COMMERCIAL NATIONAL FINANCIAL CORPORATION 1999 ANNUAL REPORT
<PAGE>

(Front cover of the annual report. The corporate logo bearing the graphic of a
bank facade appears centered at the top of the page. Directly under the logo,
Commercial National Financial Corporation appears horizontally. The rest of
the page bears the number 1999 three times in large print and centered.)

<PAGE>

The inside of the front cover is blank.

<PAGE>

                     Our Commitment To Those We Serve

(At this point in the 1999 annual report, the following text is depicted in
two column form with the first paragraph in the first column and the rest of
the text in the second column. The form has been modified for electronic
filing purposes.)

  In detailing the elements of our mission, the significant
components must be equally ranked regardless of their order of
presentation since substantial progress can be achieved only as
these elements interact harmoniously to advance the mission of
the corporation.

  Our mission is to acquire, organize and manage the resources
required to offer personalized and professional financial
services in a manner that demonstrates our concern for
understanding and meeting the needs of the individuals, families,
businesses and other organizations in our marketplace.

  In fulfilling our mission, we give constant consideration to
the well-being of our employees not only in terms of economic
benefit, but also by guaranteeing a working environment that...

-  encourages personal and professional development,
-  fosters individual dignity and
-  demands the highest ethical standards

 ...so that each employee can experience a sense of satisfaction
in and personal identity with the accomplishments we achieve
together.

  Our responsibility to the areas we are privileged to serve
requires our involvement as a corporation, as well as a
commitment by our employees and directors, to respond to
community development and improvement needs with a continual
investment of both time and funds.

  All of our activities are carefully planned and professionally
conducted to provide our shareholders with a reasonable and
regular profit so that their ongoing investment will constantly
increase in value.


<PAGE>

(At this point in the 1999 annual report, page 2 is left intentionally blank.)

<PAGE>

(At this point and mostly throughout the rest of the annual report, the
text will be in three column format. Also, a bank facade appears in the
upper right-hand corner of this page and every odd-number page throughout
the rest of the annual report.)

To Our Sharholders

  Financial-modernization legislation signed into law in November allows
organizations such as Commercial National Financial Corporation to more
fully evolve into entities that can be of better service to their clients.

  That legislation, as well as objectives undertaken and completed earlier
in the year, allows your company to continue its transformation into a
comprehensive financial-services organization.

  During a busy and productive year, we focused on three areas for
development:
-  completing unfinished 1998 initiatives;
-  launching new intiatives for 1999; and
-  implementing a number of personnel
   adjustments.

COMPLETING UNFINISHED 1999 INTIIATIVES

  The corporation's banking subsidiary, Commercial National Bank of
Pennsylvania, continued to evolve as a sales-and-service organization
during 1999 as all personnel (including your president and chief executive
officer) underwent extensive training that emphasized serving our customers,
be they internal (banking associates) or external (retail and commercial
clients). This continuing process gives our employees the skills necessary
to provide the unparalleled service to which our customers have become
accustomed.

  The Commercial National Online Banking product became functional for
retail customers in August and for commercial customers in October. This
system enables users to check balances, transfer funds and pay bills from
any Internet-enabled computer anywhere.

  The bank's commercial customers can conduct those same transactions and
can initiate Automated Clearing House transactions and wire transfers
from their business computers. Online Banking, as another delivery method
for bank services, provides expanded access for customers.

  Our insurance affiliate, Commercial National Insurance Services, began
operation April 1. Our partners instituted an insurance program that
complements bank services by offering an array of products that further
fulfills the expectations customers have of us.

  The corporation's capital-management program continued during 1999,
as the company increased its dividend two times in four quarters.
Additionally, the firm's stock buy-back program, begun in January,
accounted for the repurchase of more than 60,000 shares for a total
investment exceeding $1.1 million. Both initiatives improved shareholder
position and bolstered the future of the corporation.

  The foremost challenge facing the entire banking industry in 1999 was
the "Y2K bug," moving from the year 1999 to the year 2000. By spending
billions of dollars to uncover and correct potential Y2K glitches, the
worldwide financial industry now benefits from the most technologically
advanced systems available.

  We are pleased to report that Commercial National weathered the Year
2000 changeover without incident. Congratulations and thanks are owed
to Michael Palko, our senior vice president and director of technology,
and to all members of our "Year 2000 Committee" for their hard work
and dedication, typical of that demonstrated daily by Commercial
National employees throughout the years.

LAUNCHING NEW INITIATIVES FOR 1999

  The year just finished would have shown record earnings had we not
sustained a significant loss due to a single customer's default on it's
commercial loans. Complete details of our performance, of course, are
found in the following pages.

  In spite of the loss taken on that one commercial relationship, earnings
in other categories were strong and represented continued close attention
to managing expenses and taxes , as well as the ongoing development of
the bank's Asset Management and Trust Division.

  Our trust group has grown from managing no assets at its formation five
years ago to managing more than $80 million last year. That growth and
the corresponding increase in revenue came about even as the department
experienced significant staff turnover. Michael Matthews, vice president
and senior manager of the division, lead it through its growing pains
and made a strong team even stronger.

  Effective October 1, we changed our bank name from Commercial National
Bank of Westmoreland County to Commercial National Bank of Pennsylvania
to reflect the expansion of its customer base beyond the confines of our
headquarters county. We believe the change will help the bank evolve
into a more regional community bank, creating a more favorable reception
when our officers call on clients beyond the borders of Westmoreland
County.

  Also in 1999, Commercial National committed itself, along with more
than 1,000 banking peers, to General Colin Powell's "America's Promise"
campaign, focusing volunteer efforts to develop and guide our nation's
youth.

  Although we made the "America's Promise" committment as a public
statement in 1999, the employees of Commercial National Bank always have
devoted themselves to their communities through their time, talents and
money contributed to their favorite causes. We greatly apprectiate those
who help their neighbors, and so many others who partner with us to
improve the quality of life for all we serve.

IMPLEMENTING PERSONNELL ADJUSTMENTS

  Several changes were made during the year to take better advantange of
the unique skills of our talented and hard-working employees.

  Since our last annual report, we announced the appointments of...
  Kelly R. Moreman
  Assistant Vice President and
  Manager of Credit Services

  Patricial A. Nemchik
  Vice President and
  Business Development Officer

  Michael J. Palko
  Senior Vice President and
  Director of Technology

  Marsha J. Salley
  Assistant Vice President and
  Manager of Credit Card Sales

  Michael A. Schmidt
  Assistant Vice President and
  Sales Manager of Retail Banking

  James T. Vaughan
  Assistant Vice President and
  Trust and Investment Administrator

  Keith M. Visconti
  Senior Vice President and
  Senior Lending Officer

  During 1999, two long-time Commercial National employees passed away after
serving both the corporation and its subsidiary bank in senior-management
positions for many years.

  The contributions, loyalty and dedication of both Lois J. Lazarchik, retired
executive vice president, and Sandra L. Neiderhiser, a vice president and
manager of corporate and financial services at the time of her disability
from an extended illness, were an inspiration to those who knew them
personally and to those who worked with them professionally. We were enriched
by having worked with them and have been made poorer by their loss.

  As you can see, 1999 was another busy but productive year for Commercial
National. Certainly, the year 2000 promises to be just as exciting but no
less challenging.

