BATH NATIONAL CORPORATION
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL REPORT

December 31, 1999
<PAGE>

Bath National Corporation and Subsidiaries

Contents




Independent Auditor's Report..................................1


Financial Statements

Consolidated statements of financial condition................2
Consolidated statements of income.............................3
Consolidated statements of stockholders' equity...............4
Consolidated statements of cash flows.........................5
Notes to consolidated financial statements.................6-23

<PAGE>
Independent Auditor's Report


To the Board of Directors and Stockholders
Bath National Corporation

We have audited the accompanying consolidated statements of financial
condition of Bath National Corporation and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements
of income, stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

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









Albany, New York
February 19, 2000
<PAGE>
Bath National Corporation

Consolidated Statements of Financial Condition
December 31, 1999 and 1998


                                                  1999          1998
Assets
Cash and due from banks                         $10,281,522   $12,009,241
Interest bearing deposits in other banks          5,099,048       396,377
Federal funds sold                                4,075,000             -
Securities                                       74,787,243    84,799,120
Loans, net                                      188,283,344   186,117,798
Premises and equipment, net                       5,006,069     5,462,078
Accrued interest receivable                       2,010,967     2,351,959
Other                                             5,752,002     4,340,714

                                               $295,295,195  $295,477,287

Liabilities and Stockholders' Equity
Liabilities
  Deposits:
   Demand                                       $33,968,948   $35,030,108
   Savings                                       41,923,246    43,039,599
   NOW accounts                                  36,712,143    36,145,813
   Money market accounts                         10,672,029    11,384,049
   Time deposits ($100,000 or more)              20,219,230    18,894,039
   Other time accounts                           75,576,595    80,110,976

                                                219,072,191   224,604,584

Federal funds purchased                                   -     2,150,000
Securities sold under agreements to repurchase   12,572,930    28,090,773
Borrowed funds                                   30,000,000     5,000,000
Accrued interest and other liabilities            4,502,979     5,108,937

                                                266,148,100   264,954,294

Commitments and Contingencies
Stockholders' Equity
  Preferred stock, $10 par value, 300,000 shares
   authorized; none issued                                -             -
  Common stock, $5 par value, 1,500,000 shares
   authorized, 1,365,801 issued                   6,829,005     6,829,005
Additional paid in capital                        1,494,678     1,494,678
Undivided profits                                23,080,497    22,839,159
Accumulated other comprehensive income (loss)      (766,026)      851,210
Treasury stock (37,953 shares in 1999 and 1998)  (1,491,059)   (1,491,059)

                                                 29,147,095    30,522,993

                                               $295,295,195  $295,477,287




See Notes to Consolidated Financial Statements.
<PAGE>
Bath National Corporation
<TABLE>
Consolidated Statements of Income
Years Ended December 31, 1999, 1998 and 1997
<CAPTION>

                                                  1999           1998            1997
<S>                                            <C>             <C>            <C>
Interest income:
  Loans                                        $ 16,440,122    $ 14,968,012   $ 14,518,778
  Securities
   Held-to-maturity
     U.S. Government and agency obligations         769,000       1,538,000      1,538,000
   Available-for-sale
     U.S. Government and agency obligations       1,845,795       1,754,087      2,355,672
     State and municipal obligations              1,971,868       1,876,492      1,784,057
Federal funds sold                                   85,348         346,195        156,219
Deposits in other banks                             173,173         126,658        195,583
       Total interest income                     21,285,306      20,609,444     20,548,309
Interest expense:
  Deposits                                        6,850,176       7,485,833      7,447,411
  Borrowings                                      2,013,011       1,681,381      1,436,903
       Total interest expense                     8,863,187       9,167,214      8,884,314
       Net interest income                       12,422,119      11,442,230     11,663,995
Provision for loan losses                           745,000         333,689        295,468
       Net interest income after provision for
        loan losses                              11,677,119      11,108,541     11,368,527
Noninterest income:
  Service charges                                   978,199         831,068        784,299
  Net realized gains on sale of available-for-sale
    securities                                            -          58,095         33,218
  Other                                             937,539         613,393        292,161
       Total other income                         1,915,738       1,502,556      1,109,678
Noninterest expenses:
  Salaries and employee benefits                  4,827,776       4,499,521      4,400,690
  Occupancy                                       1,448,131       1,306,538      1,092,288
  Other                                           2,197,452       2,240,966      2,067,879
       Total other expenses                       8,473,359       8,047,025      7,560,857
Income before income taxes                        5,119,498       4,564,072      4,917,348
Income taxes                                      1,426,412       1,152,696      1,383,784
       Net Income                                $3,693,086      $3,411,376     $3,533,564

Net Income per Common Share                           $2.78           $2.56          $2.61

