
        values.  The Statement requires that those investments are to be
        classified in three categories as follow:

        "Held to Maturity" when the investor has the positive intent and
        ability to hold debt securities to maturity.<PAGE>

<PAGE>
        "Trading" when the investor acquires debt and equity securities
        principally for the purpose of selling them in the near term.

        "Available for Sale" when the investor has not classified debt and
        equity securities  as either held to maturity or trading.

        The Bank has classified all its securities as "Available for Sale".
        ITEM 6.  Selected Financial Data

        The data appearing on the following page represent selected
        consolidated financial data of the Company for the years ended
        December 31, 1995, 1994, 1993, 1992 and 1991 and are derived from the
        Company's consolidated financial statements.  These data should be
        read in conjunction with the Company's consolidated financial
        statements and the notes thereto and Management's Discussion and
        Analysis of Financial Condition and Results of Operations included
        elsewhere herein and are qualified in their entirety thereby and by
        other detailed information elsewhere in this Form 10K.


<TABLE>
<CAPTION>


                               1995      1994      1993       1992       1991
        <S>                  <C>       <C>       <C>       <C>       <C> 
        Condensed Statements         
        of Income (in
        thousands, except per
        share data)
        Interest Income <F1> $ 17,881  $ 15,911  $ 15,155  $ 15,398  $ 16,726 

        Interest Expense 
          Deposits              6,280     4,506     4,669     5,943     8,454
        Interest Expense
          Borrowings              271        61         4         3         3
                  
          Net Interest Income  11,330    11,344    10,482     9,452     8,269

        Loan Loss Provision       132        77        35       413       586 

          Net Interest Income
           After Loan Loss
           Provision           11,198    11,267    10,447     9,039     7,683

        Other Operating
          Income                1,448     1,296     1,270       972       777

        Other Operating
          Expenses              6,973     6,738     6,248     6,101     5,813 
        Income Before
          Income Tax            5,673     5,825     5,469     3,910     2,647

        Tax Equivalent
          Adjustment              668       590       505       422       547

        Income Taxes (benefit)  1,627     1,815     1,658     1,119       515

        Net Income            $ 3,378   $ 3,420   $ 3,306   $ 2,369   $ 1,585<PAGE>


        Per Share Data <F2>

        Book Value              41.80     37.39     37.78     34.46     32.24
        Cash Dividends           2.40      5.00      2.00      1.65      1.50 
        Net Income               4.99      5.32      5.28      3.88      2.65
        Weighted Average
          Common Shares       677,246   642,881   625,831   610,453   596,444

        Balance Sheet Data
        (in thousands, except
        share amount) at
        December 31        

        Assets                235,165   209,158   199,202   191,201   182,129
        Investment Securities  64,937    43,878    51,840    51,105    54,352
        Loans, Net            148,353   140,054   125,887   118,588   105,460
        Deposits              197,760   180,866   170,235   168,388   161,515
        Shareholders' Equity   28,554    25,181    24,125    21,424    19,567
        Common Shares
          Outstanding         683,117   673,390   638,480   621,528   606,766
<FN>
        <F1>Presented on a tax equivalent basis utilizing a marginal tax rate 
            of 34%.                                                          

        <F2> All per share data has been restated to reflect a two-for-one     
             stock split April 15, 1992.

</TABLE>
<PAGE>
        ITEM 7.  Management's Discussion and Analysis of Financial Condition  
                 and Results of Operations.

        Liquidity and Capital Resources:

        Management has not identified any trends, demands, commitments,
        events or uncertainties that will result in or are reasonably likely
        to result in any material decreases or increases in the Company's
        liquidity.

        Liquidity is an important factor in the financial condition of the
        Company and affects its ability to meet the borrowing needs and
        deposit withdrawal requirements of its customers.  Assets, consisting
        principally of loans and investment securities, are funded by
        customer deposits.

        The investment portfolio is one of the Company's primary sources of
        liquidity.  The Company's primary sources of liquidity are federal
        funds sold and purchased.  Other resources of liquidity include
        repayment of loans and sale of loans.  Maturities of securities and
        principal payments on mortgage backed securities provide a constant
        flow of funds which are available for cash needs.  Interest bearing
        deposits in other financial institutions maturing within one year
        total $1.0 million.  Also, high quality securities are readily
        marketable and provide another level of liquidity.  Maturities in the
        loan portfolio also provide a steady flow of funds.  At December 31,
        1995 loans with an aggregate balance of $13.2 million were due to
        mature in one year or less.  Additional funds flow from payments on
        instalment and revolving credit loans and from a historically high
        level of net operating earnings.  The Company's liquidity also
        continues to be enhanced by a relatively stable deposit base.  At<PAGE>
<PAGE>

        December 31, 1995, the loan to deposit ratio was 76% and the ratio of
        loans to core deposits (excluding certificates of deposit of $100,000
        or more) was 83%.