  Without question, these accomplishments could not have happened without
the assistance provided to this organization by its shareholders, employees
and clients. We appreciate your continued confidence and support.


/s/ Louis T. Steiner
Louis T. Steiner
Vice Chairman,
President and
Chief Executive Officer

<PAGE>

Highlights of 1999

(At this point in the 1999 annual report, the following sentence appears in
large print at the top of the left column to start off the highlights of 1999.)

                          While 1999 looked
                           to be finishing
                      as the strongest year yet
                       for Commercial National
                        National Financial...

 ...a loss recognized in the fourth quarter -and taken as the
result of a major commercial loan default- led to a year-end that
was not as profitable as we had hoped.
  Final, audited earinings for the year amounted to $3,203,605 (or
$0.90 per share), down from the $4,932,611 (or $1.38 per share)
that would have been realized without the loan charge-off.
  The decision to make the adjustment was made because of a
substantial decline in in the value of collateral that the borrower
pledged to support the loans, a discovery that greatly reduced
the prospect of our receiving full repayment.
  Of course, the company is continuing to pursue vigorous collection
efforts against the borrower to minimize the loss, but -in
accordance with conservative accounting practices- the company
preferred to assume the entire potential loss against what it
expected to be record earnings, rather than to affect financial
performance in the year ahead.
  Fortunately, as the following pages reveal, the overall financial
standing of Commercial National Financial Corporation remains
virtually unaffected by this incident, as the company remains
heavily capitalized, maintains adequate reserves and anticipates
strong earnings in the year 2000 and beyond.


MOST BUSINESS SEGMENTS SHOWED
STEADY GROWTH.
  Although the year ended with a downturn because of the single
customer's commercial loan relationship default noted earlier, other
segments of the business showed steady, if not robust, growth . Those
improvements -together with tax advantages and continued close attention
to managing the day-to-day expenses of the business -still generated
a reasonable return for the corporation and its investors.
  The year-end price of Commercial National Financial Corporation stock
(traded as CNAF on the Nasdaq Stock Market, Inc.) was affected
strongly by the general market trends that developed during the year
in the financial-services industry. The stock price slid in value by
7.5 percent from a per-share price of $19.88 at the end of 1998 to
$18.50 per share at year-end 1999. Throughout the period, the stock
traded at a per share price ranging from a low of $15.38 to a high
of $21.50.
  Total deposits managed by the corporation grew only slightly during
the year -about 2.4 percent- from $266.4 million in 1998 to $272.9
million by the end of 1999.
  The slow growth in interest-bearing deposit categories was attributed
to the continuing preference customers displayed for investments placed
with other less-traditional service providers, despite the potential
risks attendant with such instruments.
  The 1999 Commercial National loan portfolio grew by nearly 7 percent
to $204.9 million from $192.2 million a year ago. Most of that
improvement was found in the commercial-


(At this point in the 1999 annual report, there appears three bar graphs
occupying the bottom third of the page starting at the second column and
extending to the third column.)

<TABLE>
<CAPTION>
              Annual Share Price Appreciation

<S>                   <C>
1995                  $10.07
1996                  $18.00
1997                  $18.25
1998                  $19.88
1999                  $18.50

</TABLE>


<TABLE>
<CAPTION>
                Dividends Paid Per Share

<S>                     <C>
1995                    $0.28
1996                    $0.31
1997                    $0.35
1998                    $0.42
1999                    $0.60

</TABLE>

<TABLE>
<CAPTION>
                        Deposit Base Growth

<S>                     <C>
1995                    $230,736
1996                    $238,808
1997                    $260,690
1998                    $266,461
1999                    $272,947

</TABLE>

(At this point in the 1999 annual report, the following text begins at
the top of the third column and continues.)

mortgage segment, which showed a 13 percent improvement over a year
ago, increasing by $7.2 million in spite of continuing pricing
pressure from competition and relatively sharp interest-rate
increases that began at mid-year.
  Other categories posting growth at the end of the year were...
 - commerical loans by more than 10 percent,
 - construction loans by more than 55 percent, and
 - tax-free loans by more than 14 percent.
  The company continued to de-emphasized its promotion of products that
were more likely to generate high losses (such as credit card loans),
and concentrated instead on building high-quality business in other
categories such as commercial, home-equity and residential mortgage
loans.
  Total interest income for the year was up by about $636,000 or slightly
more than 2 percent from $23.6 million a year ago to $24.3 million at
year-end. Interest expense, however, decreased slightly at the same
time by nearly 3 percent, declining by about $305,000 from the prior year.
The resulting net interest income of $14.3 million was up by almost
$941,000 or 7 percent from the $13.3 million realized in the prior
year.
  Other operating income was up from $1.73 million to $1.99 million.
The 14.5 percent gain resulted from mid-year increases implemented in
service charges for selected deposit products and fees for use of
automatic teller machines not owned by the company. Limited promotion
of home-equity installment and residential mortgage loans and asset
management and trust

<PAGE>

<PAGE>

sevices also contributed to the improvement.

  From the developing venture of Commercial National Insurance
Services (a partnership between Gooder & Mary, Inc. and Commercial
National Investment Corporation), we expect to continue providing
customers with unparalleled financial service from a single location
while generating additional non-interest revenue for the corporation.
  The post-tax return on average assets declined to 0.95 percent from
the 1.46 percent return posted for each of the preceeding two years,
the drop attributed principally to the fourth-quarter commercial loan
charge-off. Total assets of the corporation grew to $355 million at the
end of 1999 from $326 million in the year prior, marking an improvement
of more than 8 percent.

TECHNOLOGY CAPTURED OUR ATTENTION AND
DEMANDED ALLOCATION OF RESOURCES.
  By July, customers of Commercial National gained the ability to access
their banking information from any Internet-connected computer anywhere
in the world. Having previously established a presence on the World Wide
Web at www.cnbthebank.com, the company advanced from a proprietary,
PC-based banking program to an improved Web version that provides
comprehensive banking and calculation services, generating about 80,000
hits per month.
  For all of last year and for the several months preceding, Commercial
National fixed, adjusted and tested its innumerable data and


(At this point in the 1999 annual report, there appears a bar graph
occupying first column as set out in the following table.)

<TABLE>
<CAPTION>
                     Loan Portfolio Growth

<S>                  <C>
1995                 $144,523
1996                 $160,048
1997                 $183,639
1998                 $192,239
1999                 $204,960

</TABLE>

(At this point in the 1999 annual report, there appears a bar graph,
occupying the full column width, as set in the following table.)


<TABLE>
<CAPTION>
                 Interest: Income, Expense & Net

<S>               <C>            <C>           <C>
1995              $19,222        $ 8,252       $10,970
1996              $19,947        $ 8,445       $11,502
1997              $21,882        $ 9,677       $12,205
1998              $23,667        $10,318       $13,349
1999              $24,303        $10,013       $14,289

</TABLE>

(At this point, the text reverts back to full-column width starting
with the second column.)

electronic systems to be sure that service would be delivered
efficiently without interruption with the arrival of January 1, 2000.
Our "Year 2000 Committee," comprising  key employees with the
knowledge and ability to avoid a major system shutdown, committed the
necessary time and financial resources to get the job done ahead of
schedule. The year arrived without disruption, reinforcing what customers
had been told since mid-year -that Commercial National indeed was
"Y2K-OK."