</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>


Bath National Corporation
<TABLE>
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1999, 1998 and 1997
<CAPTION>                                    Number of              Add. 	  Undivided  Compre.  Trea.   Total
                                                Shares    Amount    Pd.     Profits     Income  Stock  Stock-
                                                                    capt.                              holder's
<S>                                          <C>        <C>       <C>        <C>        <C>            <C>
Balance, December 31, 1996                   1,365,801  6,829,005 1,494,678  21,980,350 58,560    -    $ 30,362,593
Purchase of treas. stock (19,203 shares)                       -             -               - (739,316)   (739,316)
Comprehensive income
  Net income                                                     -            3,533,564                   3,533,564
  Other comprehensive income:
    Net change in unreal. gains (losses) on securities
      available-for-sale, net of taxes of $437,286               -             -        711,560             711,560
    Less: reclassification adjustment                            -             -        (33,218)            (33,218)
      Total other comprehensive income                                                                      678,342
        Total comprehensive income                                                                        4,211,906
Cash dividends declared ($2.00 per common share)                 -            (2,697,779)                (2,697,779)
Balance, December 31, 1997                   1,365,801  6,829,005 1,494,678   22,816,135 736,902(739,316)31,137,404
Purchase of treasury stock (18,750 shares)                       -             -               -(751,743)  (751,743)
Comprehensive income
  Net income                                                     -             3,411,376                - 3,411,376
  Other comprehensive income:
    Net change in unrealized gains (losses) on securities
      available-for-sale, net of taxes of $76,205                -             -          172,403              172,403
    Less: reclassification adjustment                            -             -          (58,095)             (58,095)
      Total other comprehensive income                                                                         114,308
        Total comprehensive income                                                                           3,525,684
Cash dividends declared ($2.55 per common share)                 -            (3,388,352)                   (3,388,352)
Balance, December 31, 1998                   1,365,801  6,829,005 1,494,678   22,839,159  851,210(1,491,059)30,522,993
Comprehensive income
  Net income                                                     -             3,693,086                -    3,693,086
  Other comprehensive income:
    Net change in unrealized gains (losses) on securities
      available-for-sale, net of taxes of $1,078,158             -             -        (1,617,236)         (1,617,236)
    Less: reclassification adjustment
      Total other comprehensive income (loss)                                                               (1,617,236)
        Total comprehensive income                                                                           2,075,850
Cash dividends declared ($2.60 per common share)                 -            (3,451,748)               -   (3,451,748)
Balance, December 31, 1999                    1,365,801 6,829,005 1,494,678   23,080,497  (766,026)(1,491,059)29,147,095
</TABLE>


	See Notes to Consolidated Financial Statements.
<PAGE>
Bath National Corporation
<TABLE>
Consolidated Statements of Cash Flows
Years Ended December 31, 1999, 1998 and 1997
<CAPTION>

                                                                           1999            1998            1997
<S>                                                                      <C>             <C>             <C>
Cash Flows From Operating Activities
Net income                                                               $ 3,693,086     $ 3,411,376     $ 3,533,564
Adjustments to reconcile net income to net cash provided by
  operating activities:
    Depreciation and amortization                                            563,612         520,691         437,578
    Provision for loan losses                                                745,000         333,689         295,468
    Deferred taxes                                                                 -               -         (50,538)
    Loan origination costs deferred                                           22,946        (189,348)        (69,465)
    Bond premium amortized and discount accreted                             138,274         160,355         140,080
    Gain on sale of investments                                                    -         (58,095)        (33,218)
    Loss (gain) on disposed assets                                           (10,000)         11,629               -
    Changes in:
      Interest receivable                                                    340,992         (41,830)         78,964
      Other assets                                                           (76,962)          6,550          19,050
      Other liabilities                                                      109,196        (253,161)        408,984
          Net cash provided by operating activities                        5,526,144       3,901,856       4,760,467
Cash Flows From Investing Activities
  Proceeds from sales and maturities of available-for-sale securities      7,991,863      16,562,804       9,949,448
  Proceeds from maturities of hold to maturities                          20,000,000               -               -
  Purchases of available-for-sale securities                             (20,813,654)    (12,242,757)     (7,911,437)
  Federal funds purchased/sold                                            (6,225,000)      2,150,000      (4,225,000)
  Net (increase) decrease in interest bearing deposits in other banks     (4,702,671)      1,081,452       1,478,712
  Proceeds from sales of loans                                             7,998,376               -               -
  Net increase in loans                                                  (10,931,868)    (23,252,914)     (6,794,600)
  Capital expenditures                                                       (83,423)       (374,743)       (976,873)
  Proceeds from sale of equipment                                             10,000          30,428               -
  Other                                                                     (795,700)     (1,545,000)              -
          Net cash used in investing activities                           (7,552,077)    (17,590,730)     (8,479,750)
Cash Flows From Financing Activities
  Proceeds from Federal Home Loan Bank borrowings                         25,000,000       5,000,000               -
  Repayments of Federal Home Loan Bank borrowings                                  -               -      (2,000,000)
  Net increase (decrease) in securities sold under repurchase
    agreements                                                           (15,517,843)      4,249,796       1,912,040
  Purchase of treasury stock                                                       -        (751,743)       (739,316)
  Net increase (decrease) in deposits                                     (5,532,393)     12,563,021       3,568,593
  Dividends paid                                                          (3,651,550)     (2,816,556)     (1,427,667)
          Net cash provided by financing activities                          298,214      18,244,518       1,313,650
Net increase (decrease) in cash and due from banks                        (1,727,719)      4,555,644      (2,405,633)
Cash and due from banks:
  Beginning of year                                                       12,009,241       7,453,597       9,859,230
  End of year                                                           $ 10,281,522    $ 12,009,241     $ 7,453,597