        In addition to the sources of liquidity above, the Bank may borrow
        from the Federal Reserve Bank in the event of a short term liquidity
        deficiency.  The Bank also has an agreement with its correspondent
        bank to borrow overnight federal funds.  During 1995, the Bank had an
        average daily federal funds sold of $3.5 million.  The Bank is also a
        member of the Federal Home Loan Bank of New York, and based upon the
        current level of stock ownership, the Bank is authorized to borrow up
        to $6.8 million.  The Bank borrowed an average of $2.0 million during
        1995.  

        At December 31, 1995, banking regulations required conformity with a 
        minimum risk based capital standard of 8%.  The Bank's risk based
        capital level was approximately 20%.  Neither the Company nor the
        Bank had any material commitments for capital expenditures as of
        December 31, 1995.  The adequacy of the Bank's capital is reviewed on
        an ongoing basis with reference to the size, composition and quality
        of the Bank's resources.  An adequate capital base is important for
        continued growth, expansion and added protection against unexpected
        losses.

        Fiscal 1995 compared with Fiscal 1994

        Total Bank assets grew from $209 million at year end 1994 to $235
        million at year end 1995, or an increase of 12.4%, while equity
        capital grew from $25.2 million to $28.6 million or an increase of
        13.5% for this period.  Growth in the Bank's assets can be attributed
        to new deposits in the Naples Branch as well as a significant
        increase in the Hammondsport balances.  An advance from the Federal
        Home Loan Bank of $3.0 million also increased total assets.

        Loan demand continued strong during 1995 with an increase from $140
        million at December 31, 1994 to $148.3 million at December 31, 1995,
        or an increase of 6%.

        Total deposits increased from $180.9 million to $197.7 million.  This
        increase was primarily in the form of time deposits, which increased
        by 31.4%.

        An advance from Federal Home Loan Bank of $3 million was outstanding
        as of December 31, 1995.  This advance was matched specifically with<PAGE>

<PAGE>
        investments to better leverage the Bank's capital.

        Net income decreased modestly from $3.42 million in 1994 to $3.38
        million for 1995.  Net interest income declined slightly due to
        falling yields earned on prime rate loans and a decline in yields
        earned on investments.  Interest on deposits increased due to growth
        in time deposits.

        Other expenses increased from $6,738,100 to $6,972,600 during 1995
        due primarily to the opening of our Naples Branch and necessary
        staffing requirements.  

        FDIC insurance decreased from $410,000 in 1994 to $210,000 in 1995,
        due primarily to the decrease in the assessment rate for banks with a
        1A classification.

        As discussed in more detail in Supervision and Regulation under Item
        I above, the capital ratio continues strong at 11.96% for 1995, as
        compared to 12.22% at December 31, 1994.

        Fiscal 1994 compared with Fiscal 1993

        The Bank's assets grew from $199.2 million at year end 1993 to $209.1
        million at year end 1994.  Loan demand has remained strong throughout
        1994 with total outstanding loans growing from $125.8 million at year
        end 1993 to $140 million at year end 1994.

        Bank customers have changed their investment strategies in order to
        maximize their interest earnings, thus the change from lower yielding
        NOW and money market accounts into time deposits, increasing the
        average cost of funds to the Bank.

        Earnings of $3.4 million for 1994 reflect a modest increase from
        1993's $3.3 million.  Investment losses during 1994 amount to
        $44,000.  These losses were taken in order to increase future income
        and to recognize current tax benefits.

        Net Interest Income on a fully tax equivalent basis (which adjusts
        for the tax exempt status of income earned on municipal investments
        to express such income as if it were taxable) for the year ended 1994
        was $11,343, representing an increase of $897 or 8.5% over 1993. 
        This increase was largely attributable to increased loan volume and
        the resulting higher yield on earning assets.