OUR STAFF MET THE CHALLENGES OF A FIERCELY
COMPETITIVE BUSINESS.

  During the year, an amitious service-training program was implemented
to provide the entire Commercial National customer-service staff with
additional skills to uncover and meet the changing customer needs that
continue to emerge from a diverse customer base across our marketplace.

(At this point in the 1999 annual report, there appears a bar graph occupying
one-third of the middle column as set out in the following table.)

<TABLE>
<CAPTION>
                 Post Tax Return On Average Assets

<S>                   <C>
1995                  1.43%
1996                  1.39%
1997                  1.39%
1998                  1.46%
1999                  0.95%

</TABLE>

(At this point in 1999 annual report, the following text runs along the left
of the bar graph occupying the remaining two-thirds of the column that the
graph did not use.)

  Several of those employees were recognized by the company with the
presentation of awards for their personal efforts to improve financial
or service performance. At our Employees' Annual Meeting in May, the
company presented its 1999 Chairman's Award to...
   - Keith M. Visconti
     Senior Vice President
     and Senior Lending Officer
 ...for his performance as senior lender and as a leader of the company's
business-development effort, which acquired new customers and generated
new revenue.
  At the same meeting, the bank's President's Award was conferred upon...
   - Mary E. Resetar
     Customer Service Representative
     West Newton Office
 ...for above-average sales results and her consistent attention to the
needs of customers, both inside and outside the company,
   - Jennifer L. Battaglia
     Customer Service Officer
     Latrobe Office
 ...for supporting the Credit Services Department as a fill-in credit
analyst while the company sought a full-time replacement,
 ...and to
   - Cheryl L. Yvanek
     Banking Associate
     Ligonier Office
 ...for her consistent accuracy in maintaining perfect balances at her
teller station, month after month.

THE COMMUNITIES AROUND US
GREW WITH US.
  Continuing its participation in the communities where it does business,
Commercial National again recognized more than 90 civic and charitable
groups during the year with presentation of contributions and pledges
for in-kind service amounting to nearly $100,000. At annual "Community
Appreciation Day" events held in September, representatives from
nonprofit agencies serving Greensburg, Hempfield Township, Latrobe,
Ligonier Township, Unity Township, Murrysville and West Newton
received their contributions as the company reinforced its commitment
to maintaining the quality of life in its marketplace.
  Despite the difficult events dealt with as the year came to a close,
we're confident that our Commercial National managers and staff are
committed to safeguarding and improving the investments of our
shareholders, maintaining the vitality of our communities and
continuing to build an independent community bank of which we all
can remain proud.

<PAGE>


Commercial National Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             December 31,
                                                      -------------------------
                                                       1999              1998
<S>                                               <C>               <C>
ASSETS
-------------------------------------------------------------------------------
  Cash and due from banks on demand               $  8,654,617      $ 7,655,963
  Interest bearing deposits with banks                 558,781           67,935
  Federal funds sold                                 5,750,000             -
  Securities available for sale                    124,743,186      119,103,480

 Loans                                             204,959,798      192,239,249
     Unearned income                                  (120,463)        (124,089)
     Allowance for loan losses                      (1,919,453)      (1,914,174)
                                                   ----------------------------
 Net loans                                         202,919,882      190,200,986
                                                   ----------------------------
 Premises and equipment                              6,304,454        6,027,496
 Accrued interest receivable                         2,057,925        2,210,909
 Other assets                                        4,309,145        1,112,584
-------------------------------------------------------------------------------
      Total Assets                               $ 355,297,990    $ 326,379,353
                                                  ============     ============
LIABILITIES
-------------------------------------------------------------------------------
  Deposits
   Non-interest-bearing                          $  41,534,998    $  44,518,765
   Interest-bearing                                231,412,405      221,941,756
                                                   ----------------------------
      Total deposits                               272,947,403      266,460,521

  Short-term borrowings                             15,000,000        3,775,000
  Other liabilities                                  2,946,694        2,982,183
  Long-term borrowings                               25,000,000      10,000,000
-------------------------------------------------------------------------------
      Total liabilities                            315,894,097      283,217,704
                                                   ----------------------------
Shareholders' Equity
-------------------------------------------------------------------------------
  Common stock, par value $2; 10,000,000 shares authorized;
   3,600,000 issued; 3,539,643 and 3,600,000 shares
   outstanding in 1999 and 1998                      7,200,000        7,200,000

  Retained earnings                                 35,190,986       34,133,006
  Accumulated other comprehensive income -
   net of deferred taxes $(931,218) and
   $942,028 in 1999 and 1998                        (1,807,660)       1,828,643
  Treasury stock at cost; 60,357 shares in 1999     (1,179,433)            -
                                                  -----------------------------
      Total shareholders' equity                    39,403,893       43,161,649
-------------------------------------------------------------------------------
   Total Liabilities and Shareholders' Equity    $ 355,297,990    $ 326,379,353
                                                  ============     ============
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Consolidated Statements of Income
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                             Years Ended December 31,
                                          -----------------------------------
                                            1999         1998         1997
<S>                                     <C>          <C>          <C>
Interest Income
-----------------------------------------------------------------------------
 Interest and fees on loans             $16,693,455  $16,755,493  $15,312,410
 Interest and dividends on securities:
   Taxable                                5,432,186    4,967,679    4,827,530
   Exempt from federal income taxes       2,043,482    1,894,515    1,694,422
 Interest on deposits with banks             10,824        7,858        7,167
   Interest on federal funds sold           122,785       41,547       40,363
-----------------------------------------------------------------------------
      Total interest income              24,302,732   23,667,092   21,881,892

Interest Expense                         10,013,456   10,318,581    9,677,138
-----------------------------------------------------------------------------
Net Interest Income                      14,289,276   13,348,511   12,204,754

Provision for Loan Losses                 3,289,706      435,000      270,000
-----------------------------------------------------------------------------
      Net interest income after provision
      for loan losses                    10,999,570   12,913,511   11,934,754

Other Operating Income
-----------------------------------------------------------------------------
 Service charges on deposit accounts        691,899      584,783      572,124
 Other service charges and fees             616,811      530,530      382,332
 Net security gains                        (349,940)      10,113       11,561
 Trust department income                    304,998      240,418      164,430
 Other income                               721,452      367,246      358,622
-----------------------------------------------------------------------------
      Total other operating income        1,985,220    1,733,090    1,489,069
                                          -----------------------------------
Other Operating Expenses
-----------------------------------------------------------------------------
 Salaries and employee benefits           5,111,197    4,883,607    4,664,107
 Net occupancy expense                      580,883      604,730      543,407
 Furniture and equipment expense            712,922      601,934      617,402
 Pennsylvania shares tax                    344,333      306,602      278,192
 Other expenses                           2,544,746    2,143,771    1,960,329
-----------------------------------------------------------------------------
      Total other operating expenses      9,294,081    8,540,644    8,063,437
                                          -----------------------------------
Income Before Income Taxes                3,690,709    6,105,957    5,360,386
                                          -----------------------------------
Income Tax Expense                          487,104    1,465,071    1,273,777
-----------------------------------------------------------------------------
      Net Income                        $ 3,203,605  $ 4,640,886  $ 4,086,609
                                        ===========  ===========  ===========
      Net Income Per Common Share       $      .90  $      1.29  $      1.14
                                        ===========  ===========  ===========
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>