Supplemental Disclosures of Cash Flow Information
  Interest paid                                                         $  9,016,132    $  9,206,412     $ 9,023,686

  Income taxes paid                                                     $  1,488,455    $    902,984     $ 1,531,283

  Dividends payable (included in other liabilities)                     $  2,256,717    $  2,456,519     $ 1,884,723
</TABLE>




See Notes to Consolidated Financial Statements.
<PAAGE>
Note 1.	Summary of Significant Accounting Policies

General

Bath National Corporation (the "Company"), a bank holding company, its
wholly owned subsidiary, Bath National Bank (the ?Bank?), a federal-
chartered financial institution, and BNC Financial Services, a wholly owned
subsidiary providing securities and insurance products and services, are
incorporated under the laws of New York State. The accounting and
financial reporting policies of the entities are in accordance with generally
accepted accounting principles and general practices within the industry.

In May 1999, the Bank formed a subsidiary corporation, Bath United Home,
Inc. (the "REIT"), which was organized to qualify as a real estate investment
trust. The REIT became an active subsidiary of the Bank on October 1,
1999. The REIT was organized principally to hold certain qualifying loans.
The Bank and the REIT are collectively referred to as the Bank.

Consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation.

Securities

The Bank has investments in debt and other securities. Debt securities
consist primarily of obligations of the U.S. government, its agencies and
corporations, and state and municipal governments. Management
determines the appropriate classification of securities at the time of
purchase.

Trading

Trading account assets are held for resale in anticipation of short-term
market movements. Trading account assets, consisting of debt and
money market instruments, are stated at fair value. Gains and losses,
both realized and unrealized, are included in other income. The Bank did
not hold any trading account assets at December 31, 1999 and 1998.

Held-to-Maturity

Securities for which the Bank has the positive intent and ability to hold
to maturity are reported at cost, adjusted for premiums and discounts
that are recognized in interest income over the period to maturity.

Available-for-Sale

Available-for-sale securities consist of bonds, notes, debentures, and
certain equity securities not classified as trading or as held-to-maturity
securities.

Unrealized gains and losses, net of tax, on available-for-sale securities
are reported in other comprehensive income.
<PAGE>
Note 1.	Summary of Significant Accounting Policies, Continued

Securities, Continued

Available-for-Sale, Continued

Gains and losses on the sale of available-for-sale securities are
determined using the specific identification method.

Premiums and discounts are recognized in interest income over the
period to maturity.

Loans and Allowance for Loan Losses

Loans are stated at the amount of unpaid principal, adjusted for net
deferred loan origination costs, unearned fees and discounts, and an
allowance for loan losses. Certain direct loan origination costs are deferred
and recognized as an adjustment to interest income over the estimated life
of the loans. Interest on loans is recognized over the term of the loan and
is calculated using the simple interest method on principal amounts
outstanding.

The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb potential losses inherent
in the loan portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan portfolio, including
the nature of the portfolio, credit concentrations, trends in historical loss
experience, specific impaired loans, and economic conditions. Allowances
for impaired loans are generally determined based on collateral values or
the present value of estimated cash flows. The allowance is increased by
a provision for loan losses, which is charged to expense and reduced by
charge-offs, net of recoveries. Changes in the allowance relating to
impaired loans are charged or credited to the provision for loan losses.
Because of uncertainties inherent in the estimation process,
management's estimate of credit losses inherent in the loan portfolio and
the related allowance may change in the near term. However, the amount
of the change that is reasonably possible cannot be estimated. In addition,
various regulatory agencies, as an integral part of their examination
process, periodically review the Company's allowance for losses on loans.
Such agencies may require the Company to recognize additions to the
allowances based on their judgments of information available to them at
the time of their examination.

Accounting for loan impairments is governed by Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan" (SFAS 114) and SFAS 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosure," which
amended SFAS 114.  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.
<PAGE>
Note 1.	Summary of Significant Accounting Policies, Continued

Loans and Allowance for Loan Losses, Continued

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 judgment, 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.

Premises and Equipment, Net

Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is provided over the estimated useful lives using straight line
and accelerated methods.

Other Real Estate Owned

Real estate properties acquired through, or in lieu of, loan foreclosure are
to be sold and are initially recorded at fair value at the date of foreclosure
establishing a new cost basis. After foreclosure, valuations are periodically
performed by management and the real estate is carried at the lower of
carrying amount or fair value less cost to sell. Revenue and expenses from
operations and changes in the valuation allowances are included in
noninterest expense.

Real estate properties formally acquired in settlement of loans were not
material in 1999 and 1998.

Income Taxes

Income taxes are provided for the tax effects of the transactions reported
in the financial statements and consist of taxes currently due and deferred
taxes, which relate primarily to differences between the basis of available-
for-sale securities; allowance for loan losses; accumulated depreciation;
and employee benefits for financial and income tax reporting. Deferred tax
assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred tax assets and liabilities are
reflected at income tax rates applicable to the period in which the deferred
tax assets or liabilities are expected to be realized or settled. As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.
<PAGE>
Note 1.	Summary of Significant Accounting Policies, Continued

Employee Benefit Plans

Retirement Benefits:  The Bank has a defined contribution pension
plan and a profit sharing plan, with a salary deferral feature, for those
employees who meet the eligibility requirements set forth in the plans.
Contributions to the defined contribution plan are based on a formula
while contributions to the profit sharing plan are at the discretion of the
board of directors.