        Fiscal 1994 compared with Fiscal 1993 Continued

        Other expenses increased from $6.2 million to $6.7 million.  Included
        in this other expense increase is an increase in salaries and
        benefits of 5.52% from $3.3 million to $3.5 million.  In addition,
        expenses on Other Real Estate Owned increased from $30,000 in 1993 to
        $141,000 in 1994.  Property foreclosures and subsequent sales of this
        property increased in 1994.
<PAGE>
        Interest Sensitivity Analysis

<TABLE>
        The following table sets forth the maturity distribution of the
        Company's interest-earning assets and interest bearing liabilities as
        of December 31, 1995, the Company's interest rate sensitivity gap
        (i.e. interest rate sensitive assets less interest rate sensitive
        liabilities), the Company's cumulative interest rate sensitivity gap,
        the Company's interest rate sensitivity ratio (i.e. interest rate
        sensitive assets divided by interest rate sensitive liabilities) and
        the Company's cumulative interest rate sensitivity ratio.  The
        following assumptions were used in preparation of this table:
        variable rate loans are included in the period in which their next
        scheduled rate adjustment is expected to take place; fixed rate loans
        are assumed to be repaid in accordance with their contractual terms; 
        no prepayments are assumed on any loans; and securities are included
        in the period in which they mature, or in the case of variable rate
        securities, the period in which the next rate change is anticipated.  
                                     
<CAPTION>
                                        Interest Rate Sensitivity Analysis
                                             (dollars in thousands)

                                 0-30  31-90  91-180  181-365  1 - 5  Over 5

        As of December 31, 1995:
        <S>                   <C>     <C>     <C>     <C>     <C>      <C> 
        Earning Assets:
         Loans                 54,707   2,542   4,544   6,535  40,894  40,781
         Securities             8,298   2,289   6,984   5,961  20,498  20,907
         Total Earning Assets  63,005   4,831  11,528  12,496  61,392  61,688
        Interest Bearing Liab.
         Money Market Demand   13,302
         Interest Bearing
          Deposits             32,372
         Certificates of Deposit
          Under $100,000        5,530   8,612  13,480  21,213  12,789
          $100,000 and over     7,165   2,548   3,674   2,552     611
         Savings Accounts      46,510 
        Securities Sold
         Agreement to Repurch.    546             525 
        FHLB Borrowings
         Federal Funds Purch.   2,150                   1,000   2,000

        Total Int. Bear. Liab.107,575  11,160  17,679  24,765  15,400  61,688
        Incremental Gap <F1>  (44,570) (6,329) (6,151)(12,269)(45,992) 38,361
        Cumulative Gap  <F2>  (44,570)(50,899)(57,050)(69,319)(23,327)
        Sensitivity Gap <F3>      .58     .43     .65     .50    3.98
        Cumulative Sensit.<F4>    .58     .57     .63     .61     .87






        Interest Sensitivity Analysis Continued
<FN>
        <F1> Total earning assets less total interest bearing liabilities for  
             each period.
        <F2> Total earning assets less total interest bearing liabilities,     
             cumulative for periods.
        <F3> Total earning assets divided by total interest bearing 
             liabilities.
        <F4> Total earning assets divided by total interest bearing            
             liabilities cumulative for periods.
</TABLE>
<PAGE>
        Typically, a banking institution which is "liability sensitive" will
        be expected to benefit from a decrease in interest rates and be
        adversely impacted by an increase in interest rates.  However,
        because (as noted above) the repricing of assets and liabilities is
        frequently subject to management discretion, the correlation between
        an institution's interest sensitivity position and a change in the
        interest rate environment is rarely precise.  Although the Company
        currently is "liability sensitive", within one year after December
        31, 1995 a decline in interest rates would adversely impact the
        Company to the extent that the Company determines not to make a
        corresponding adjustment to the rates paid on NOW and money market
        deposit accounts.

        Inflation:

        Inflation may effect financial institutions through impaired asset
        growth, reduced earnings and substandard capital adequacy ratios. 
        Since the majority of assets and liabilities are monetary in nature,
        variations in economic policies issued by the Federal Reserve Board
        to control interest rates have a greater impact on the profitability
        of a financial institution.  The investment committee continually
        monitors the rate sensitivity of its earning assets and interest
        bearing liabilities to minimize any adverse effects on future
        earnings.

        Future Outlook:

        The profitability of the Company, like all financial institutions, is
        subject to the volatility of interest rates throughout the year.  The
        composition of the Company's balance sheet and the repricing
        frequency of its interest bearing assets and liabilities have a
        direct impact on the interest margin, a key indicator of
        profitability.  Since there will always be economic events and trends
        that will influence the decision making of management, a main goal of
        the Bank is controlling interest rate risk through managing the
        interest sensitivity gap and by controlling the quality of assets
        through credit policies and diversification.  At this time,
        management believes that the Company's balance sheet does not include
        significant concentrations of assets or liabilities that would have a
        material adverse affect on earnings.

<PAGE>
                                      SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 1934,
        the registrant has duly caused this report to be signed by the
        undersigned thereunto duly authorized.

                                                  BATH NATIONAL CORPORATION



                                        _______________________________
        DATE   ______________________     Robert H. Cole  
                                          President



                                          _______________________________
        DATE ________________________     Edward C. Galpin
                                          Vice President and Treasurer <PAGE>