Commercial National Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                   Accumulated
                                                                      Other                      Total
                                          Common     Retained     Comprehensive    Treasury    Shareholders'
                                           Stock     Earnings      (Loss)Income     Stock        Equity
------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>               <C>         <C>         <C>
Balance - January 1, 1997               $ 3,600,000  $ 31,777,511      $  10,743         -      $35,388,254

COMPREHENSIVE INCOME

Net income                                     -        4,086,609           -            -        4,086,609

Other comprehensive income, net
of tax:
  Unrealized net gains on securities
  of $237,778, net of reclassification
  adjustment for gains included in net
  income of ($7,630)                           -             -           230,148         -          230,148
                                                                                                 ----------
TOTAL COMPREHENSIVE INCOME                                                                        4,316,757


Cash dividends declared
  $.35 per share                               -       (1,260,000)          -            -       (1,260,000)
------------------------------------------------------------------------------------------------------------
Balance - December 31, 1997               3,600,000    34,604,120        240,891         -       38,445,011

COMPREHENSIVE INCOME

Net income                                     -        4,640,886           -            -        4,640,886

Other comprehensive income, net
of tax:
  Unrealized gains on securities
  of $1,594,427, net of reclassification
  adjustment for gains included in net
  income of ($6,675)                           -             -         1,587,752         -        1,587,752
                                                                                                  -----------
TOTAL COMPREHENSIVE INCOME                                                                        6,228,638
Stock split in the form of a dividend     3,600,000    (3,600,000)          -            -             -
Cash dividends declared
  $.42 per share                               -       (1,512,000)          -            -       (1,512,000)
-------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998               7,200,000    34,133,006      1,828,643         -       43,161,649

COMPREHENSIVE INCOME

Net income                                     -        3,203,605           -            -        3,203,605

Other comprehensive income, net
of tax:
  Unrealized net losses on securities
  of $(3,867,263), net of reclassification
  adjustment for losses included in net
  income of $230,960                           -             -        (3,636,303)        -       (3,636,303)
                                                                                                 -----------
TOTAL COMPREHENSIVE LOSS                                                                         (  432,698)


Cash dividends declared
  $.60 per share                               -       (2,145,625)          -            -       (2,145,625)

Purchases of treasury stock                    -             -              -     $(1,179,433)   (1,179,433)
-------------------------------------------------------------------------------------------------------------

Balance - December 31, 1999              $7,200,000   $35,190,986    $(1,807,660) $(1,179,433)   $39,403,893
                                         ===========  ============    =========== ============   ============

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>


Commercial National Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                               Years ended December 31,
                                                    ------------------------------------------
                                                        1999           1998            1997
----------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>
Operating Activities
 Net income                                        $  3,203,605   $  4,640,886   $   4,086,609
 Adjustments to reconcile net income
  to net cash provided by operating activities
 Depreciation and amortization                          717,001        604,772         593,862
 Loss on sale of other real estate                         -              -              6,446
 Provision for loan losses                            3,289,706        435,000         270,000
 Net amortization of securities
  and loan fees                                          77,801        202,283         153,615
 Net security gains                                     349,940        (10,113)        (11,561)
 Decrease (increase) in interest receivable             152,984        234,255        (300,441)
 Increase in interest payable                           316,569         52,939         198,258
 (Decrease) increase in taxes payable                    (3,307)        23,409           3,591
 (Decrease) increase in taxes receivable               (963,219)          -             98,177
 Deferred tax (benefit) expense                        (118,693)        17,176         115,735
 (Decrease) increase in other liabilities              ( 69,128)      (130,976)          41,140
 Increase in other assets                              (403,630)      (185,021)       (174,276)
-----------------------------------------------------------------------------------------------
 Net cash provided by operating activities            6,549,629      5,884,610       5,081,155
-----------------------------------------------------------------------------------------------
Investing Activities
 Net (increase) decrease in deposits with other banks  (490,846)        63,002          22,730
 Decrease in federal funds sold                      (5,750,000)          -               -
 Purchases of securities available for sale         (69,437,582)   (25,334,138)    (34,966,171)
 Purchases of securities held to maturity                  -        (1,966,778)    (11,702,873)
 Maturities and calls of securities
  available for sale                                 28,192,935      7,654,065      12,311,659
 Proceeds from sales of securities
  available for sale                                 29,625,903      8,996,484       6,488,260
 Maturities and calls of securities
  held to maturity                                         -        12,175,000      12,095,000
 Net increase in loans                              (16,084,250)    (9,069,590)    (24,014,417)
 Proceeds from the sale of other real estate               -              -             266,473
 Purchases of premises and equipment                   (993,959)      (641,482)     (1,782,183)
-----------------------------------------------------------------------------------------------
 Net cash used by investing activities              (34,937,799)    (8,123,437)    (41,281,522)
-----------------------------------------------------------------------------------------------
Financing Activities
  Net increase in deposits                            6,486,882      5,770,764      21,881,686
  Net increase (decrease) in short-term borrowings   11,225,000    (14,075,000)     16,450,000
  Proceeds from long-term borrowings                 15,000,000     10,000,000            -
  Dividends paid                                     (2,145,625)    (1,512,000)     (1,260,000)
  Purchase of treasury stock                         (1,179,433)          -               -
-----------------------------------------------------------------------------------------------
  Net cash provided by financing activities          29,386,824        183,764      37,071,686
-----------------------------------------------------------------------------------------------
  Increase (decrease) in cash and cash equivalents      998,654     (2,055,063)        871,319
  Cash and cash equivalents at beginning of year      7,655,963      9,711,026       8,839,707
-----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year           $  8,654,617   $  7,655,963    $  9,711,026
                                                   ============   ============    =============

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
      Interest                                     $  9,696,887   $ 10,265,642    $  9,478,881
                                                   ============   ============    ============
      Taxes                                        $  1,598,200   $  1,423,900    $  1,172,800
                                                   ============   ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998, and 1997
-----------------------------------------------------------
1. Summary of Significant Accounting Policies

General

The accompanying consolidated financial statements include the
accounts  of  Commercial  National  Financial  Corporation   (the
corporation)   and  its  wholly-owned  subsidiaries,   Commercial
National  Bank of  Pennsylvania (the bank)  and Commercial
National Investment Corporation.  All material intercompany
transactions have been eliminated.

The following summary of accounting and reporting policies  is
presented  to  aid the reader in obtaining a better understanding
of  the  financial statements and related financial data  of  the
corporation and its subsidiaries contained in this report.  Such
policies conform to generally accepted accounting principles(GAAP)
and to general practice within the banking industry. In preparing
financial  statements  in  conformity with  GAAP,  management  is
required  to  make  estimates  and assumptions  that  affect  the
reported amounts  of assets  and liabilities,  the disclosure  of
contingent  assets and liabilities at the date of  the  financial
statements  and income and expenses during the reporting  period.
Actual results could differ from those estimates.

Certain items of the consolidated financial statements for the
years ended December 31, 1998 and 1997, have been reclassified to
conform  with the December 31, 1999 presentation.  None of  these
reclassifications affected net income.