Postretirement Benefits:  The Bank provides certain health care
benefits for all retired employees that meet certain eligibility
requirements. 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 prior to
the adoption of the plan is being accrued primarily in a straight line
manner.

Net Income Per Common Share

Net income per common share is computed on the weighted average
number of shares outstanding during each year. The weighted average
number of shares outstanding were 1,327,848, 1,331,567 and 1,354,869
in 1999, 1998 and 1997, respectively.

Use of Estimates

The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure  of contingent assets and liabilities
at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.

Reclassifications

Certain items have been reclassified in the 1998 and 1997 financial
statements to conform with the 1999 presentation.


Note 2.	Cash and Due From Banks

The Bank is required to maintain reserve cash balances with the Federal
Reserve Bank. The total of those reserve cash balances was approximately
$2,627,000 and $5,645,000 at December 31, 1999 and 1998, respectively.
<PAGE>
Note 3.	Securities

The amortized cost and fair values of available-for-sale securities as
of December 31, 1999 are summarized as follows:
<TABLE>
<CAPTION>
                                                  Gross Unrealized
                                Amortized
                                  Cost            Gains         Losses         Fair Value
<S>                            <C>             <C>           <C>             <C>
U.S. Government and agency
  securities                   $  6,474,873    $     142     $   211,920     $   6,263,095
State and municipal securities   40,624,564      232,432         410,327        40,446,669
Mortgage-backed and related
  securities                     25,354,462       17,423         662,156        24,709,729
Other                             3,615,650        2,022         249,922         3,367,750
                               $ 76,069,549    $ 252,019     $ 1,534,325     $  74,787,243
</TABLE>



The amortized cost and fair value of available-for-sale securities as of
December 31, 1999 by contractual maturity are shown below. For
purposes of the maturity table, mortgage-backed securities, which are
not due at a single maturity date, have been allocated over maturity
groupings based on the weighted-average contractual maturities of
underlying collateral. The mortgage-backed securities may mature
earlier than their weighted-average contractual maturities because of
principal prepayments.

                                             Amortized           Fair
                                                Cost              Value
Due in one year or less                     $   5,154,611      $  5,148,906
Due after one year through five years           6,326,482         6,323,370
Due after five years through ten years         31,586,178        31,344,238
Due after ten years                            33,002,278        31,970,729

                                            $  76,069,549      $ 74,787,243



The Bank did not hold any held-to-maturity investments at
December 31, 1999.

The amortized cost and fair values of available-for-sale securities as
of December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
                                                  Gross Unrealized
                                         Amortized
                                           Cost           Gains         Losses         Fair Value
<S>                                    <C>             <C>             <C>            <C>
U.S. Government and agency
  securities                           $  9,587,648    $   63,977      $  30,938      $  9,620,687
State and municipal securities           37,295,393     1,470,182          3,917        38,761,658
Mortgage-backed and related
  securities                             15,957,808        45,417        152,329        15,850,896
Other                                       545,184        22,829          2,134           565,879
                                       $ 63,386,033    $ 1,602,405     $ 189,318      $ 64,799,120
</TABLE>
<PAGE>
Note 3.	Securities, Continued

The amortized cost and fair values of held-to-maturity securities as of
December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
                                                        Gross Unrealized
                                   Amortized
                                     Cost               Gains             Losses            Fair Value
<S>                              <C>                  <C>               <C>               <C>
U.S. Government and agency
  securities                     $  20,000,000        $  268,750        $        -        $  20,268,750

</TABLE>

Proceeds from sales and calls of securities during 1999, 1998 and 1997, which
were principally attributable to those available-for-sale, were $3,000,000,
$8,557,804 and $5,599,231, respectively. Gross gains of $92,692 and $58,983
and gross losses of $34,597 and $25,765 were realized on those sales and
calls in 1998 and 1997, respectively. No gains or losses on sales and calls
were realized in 1999.

Securities with a carrying value of $62,683,676 and $71,743,226 and market
values of $61,678,747 and $72,772,816 at December 31, 1999 and 1998,
respectively, were pledged to secure public deposits, securities sold under
agreements to repurchase, and for other purposes as required or permitted by
law.


Note 4.	Loans, Net

The components of loans at December 31, 1999 and 1998 were as follows:

                                              1999	              	1998
Commercial                               $  100,237,822     $  91,073,309
Installment                                  19,819,990        18,872,768
Real estate mortgage                         34,775,892        42,872,595
Home equity loans                            22,615,053        23,351,490
Student                                      10,024,872         8,938,556
Credit card loans                             1,621,317         1,700,208
Net deferred loan origination costs and
  unearned discounts                            935,926           958,872
                                            190,030,872       187,767,798
Less allowance for loan losses                1,747,528         1,650,000
Loans, net                               $  188,283,344     $ 186,117,798



Real estate mortgage and home equity loans consist of:

Mortgages with fixed rates             $  23,050,963
Mortgages with variable rates             11,724,929
Home equity loans with fixed rates        18,372,044
Home equity loans with variable rates      4,243,009
Total real estate loans                $  57,390,945

<PAGE>
Note 4.	Loans, Net, Continued

Changes in the allowance for loan losses for the years ended December 31,
1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
                                     1999               1998             1997
<S>                             <C>                <C>              <C>
Balance, beginning of year      $  1,650,000       $  1,650,000     $  1,650,000
Provision for loan losses            745,000            333,689          295,469
Recoveries credited to the allowance  80,952             69,167           86,306
Losses charged to the allowance     (728,424)          (402,856)        (381,775)
"Balance, end of year           $  1,747,528       $  1,650,000     $  1,650,000

</TABLE>

The Bank has, and may be expected to have in the future, banking
transactions with directors, principal officers, their immediate families and
affiliated companies in which they are principal stockholders (commonly
referred to as related parties). The aggregate amount of loans to related
parties was $600,000 and $550,000 at December 31, 1999 and 1998,
respectively.


Note 5.	Premises and Equipment

At December 31, 1999 and 1998, premises and equipment consist of:

                                             1999                  1998
Land                                   $    502,389          $    502,389
Buildings and improvements                6,258,972             6,229,904
Furniture                                 3,600,262             3,545,907
  Total                                  10,361,623            10,278,200
Less accumulated depreciation             5,355,554             4,816,122
Premises and equipment, ne             $  5,006,069          $  5,462,078



Depreciation expense was $539,432, $496,511 and $411,672 for the years
ended December 31, 1999, 1998 and 1997, respectively.


Note 6.	Deposits

A summary of deposit accounts at December 31, by maturity, is as follows:

                                                 1999                  1998
No contractual maturity                   $   123,277,971       $  125,599,569
Maturity within one year                       82,772,040           81,109,227
Maturity after one year through five years     12,996,635           17,895,788
Maturity over five years                           25,545                    -
                                          $   219,072,191       $  224,604,584
<PAGE>

Note 7.	Securities Sold Under Agreements to Repurchase

Information concerning securities sold under agreements to repurchase is
summarized as follows. The agreements mature in less than one year.
<TABLE>
<CAPTION>
                                                  1999                1998
<S>                                            <C>                 <C>
Average balance during the year                $ 20,084,000        $ 24,577,300
Average interest rate during the year                  6.6%                6.2%
Maximum month-end balance during
  the year                                     $ 28,205,400        $ 28,887,900

</TABLE>


Carrying value                                 $ 17,001,000        $ 32,539,000
Estimated fair value                           $ 16,507,000        $ 32,884,000

Securities underlying the agreements at year-end:

Carrying value                                 $ 17,001,000        $ 32,539,000
Estimated fair value                           $ 16,507,000        $ 32,884,000

In 1998, approximately $18,500,000 of securities sold under repurchase
agreements were delivered to the broker-dealers who arranged the
transactions. These broker-dealers may have sold, loaned, or otherwise
disposed of such securities to other parties in the normal course of their
operations, and have agreed to resell to the Bank substantially identical
securities at the maturities of the agreements.


Note 8.	Borrowed Funds

Borrowed funds represent advances from the Federal Home Loan Bank
("FHLB") as follows at December 31:

Maturity Date            Rate               1999		          1998
  March 31, 2000        5.81%         $  5,000,000       $         -
  June 25, 2008         6.08%            5,000,000         5,000,000
  July 22, 2009         5.52%           20,000,000               -
                                      $ 30,000,000       $ 5,000,000

All borrowings outstanding with the FHLB at December 31, 1999 were fixed
rate borrowings and the $20,000,000 advance is convertible. The conversion
feature allows the FHLB to convert the debt on the third anniversary (July
2002) and quarterly thereafter into replacement funding at then current market
rates. The advances at December 31, 1999 were partially collateralized by
certain real estate loans.
<PAGE>
Note 9.	Income Taxes

A summary of the components of income taxes is as follows:
<TABLE>
<CAPTION>
                                               Years Ended December 31
                                          1999              1998              1997
<S>                                  <C>                <C>             <C>
Current Tax
  Federal                            $  1,096,228       $   828,322     $  1,091,641
  State                                   330,184           324,374          342,681
    Total current tax expense           1,426,412         1,152,696        1,434,322
Deferred tax
  Federal and State                             -                 -          (50,538)
    Total provision for income
     taxes                           $  1,426,412       $ 1,152,696     $  1,383,784
</TABLE>


A reconciliation of the expected income tax expense, computed at the
federal statutory rate of 34%, to the income tax expense included in the
consolidated statements of income is as follows:
<TABLE>
<CAPTION>


                                               Years Ended December 31
                                        1999	          	 1998	              	1997
<S>                                 <C>               <C>               <C>
Statutory provision                 $  1,740,629      $ 1,551,784       $  1,671,898
Tax exempt interest                     (697,461)        (672,113)          (608,027)
State income tax, net of federal
 benefit                                 217,921          225,967            226,169
Non deductible interest                   87,040           90,004             80,956
Other                                     78,282          (42,946)            12,788
     Total                          $  1,426,411      $ 1,152,696       $  1,383,78
</TABLE>
Net deferred tax liabilities (classified as other liabilities) consist of the
following at December 31, 1999 and 1998:

                                                      1999	         	1998
Deferred tax assets:
  Provision for loan losses                        $  502,464    $  502,464
  Employee benefits                                   322,724       322,724
                                                      825,188       825,188
Less valuation allowance                                    -             -
                                                      825,188       825,188
Deferred tax liabilities:
  Depreciation                                        467,495       467,495
  Deferred loan fees                                  307,810       307,810
                                                      775,305       775,305
Net deferred tax asset (liability)                 $   49,883    $   49,883

<PAGE>
Note 9.	Income Taxes, Continued

The above analysis does not include the recorded deferred tax asset of
$512,923 related to unrealized losses and deferred tax liabilities of
$565,235 related to the unrealized gains in the available-for-sale securities
portfolio as of December 31, 1999 and 1998, respectively. These amounts
are included in other assets and other liabilities, respectively, and the
changes in the deferred taxes related to the available-for-sale securities
portfolio are reported in other comprehensive income (loss) in the
statement of stockholders? equity.


Note 10.	Employee Benefit Plans and Postretirement Benefits

Employee Benefit Plans:

The Bank has a defined contribution pension plan for those employees
who meet the eligibility requirements set forth in the plan. Substantially
all of the Bank's full time employees are covered by the plan.
Contributions to the plan are based on a percentage computation. The
Bank's defined contribution pension plan expense was $265,600,
$265,600 and $268,000 for 1999, 1998 and 1997, respectively.

The Bank also has a profit sharing plan, with a salary deferral feature,
for those employees who meet the eligibility requirements set forth in the
plan. Contributions to the plan are at the discretion of the Board of
Directors. Substantially all of the Bank's full time employees are covered
by the plan. The Bank's profit sharing plan expense was $215,000,
$177,300 and $208,700 for 1999, 1998 and 1997, respectively.

The Bank has severance compensation agreements with two of its
officers which do not become effective unless there has been a change
in control of the Bank as defined and the Bank terminates the officers'
employment. Under those conditions the Bank will pay, as severance,
a lump sum payment equal to three times the aggregate annual
compensation paid to the executive officers during the calendar year
immediately preceding the change in control.

Postretirement Benefits:

The Bank provides health and dental care benefits to retired employees
who meet specified age and service requirements through a
postretirement health and dental care plan in which both the Bank and
retiree share the cost. The plan provides for substantially the same
medical insurance coverage as for active employees until their death
and is integrated with Medicare for those retirees aged 65 or older.
<PAGE>
Note 10.	Employee Benefit Plans and Postretirement Benefits, Continued

Postretirement Benefits, Continued:

A summary of this plan's funded status is as follows:
<TABLE>
<CAPTION>

                                                           1999                 1998
<S>                                                     <C>                 <C>
Change in benefit obligation
  Benefit obligation at beginning of year               $  1,378,752        $    924,328
  Service cost                                                52,868              37,489
  Interest cost                                               90,699              83,253
  Plan participants' contributions                            13,453              13,700
  Actuarial loss                                              14,819             399,387
  Benefits paid                                              (77,972)            (79,405)
    Benefit obligation at end of year                      1,472,619           1,378,752
Change in plan assets
  Fair value of plan assets at beginning of year                   -                   -
  Actual return on plan assets                                     -                   -
  Employer contribution                                       64,519              65,705
  Plan participants' contributions                            13,453              13,700
  Benefits paid                                              (77,972)            (79,405)
    Fair value of plan assets at end of year                       -                   -
Funded status                                             (1,472,619)         (1,378,752)
Unrecognized transition obligation                           344,697             371,211
Unrecognized net actuarial loss                              498,000             511,957
Accrued benefit cost (classified as other liabilities)  $   (629,922)       $   (495,584)
</TABLE>

<TABLE>
<CAPTION>


                                                                     1999         1998
<S>                                                                 <C>          <C>
Weighted-average assumptions as of December 31
  Discount rate                                                     7.75%        6.75%
  Expected return on plan assets                                     n/a          n/a
  Rate of compensation increase                                      n/a          n/a
</TABLE>

		For measurement purposes, a 7.5 percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for 1999.
The rate was assumed to decrease gradually to 4.5 percent for 2004 and
remain at that level thereafter. The dental trend rate assumed was 3
percent.
<TABLE>
<CAPTION>
                                                    1999	               	1998         		1997
<S>                                               <C>                <C>             <C>
Components of net periodic benefit cost
Service cost                                      $  52,868          $  37,489       $  26,798
Interest cost                                        90,699             83,253          68,154
Amortization of transition obligation                26,514             26,514          26,514
Amortization of net loss                             28,776             12,867           2,714
Net periodic benefit cost                        $  198,857         $  160,123       $ 124,180
</TABLE>

<PAGE>

Note 10.	Employee Benefit Plans and Postretirement Benefits, Continued

Postretirement Benefits, Continued:

Assumed health and dental care cost trend rates have a significant effect
on the amounts reported for the plan. A one-percentage-point change in
assumed health and dental care cost trend rates would have the following
effects at December 31, 1999:
<TABLE>
<CAPTION>

                                                      1-Percentage-            1-Percentage-
                                                      Point Increase           Point Decrease
<S>                                                     <C>                     <C>
Effect on total service and interest cost
  components                                            $   24,249              $    (19,637)
Effect on postretirement benefit obligation             $  195,479              $   (161,663)
</TABLE>


Note 11.	Regulatory Matters

The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum regulatory capital
requirements can initiate certain mandatory?and possibly additional
discretionary?actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under the regulatory
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that involve
quantitative
measures of the Bank's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital
amounts and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total risk-based capital and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I capital to
adjusted total assets (as defined). Management believes, as of
December 31, 1999, that the Bank meets all capital adequacy requirements
to which it is subject.