Securities

Debt  securities that the corporation has the positive  intent
and ability to hold to maturity are classified as securities held
to  maturity and are reported at amortized cost.  Debt and equity
securities  not classified  as  held to maturity  securities  are
classified as securities available for  sale and are reported  at
fair value, with unrealized gains and losses excluded from earnings
and reported as a separate  component  of shareholders' equity.

Net gain or loss on the sale of  securities is determined using
the specific identification method.

Loans

Loans are stated at the principal amount outstanding. When a loan
becomes past due and doubt exists as to the ultimate collection
of principal and interest, the accrual of income is discontinued
and is only recognized at the time payment is received.

The corporation considers a loan to be impaired when based on
information and events, it is probable that the corporation will
be unable to collect principal or interest due according to the
contractual terms of the loan. Loan impairment is measured based
on the present value of expected cash flows discounted at the
loan's effective interest rate or, as a practical expedient, at
the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent.

Payments received on impaired loans are applied against the
recorded investment in the loan. For loans other than those
that the corporation expects repayment through liquidation
of the collateral, when the remaining recorded investment
in the impaired loan is less than or equal to the present
value of the expected cash flows, income is recorded on a
cash basis.

Loan Fees

Loan origination and commitment fees, net of associated direct
costs,  are  deferred  and  the net amount  is  amortized  as  an
adjustment  to  the  related loan yield on the  interest  method,
generally  over  the  contractual life of the  related  loans  or
commitments.


Other Real Estate Owned

Real estate, other than bank premises, is recorded at the lower
of  cost  or market at the time of acquisition.  Expenses related
to  holding  the  property, net of rental income,  are  charged
against earnings in the current period.

Allowance for Loan Losses

The  allowance  for  loan  losses  represents  management's
estimate of an amount adequate to provide for losses which may be
incurred  on  loans  currently held.  Management  determines  the
adequacy  of the allowance based on reviews of individual  credits,
historical patterns of loan charge-offs and recoveries,  industry
experience,  current economic trends and other factors  relevant
to  the  collectibility of the loans currently in the  portfolio.
The  allowance  is  increased by provisions  charged  to  operating
expense and reduced by net charge-offs.

Premises and Equipment

Premises  and  equipment are carried at cost less  accumulated
depreciation and amortization.  For financial statement reporting
and  income  tax  purposes,  depreciation  is  computed  both  on
straight-line  and accelerated methods over the estimated  useful
life  of the premises and equipment. Charges for maintenance  and
repairs  are expensed as incurred.  Amortization is charged  over
the term of the respective lease or the estimated useful life  of
the asset, whichever is shorter.

Income Taxes

Certain income  and  expense items are accounted for in different
years  for  financial  reporting purposes  than  for  income  tax
purposes.   Deferred  taxes  are  provided  to  recognize   these
temporary   differences.   The  principal  items   involved   are
investment  securities,  employee benefit  plans,  provision  for
loan  losses, net deferred loan fees and costs, and depreciation.
The effect  on  deferred  taxes  of  a  change  in  tax rates  is
recognized in earnings in the period that includes  the enactment
date.   Income  tax  expense is  not  proportionate  to  earnings
before  taxes,  principally  because  a portion  of revenues from
obligations  of  states  and  political  subdivisions   are
nontaxable.

Earnings per Share:

Earnings per share have been calculated on the weighted average
number  of shares outstanding of 3,578,894 shares in 1999, and
3,600,000 in 1998 and 1997. The weighted average number of shares
outstanding has been  adjusted for the  effect  of  a two-for-one
stock split in the form of a stock dividend more full described
in Note 13.

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" (FAS 128). This statement redefines the standards for
computing earnings per share (EPS) previously found in Accounting
Principles Board opinion No. 15, "Earning Per Share." FAS 128
establishes new standards for computing and presenting EPS and
requires dual presentation of "basic" and "diluted" EPS on the
face of the income statement for all entities with complex
capital structures. Under FAS 128, basic EPS is to be computed
based upon income available to common shareholders and the
weighted average number of common shares outstanding for the
period. Diluted EPS is to reflect the potential dilution
exercised or converted into common stock or resulted in the
issuance of common stock

<PAGE>

(At this point in the 1999 annual report, the page is still in
three column format with the first column containing full text
with the second and third columns having text occupy about a
fourth of the page. The remaining space in the second and
third columns consist of two tables that will be identified
when approached.)


that then shared in the earnings of the corporation. FAS 128 also
requires the restatement of all prior-period EPS data presented.
The corporation currently maintains a simple capital structure,
thus there are no dilutive effects on earnings per share.

Treasury Stock

The acquisition of treasury stock is recorded under the cost
method. At the date of subsequent reissue, the treasury stock
is reduced by the cost of such stock on the average cost basis,
with any excess proceeds being credited to additional paid-in
capital.

Comprehensive Income

As of January 1, 1998, the corporation adopted Statement of
Financial Accounting Standards 130, Reporting Comprehensive Income
(FAS 130). FAS 130 established new rules for the reporting and
display of comprehensive income and its components; however, the
adoption  of this  statement had  no impact  on the corporation's
net  income  or shareholders' equity. FAS 130 requires unrealized
gains or losses on the corporation's available-for-sale  securities,
which  prior  to  adoption  were  reported separately  in  shareholders'
equity,  to  be  included  in other comprehensive income. Prior  year
financial  statements have been reclassified to conform to the
requirements of FAS 130.

Cash and Cash Equivalents

For  purposes  of  reporting cash flows, the  corporation  has
defined  cash and cash equivalents as those amounts  included  in
the balance sheet caption "Cash and due from banks on demand".

2. Cash and Due from Banks on Demand

Regulations  of the Board of Governors of the Federal  Reserve
System  impose  uniform reserve requirements  on  all  depository
institutions  with transaction accounts (checking  accounts,  NOW
accounts,  etc.)  and non-personal time deposits  (deposits  with
original maturities of 14 days or more).  Reserves are maintained
in  the form of vault cash or a non-interest-bearing balance held
with  the Federal Reserve Bank.  The bank also maintains deposits
with  the  Federal  Reserve  Bank and  other  banks  for  various
services  such  as check clearing.  The amount so  restricted  at
December 31, 1999 and 1998 was $2,549,000 and $2,675,000,
respectively.

3. Securities
The  amortized cost and estimated market values of  securities
are as follows:
<TABLE>
<CAPTION>
                                                 Gross       Gross       Estimated
                                  Amortized   Unrealized  Unrealized      Market
                                    Cost         Gains       Losses        Value
----------------------------------------------------------------------------------
<S>                             <C>           <C>          <C>          <C>
Securities Available for Sale:
December 31, 1999
U.S. Treasury securities        $ 3,002,818   $    5,312   $     -      $  3,008,130
Obligations of U.S. Government
 agencies                        14,497,290        6,120       60,218     14,443,192
Obligations of states and
 political subdivisions          51,542,799      371,814      903,809     51,010,804
Mortgage-backed securities       55,067,520         -       2,158,098     52,909,422
Other securities                  3,371,638         -            -         3,371,638
------------------------------------------------------------------------------------
                               $127,482,065   $  383,246   $3,122,125   $124,743,186
                                ===========   ==========   ==========  =============


December 31, 1998
U.S. Treasury securities       $ 15,577,778   $  156,617   $    -     $ 15,734,395
Obligations of U.S. Government
 agencies                        20,986,555      313,700       2,855    21,297,400
Obligations of states and
 political subdivisions          36,454,587    1,916,896         239    38,371,244
Mortgage-backed securities       40,917,290      386,551        -       41,303,841
Other securities                  2,396,600         -           -        2,396,600
----------------------------------------------------------------------------------
                               $116,332,810   $2,773,764   $  (3,094) $119,103,480
                                ===========   ==========   ==========  ===========

</TABLE>

The amortized cost and estimated market values of securities at
December  31,  1999, by contractual maturity,  are  shown  below.
Mortgage-backed security maturities are based upon their contractual
maturities. Expected  maturities  will  differ  from  contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.


<TABLE>
                                     Securities Available
                                           for Sale
--------------------------------------------------------------------------
<CAPTION>
                                     Amortized   Estimated
                                       Cost     Market Value
--------------------------------------------------------------------------
<S>                                <C>          <C>
Due within 1 year                  $ 14,295,648  $ 14,306,369
Due after 1 but within 5 years       28,575,549    28,277,100
Due after 5 but within 10 years      50,537,412    49,241,329
Due after 10 years                   30,701,818    29,546,750
Equity securities                     3,371,638     3,371,638
--------------------------------------------------------------------------
                                   $127,482,065  $124,743,186
                                   ============  ============
</TABLE>

(The following test reverts back to the one-column format measuring
two columns wide.)

Securities with amortized cost and market values, respectively,
of  $62,760,127 and $60,739,684 at December 31, 1999 and $11,798,395
and  $12,210,441  at  December 31, 1998, were  pledged  to  secure
public  deposits and for other purposes required or permitted  by
law.

Proceeds from sales and calls of securities were $29,625,903,
$17,361,371  and  $13,608,361  during  1999, 1998 and 1997,
respectively. Gross gains of $243,708, $17,915 and $20,187 and
gross losses of $593,648, $7,802 and $8,626 were realized on those
sales and calls during 1999, 1998 and 1997, respectively.

Other  securities consist of Federal Reserve  Bank  stock,  an
equity  security,  with  book and market values  of

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
--------------------------------------------------------------

(The following text measures two columns wide in a three column
format.)

$108,000  at December  31, 1999 and 1998 and Federal Home Loan Bank
stock,  an equity  security,  with book and market values  of
$3,254,700 and $2,276,100 at December 31, 1999 and 1998, respectively.
Also included in other securities is an investment in Commercial
National Insurance Services, with book and market values of $8,938 and
$12,500 at December 31, 1999 and 1998, respectively.

The   corporation  did  not  hold  any  derivative  financial
instruments  such as futures, forwards, swap or option  contracts
at December 31, 1999 or December 31, 1998. Also included in the
investment portfolio are mortgage-backed securities which are
subject to prepayment risk as a result of interest rate fluctuations.

In September 1998, the corporation transferred securities from the
held  to  maturity  classification  to  the  available  for  sale
classification. The transfer was done to enable the corporation to
better manage the interest rate risk associated with the investment
portfolio. The amortized cost and market values of these securities
as of the date of transfer was $53,889,490 and $55,506,850,
respectivley.

The  changes  in  net  unrealized  holding  gain  or  loss  on
securities  available  for sale that has  been  included  in  the
separate  component of shareholders' equity for  the  year  ended
December 31, is as follows:

(At this point in the 1999 annual report, a table appears
in one column format measuring two columns  wide.)

<TABLE>
<CAPTION>
                                                1999        1998         1997
--------------------------------------------------------------------------------
<S>                                        <C>           <C>         <C>
Gross change in unrealized (loss) gain
  on securities available for sale         $(5,509,549)  $2,405,684   $  348,711
Deferred tax (benefit) gain                 (1,873,246)     817,932      118,563
-------------------------------------------------------------------------------
Net change in unrealized (loss) gain
  on securities available for sale         $(3,636,303)  $1,587,752   $  230,148
                                            ==========  ==========  ===========

</TABLE>

4.  Loans
Loans are summarized as follows:

<TABLE>
<CAPTION>
                                                December 31,
                                        --------------------------
                                             1999         1998
------------------------------------------------------------------
<S>                                     <C>           <C>
Commercial  loans                       $ 23,069,385  $ 20,893,911
Real estate loans - commercial            59,386,543    52,165,384
Real estate loans - construction           4,275,988     2,754,964
Real estate loans - other                 99,769,594    96,210,304
Installment loans                          4,396,065     5,388,246
Municipal loans                            4,290,289     3,757,563
Other loans                                9,771,934    11,068,877
------------------------------------------------------------------
                                        $204,959,798  $192,239,249
                                        ============  ============

</TABLE>


The corporation's loan portfolio is collateralized with assets located
primarily within Western Pennsylvania. Although the corporation has a
diversified  portfolio, exposure to credit loss can be  adversely
impacted   by   downturns  in  local  economic   and   employment
conditions.

5.  Allowance for Loan Losses

Transactions in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
                                              1999           1998         1997
----------------------------------------------------------------------------------
<S>                                        <C>           <C>          <C>
Balance at January 1,                      $1,914,174    $ 1,882,251  $ 2,035,818
----------------------------------------------------------------------------------
Losses charged against allowance           (3,308,023)      (412,867)    (448,308)
Recoveries on previously charged-off loans     23,596          9,790       24,741
Provision charged to operating expense      3,289,706        435,000      270,000
----------------------------------------------------------------------------------
Balance at December 31,                    $1,919,453    $ 1,914,174  $ 1,882,251
                                           ==========    ===========  ===========
</TABLE>

(At this point the following text is in three-column format occupying the
third column.)

Impairment of loans having recorded investments of  $3,900,080
and  $3,838,099  at  December 31, 1999  and  1998, respectively,
has been recognized in conformity with FAS  114  as amended  by
FAS 118. The average recorded investment in impaired loans during
1999, 1998 and 1997 was $6,697,653, $4,545,916 and $3,231,563,
respectively. The total allowance for loan losses related to these
loans was $95,181 and $429,512 at December 31, 1999 and 1998,
respectively. Interest income on impaired loans of $624,414,
$331,642 and $258,241 was recognized for cash payments received in
1999, 1998 and 1997, respectively.

6.  Financial Instruments with Off-Balance-Sheet Risk

The  corporation is a 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, standby letters of credit,
financial  standby letters of credit, and commercial  letters  of
credit.   Those instruments involve, to varying degrees, elements
of  credit  and  interest  rate risk  in  excess  of  the  amount
recognized in the balance sheet.  The contract or notional amount
of  those  instruments  reflect the  extent  of  involvement  the
corporation  has in particular classes of financial  instruments.
The  corporation  does  not  issue  any  other  instruments  with
significant off-balance-sheet risk.

The  corporation's exposure to credit loss  in  the  event  of
nonperformance by the other party to the financial instrument for
commitments  to  extend  credit,  standby  letters   of   credit,
financial  standby letters of credit, and commercial  letters  of
credit  written is represented by the contract or notional amount
of  those  instruments.  The corporation  uses  the  same  credit
policies in making commitments and conditional obligations as  it
does  for  on-balance-sheet  instruments.   The  following  table
identifies the contract or notional amount of those instruments.

<PAGE>

(At this point in the 1999 annual report, the table and following
text appear in the first column.)