As of December 31, 1999, the most recent notification from the Office of
Controller of the Currency categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-
based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Bank's category.
<PAGE>
Note 11.	Regulatory Matters, Continued

The Company's actual and required capital amounts and ratios are as follows
(dollars in thousands):
<TABLE>
<CAPTION>

                                     Actual                     Adequacy Purposes:           To Be Well Capitalized:
                                  Amount       Ratio            Amount     Ratio             Amount       Ratio


<S>                              <C>             <C>            <C>         <C>              <C>           <C>
As of December 31, 1999
Total Risk- Based Capital
  (to Risk-Weighted Assets)      $  31,467       16.8%          $  14,986   >=8.0%           $  18,732     >=10.0%
Tier I Capital
  (to Risk-Weighted Assets)         29,719       15.9%              7,493   >=4.0%              11,239      >=6.0%
Tier I Capital
  (to Adjusted Total Assets)        29,719       10.1%             11,784   >=4.0%              14,731      >=5.0%

As of December 31, 1998
Total Risk-Based Capital
  (to Risk-Weighted Assets)      $  31,053       18.1%          $  13,734   >=8.0%           $  17,167     >=10.0%
Tier I Capital
  (to Risk-Weighted Assets)         29,403       17.1%              6,867   >=4.0%              10,300      >=6.0%
Tier I Capital
  (to Adjusted Total Assets)        29,403       10.3%             11,374   >=4.0%              14,217      >=5.0%
</TABLE>

The Bank is restricted as to the amount of dividends which can be paid.
Dividends declared by national banks that exceed net income (as defined)
for the current year plus retained net income for the preceding two years
must be approved by the Comptroller of the Currency. Under the formula, no
dividends may be paid without prior regulatory approval. Regardless of
formal regulatory restrictions, the Bank may not pay dividends that would
result in capital levels being reduced below the minimum requirements
shown above.


Note 12.	Commitments and Contingencies

Financial instruments with off balance sheet risk:

The Bank is party to financial instruments with off balance sheet risk in the
normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and
standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the
statements of financial condition.
<PAGE>
Note 12.	Commitments and Contingencies, Continued

Financial instruments with off balance sheet risk, continued:

The Bank's exposure to credit loss in the event of non performance by the
other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of
those instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as they do for on balance sheet
instruments. A summary of the Bank's commitments at December 31,
1999 is as follows (dollars in thousands):
<TABLE>
<CAPTION>

<S>                                                                          <C>
Revolving open-end lines secured by 1-4 family residential
  properties                                                                 $  3,515
Credit card lines                                                               5,373
Commercial real estate, construction and land development                       3,969
Commercial and similar letters of credit, net                                     594
Other unused commitments                                                       18,074


                                                                            $  31,525
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Since many of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each customer's
creditworthiness on a case by case basis. The amount of collateral
obtained if deemed necessary by the Bank upon extension of credit is
based on management's credit evaluation of the counterparty. Collateral
held varies but may include accounts receivable, inventory, property,
equipment and income producing commercial properties.

Letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. Collateral held varies as specified above and is required in
instances where the Bank deems necessary.

Concentrations of credit risk:

The Company and the Bank are located in the Southern Tier of the Finger
Lakes region of New York State. The Bank grants commercial, consumer
and residential loans primarily to customers in Allegheny, Livingston,
Ontario, Schuyler, Steuben and Yates counties. The Bank's loan portfolio
consists primarily of commercial, installment and real estate secured
loans. A substantial portion of its debtors? ability to honor their contracts
is dependent upon the economic conditions of the region.
<PAGE>
Note 12.	Commitments and Contingencies, Continued

Concentrations of credit risk, continued:

All of the Bank's loans, commitments to extend credit and letters of credit
have been granted to customers in the Bank's market area. Investments
in securities issued by state and political subdivisions also involve
governmental entities within the Bank's market area. The concentrations
of credit by type of loan are set forth in Note 4. The distribution of
commitments to extend credit approximates the distribution of loans
outstanding. Standby letters of credit were granted primarily to commercial
borrowers.

Line of credit:

The Bank has credit available from a commercial bank in the amount of
$4,000,000 at the overnight federal funds rate.