<TABLE>
<CAPTION>
                                                        December  31,
----------------------------------------------------------------------------
                                                     1999           1998
----------------------------------------------------------------------------
<S>                                              <C>             <C>
Financial instruments whose contract amounts
  represent credit risk
    Commitments to extend credit                 $65,792,354     $44,315,527
    Standby letters of credit                    $ 1,787,191     $ 2,768,940
    Financial standby letters of credit          $ 4,154,814     $ 4,541,531

</TABLE>
<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
-----------------------------------------------------------------------------

(At this point, the following text is in three-column format with only
the first column being occupied.)

Commitments  to  extend credit are agreements  to  lend  to  a
customer  as  long  as  there is no violation  of  any  condition
established  in the contract.  Commitments generally  have  fixed
expiration  dates or other termination clauses  and  may  require
payment of a fee.  Since many of the commitments are expected  to
expire without being drawn upon, the total commitment amounts  do
not   necessarily   represent  future  cash  requirements.    The
corporation evaluates each customer's credit worthiness on a case-
by-case  basis.   The  amount of collateral  obtained  if  deemed
necessary by the corporation upon extension of credit is based on
management's credit evaluation of the counter party.   Collateral
held  varies  but  may  include accounts  receivable,  inventory,
property,  plant and equipment, and income-producing  commercial
properties.

Standby letters of credit, financial standby letters of credit,
and   commercial  letters  of  credit  written  are   conditional
commitments   issued  by  the  corporation   to   guarantee   the
performance of a customer to a third party.  Those guarantees are
primarily   issued  to  support  public  and  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.


(At this point  the following text and tables appear in
one-column format measuring two columns wide. The text begins
at the top of the second column in a standard three column page.)


7.      Premises and Equipment

The depreciation and amortization on premises and equipment charged to
operating expense amounted to $717,001 in 1999, and $604,772 in 1998.

The composition of premises and equipment at December 31, is as follows:

<TABLE>
<CAPTION>
                                           1999         1998
----------------------------------------------------------------
  <S>                                   <C>          <C>
  Premises                              $6,119,503   $6,101,386
  Leasehold improvements                   214,866      214,866
  Furniture and equipment                6,419,244    5,443,402
----------------------------------------------------------------
                                        12,753,613   11,759,654

  Less accumulated depreciation
    and amortization                     7,275,390    6,558,389
----------------------------------------------------------------
                                         5,478,223    5,201,265
  Land                                     826,231      826,231
----------------------------------------------------------------
                                        $6,304,454   $6,027,496
                                         =========    =========
</TABLE>

 8.     Interest-Bearing Deposits

Interest  bearing  deposits include certificates  of  deposit  issued  in
denominations  of  $100,000  or  more  which  amounted  to  $37,315,340  and
$30,016,225  at  December 31, 1999 and 1998.  Interest  expense  related  to
certificates  of  $100,000  or  greater  was  $1,870,326,  $1,587,148   and
$1,577,237,  for the  years  ended  December  31,  1999,  1998  and   1997,
respectively.

Interest bearing deposits at December 31, are detailed as follows:

<TABLE>
<CAPTION>
                                           1998            1997
---------------------------------------------------------------------
        <S>                           <C>             <C>
        Savings accounts              $ 45,991,977    $ 45,622,724
        NOW accounts                    13,056,700      12,598,378
        Money Market NOW accounts        9,235,891       8,811,086
        FIMM accounts                   46,098,370      42,210,709
        Time deposits                  117,029,467     112,698,859
---------------------------------------------------------------------
                                      $231,412,405    $221,941,756
                                       ===========     ===========
</TABLE>

Included in time deposits at December 31, 1999 were certificates of deposit
with the following scheduled maturities:

         2000                   $ 92,066,218
         2001                     14,611,248
         2002                      4,844,704
         2003                      3,236,549
         2004 and thereafter       2,270,748
                                ------------
                                $117,029,467
                                ============

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
------------------------------------------------------------


(At this point in the 1999 annual report, the folowing text and table
is in one-column format measuring three columns wide.)

9.      Short-Term Borrowings

Short-term borrowings at December 31 were as follows:

<TABLE>
<CAPTION>

                                            1999                            1998
-------------------------------------------------------------------------------------------------
                                Ending     Average   Average     Ending    Average   Average
                                Balance    Balance    Rate       Balance   Balance    Rate
-------------------------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>      <C>          <C>          <C>
Federal funds purchased      $      -     $ 2,168,767  5.37%    $ 1,775,000  $ 2,397,534   5.60%
Borrowings from
 Federal Home Loan Bank       15,000,000    6,412,260  5.53%      2,000,000    8,578,753   5.76%
-------------------------------------------------------------------------------------------------

                             $15,000,000  $ 8,581,027  5.49%    $ 3,775,000  $10,976,287   5.72%
=================================================================================================
Maximum total at any
month-end                    $25,000,000                       $20,450,000
                             ===========                       ===========
</TABLE>

At December 31, 1999 the corporation had approved but unused borrowing
with the Federal Home Loan Bank of $10,000,000.



(At this point in the 1999 annual report, the following text and tables
are in one-column format measuring two columns wide.)

Interest expense on short-term borrowings for the years ended December
31 is detailed below:

                                               1999       1998       1997
----------------------------------------------------------------------------

Federal funds purchased                     $116,389   $134,332    $ 77,888
Federal Reserve Discount Window                  477       -           -
Borrowings from Federal Home Loan Bank       354,846    493,784     210,607
----------------------------------------------------------------------------
Total interest on short-term borrowings     $471,712   $628,116    $288,495
============================================================================

10.     Long-Term Borrowings

Long-term borrowings consist of Federal Home Loan Bank (FHLB) Advances which
are collateralized by certain mortgages and investment securities. The bank
is required to maintain an investment in the capital stock of the FHLB of
Pittsburgh in an amount of either 1% of its mortgage related assets or .3%
of its total assets  (whichever is greater), as calculated at December 31
of each year.

Advances from the FHLB consist of the following:

                                 December 31, 1999          December 31, 1998
                              ----------------------      ---------------------
                                          Weighted                    Weighted
Stated Maturity               Amount   Average Rate       Amount   Average Rate
--------------                --------------------------------------------------

January 2001              $ 5,000,000     5.70%        $ 5,000,000     5.70%
December 2002               5,000,000     6.93%               -        -
December 2004               5,000,000     7.00%               -        -
November 2005               5,000,000     4.82%          5,000,000     4.82%
March 2009                  5,000,000     5.52%               -        -
                          -----------     -----        -----------     -----
                          $25,000,000     5.43%        $10,000,000     5.26%
                          ===========     =====        ===========     =====

Of the outstanding advances, $10,000,000 are convertible rate notes which
carry an option, at the interest rate change date, to repay the advance
without incurring a prepayment penalty.

(At this point in the 1999 annual report, the following text is in
one column format starting with the third column about a third of
the way down.)

Advances from the FHLB of Pittsburgh are secured by the bank's stock in the
FHLB of Pittsburgh, qualifying residential mortgage loans, U.S. Government
securities, U.S. agency securities and mortgage-backed securities issued or
guaranteed by GNMA, FHLMC and FNMA to the extent that the defined statutory
value must be at least equal to the advances outstanding. The maximum
borrowing capacity at December 31, 1999, is $83,159,000. The advances are
subject to restrictions or penalties in the event of prepayment.