Note 13.	Disclosures About Fair Value of Financial Instruments

The fair values shown below (in thousands) represent management's
estimates of values at which the various types of the Bank?s financial
instruments could be exchanged in transactions between willing, unrelated
parties. They do not necessarily represent amounts that would be received
or paid in actual trades of specific financial instruments.
<TABLE>
<CAPTION>


                                                    1999                                 1998
                                          Carrying           Fair              Carrying            Fair
                                          Amount             Value             Amount              Value
<S>                                     <C>               <C>                <C>                 <C>
Financial assets:
  Cash and short term investments       $   15,381        $    15,381        $   12,406          $   12,406
  Federal funds sold                         4,075              4,075                 -                   -
  Securities                                74,787             74,787            84,799              85,068
  Loans, net                               188,283            188,791           186,118             188,401
                                        $  282,526        $   283,034        $  283,323          $  285,875

Financial liabilities:
Deposits                                $  219,072        $   218,917        $  224,605          $  225,007
Federal funds purchased                          -                  -             2,150               2,150
Securities sold under agreements
to repurchase                               12,573             12,573            28,091              28,091
Borrowed funds                              30,000             29,673             5,000               5,000
                                        $  261,645        $   261,163        $  259,846          $  260,248

Unrecognized financial instruments
  Commitments to extend credit          $   31,525        $    31,525        $   33,297          $   33,297
</TABLE>
<PAGE>

Note 13.	Disclosures About Fair Value of Financial Instruments, Continued

The specific estimation methods and assumptions used can have a
substantial impact on the resulting fair values of financial instruments.
Following is a brief summary of the significant methods and assumptions
used in the above table:

Cash and short term investments:

For those short term instruments, the carrying amount is a reasonable
estimate of fair value.

Securities:

For securities held as investments, fair value equals quoted market price,
if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.

Loans, net:

For certain homogeneous categories of loans, such as residential
mortgages, credit card receivables, and other consumer loans, fair value
is estimated using the quoted market prices for securities backed by
similar loans, adjusted for differences in loan characteristics. The fair
value of other types of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities.

Deposits:

The fair value of demand deposits, savings accounts and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed maturity certificates of deposit is estimated using
the rates currently offered for deposits of similar remaining maturities.

Securities sold under agreements to repurchase and borrowed funds:

The carrying amounts of securities sold under agreements to repurchase
and borrowed funds approximate their fair values.

Commitments to extend credit and standby letters of credit:

The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of
the counterparties. For fixed rate loan commitments, fair value also
considers the difference between current levels of interest rates and the
committed rates. The fair value of letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to
terminate them or otherwise settle the obligations with the counterparties
at the reporting date.
<PAGE>
Note 14.	Parent Company Only Financial Information

Parent company (Bath National Corporation) only condensed financial
information is as follows:
<TABLE>
<CAPTION>
Condensed Statements of Financial Condition
December 31, 1999 and 1998


                                                            1999                1998
<S>                                                     <C>                 <C>
Assets
Cash                                                    $       6,517       $       2,144
Dividend receivable                                         2,258,000           2,460,000
Investment in subsidiaries                                 29,165,745          30,545,229
        Total assets                                    $  31,430,262       $  33,007,373

Liabilities and Stockholders' Equity
Liabilities
  Dividend payable                                      $   2,256,717       $   2,456,519
  Other liabilities                                            26,450              27,861
                                                            2,283,167           2,484,380
Stockholders' Equity
  Common stock                                              6,829,005           6,829,005
  Additional paid in capital                                1,494,678           1,494,678
  Undivided profits                                        23,080,497          22,839,159
  Accumulated other comprehensive income                     (766,026)            851,210
  Treasury stock                                            1,491,059)         (1,491,059)
                                                           29,147,095          30,522,993
        Total liabilities and stockholders' equity      $  31,430,262       $  33,007,373
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements of Operations
Years Ended December 31, 1999, 1998 and 1997


                                           1999              1998                 1997
<S>                                   <C>              <C>              <C>
Revenue                               $        980     $         -      $          -
Expenses
  Other operating expenses                       -           1,295             2,165
Loss before equity in earnings of
  subsidiaries                                 980          (1,295)           (2,165)
Equity in earnings of subsidiaries       3,692,106       3,412,671         3,535,729
Net income                            $  3,693,086    $  3,411,376      $  3,533,564

</TABLE>
<PAGE>
Note 14.	Parent Company Only Financial Information, Continued
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
Years Ended December 31, 1999, 1998 and 1997

                                                      1999		            1998  	              	1997
<S>                                              <C>                  <C>                   <C>

Cash Flows From Operating Activities
  Net income                                     $  3,693,086         $ 3,411,376           $  3,533,564
  Adjustments to reconcile net income to net
    cash used in operating activities:
      Net earnings of subsidiaries                 (3,692,106)         (3,412,671)            (3,535,729)
      Change in other liabilities                      (1,411)              (1,302)                (2,788)
        Net cash used in operating activities            (431)              (2,597)                (4,953)
Cash Flows From Investing Activities
  Cash dividend received                            3,656,355            3,571,743             2,170,313
Cash Flows From Financing Activities
  Payments for purchase of treasury stock              -             (751,743)             (739,316)
  Cash dividends paid                              (3,651,551)          (2,816,556)           (1,427,667)
Net cash used in financing activities              (3,651,551)          (3,568,299)           (2,166,983)
Net increase (decrease) in cash                         4,373                  847                (1,623)
Cash, January 1                                         2,144                1,297                 2,920
Cash, December 31                                $      6,517         $      2,144         $       1,297
</TABLE>