11.     Employee Benefits Plans

The corporation sponsors an employee profit sharing plan available to all
employees with at least one year of service.  The corporation contributes to
the  plan,  as  determined by the Board of Directors, in an  amount  not  to
exceed  15% of compensation of eligible participants.  The corporation  also
has  a supplemental retirement plan for certain employees.  The expense  for
the  employee  benefit plans was  $580,000, $506,572 and  $520,978  for  the
years ended December 31, 1999, 1998 and 1997, respectively.

<PAGE>

(At this point in the 1999 annual report, the following text and tables
appear in one column format measuring two columns wide.)

12.     Income Taxes

The  balance  sheets include approximately $1,712,316 and $(279,623) of net
deferred tax asset (liability) at December 31, 1999 and 1998, respectively.
The components of the net deferred tax  asset (liability)  at December 31,
1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                December 31,
                                           ----------------------
                                             1999          1998
------------------------------------------------------------------
  <S>                                     <C>           <C>
  Unrealized net losses on securities     $ 931,218     $    -
  Allowancee for loan losses                663,680       492,014
  Accrued benefits                          138,433       180,263
  Deferred loan fees                         40,957        42,190
  Premises and equipment                        405         1,161
------------------------------------------------------------------
  Total deferred tax assets               1,774,693       715,628

  Securities accretion                       62,377        53,223
  Unrealized gain on securities
    available for sale                         -          942,028
------------------------------------------------------------------
  Total deferred tax liabilities             62,377       995,251
------------------------------------------------------------------
  Net deferred tax asset                 $1,712,316     ($279,623)
                                         ===========    ==========
</TABLE>


The total tax provision or credit for financial reporting purposes differs
from the amount computed by applying statutory rates to income before income
taxes.  The differences for the years ended December 31, are as follows:

<TABLE>
<CAPTION>
                                                 1999         1998         1997
-----------------------------------------------------------------------------------
 <S>                                         <C>          <C>          <C>
 Tax at statutory rates                      $1,254,841   $2,076,611   $1,822,531
  Increase (decrease) resulting from:
    Non-taxable interest and dividend income   (759,541)    (700,181)    (626,324)
    Non-deductible interest expense              90,021       89,263       79,904
    Life insurance                             (105,819)    (  7,458)    (  8,589)
    Other                                         7,602        6,836        6,255
-----------------------------------------------------------------------------------
  Total tax provision                        $  487,104   $1,465,071   $1,273,777
                                              =========    =========    ==========
</TABLE>



13.     Stock Split

On  November  17, 1998, the Board of Directors approved  a  two-for-one
stock  split  effected in the form of a stock dividend  to  shareholders  of
record on December 15, 1998. The stock split in the form of a stock  dividend
has  been  given  retroactive effect and per share data for the prior period
presented  has been restated.

14.     Fair Value of Financial Instruments

Below are various estimated fair values at December 31, 1999 and 1998, as
required by Statement of Financial Accounting Standards No. 107 (FAS 107).
Such information, which pertains to the corporation's financial instruments,
is  based  on the requirements set forth in FAS 107 and does not purport  to
represent  the  aggregate  net fair value of the  corporation.   It  is  the
corporation's general practice and intent to hold its financial  instruments
to   maturity,  except  for  certain  securities  designated  as  securities
available  for sale, and not to engage in trading activities.  Many  of  the
financial instruments lack an available trading market, as characterized  by
a  willing buyer and seller engaging in an exchange transaction.  Therefore,
the  corporation  had  to  use  significant estimations  and  present  value
calculations to prepare this disclosure.

Changes in the assumptions or methodologies used to estimate fair  values
may  materially affect the estimated amounts.  Also, management is concerned
that  there may not be reasonable comparability between institutions due  to
the wide range of permitted assumptions and the methodologies in absence  of
active  markets.   This lack of uniformity gives rise to a  high  degree  of
subjectivity in estimating financial instrument fair values.

(At this point in the 1999 annual report, the text appears in one column
format starting with the third column.)

The  following  methods and assumptions were used by the  corporation  in
estimating financial instrument fair values:

CASH AND SHORT-TERM INVESTMENTS: The carrying amounts for cash and short-
term investments approximate the estimated fair values of such assets.

SECURITIES:  Fair values for securities held to maturity  and  securities
available  for  sale are based on quoted market prices, if available. If
quoted market prices are not available, fair values are based on quoted
market prices of comparable instruments.

LOANS RECEIVABLE: Fair values of variable-rate loans subject to frequent
repricing  and  which entail no significant credit risk  are  based  on  the
carrying values.  The estimated fair values of other loans are estimated  by
discounting the future cash flows using interest rates currently offered for
loans  with  similar  terms  to borrowers of similar  credit  quality.   The
carrying  amount of accrued interest is considered a reasonable estimate  of
fair value.

OFF-BALANCE-SHEET INSTRUMENTS: Many of the corporation's off-balance-sheet
instruments, primarily loan commitments and standby letters of  credit,  are
expected  to  expire  without being drawn upon,  therefore,  the  commitment
amounts  do  not necessarily represent future cash requirements.  Management
has determined that due to the uncertainties of cash flows and difficulty in
predicting the timing of such cash flows, fair values were not estimated for
these instruments.

DEPOSIT LIABILITITES: For deposits which  are  payable  on  demand  at  the
reporting  date,  representing  all  deposits  other  than  time  deposits,
management  estimated  that  the  carrying  value  of  such  deposits  is a
reasonable  estimate  of fair value. The carrying  amounts of variable-rate
time deposit accounts and certificates  of  deposit  approximate their fair
values at the report date. Fair  values  of  fixed-rate time  deposits  are
estimated by discounting the future cash flows using interest rates currently
being offered and a schedule of aggregate expected maturities. The carrying
amount of accrued interest payable approximates its fair value.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
-----------------------------------------------------------------------

(At this point in the 1999 annual report, the following text and table
appear in one column format measuring two columns wide.)

SHORT-TERM BORROWINGS: The carrying amounts for short-term borrowings
approximate the estimated fair value of such liabilities.

LONG-TERM BORROWINGS: Fair values of fixed rate borrowings  are estimated by
discounting the future cash flows using the corporation's estimated incremental
borrowing rate for similar types of borrowing arrangements.

<TABLE>
<CAPTION>
                                                               December 31,
---------------------------------------------------------------------------------------------------
                                                     1999                          1998
---------------------------------------------------------------------------------------------------
                                           Carrying         Fair         Carrying           Fair
                                            Amount          Value         Amount            Value
---------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>             <C>              <C>
Financial assets
  Cash and short term investments      $  14,963,398  $  14,963,398   $   7,723,899    $  7,723,899
  Securities available for sale          124,743,186    124,743,186     119,103,480     119,103,480
  Loans, net of reserve                  202,919,882    203,460,163     190,200,986     196,094,171
  Accrued interest receivable              2,057,925      2,057,925       2,210,909       2,210,909

Financial liabilities
  Deposits                              $272,947,403   $273,642,038    $266,460,521    $268,140,263
  Short-term borrowings                   15,000,000     15,000,000       3,775,000       3,775,000
  Accrued interest payable                 1,604,041      1,604,041       1,287,472       1,287,472
  Long-term borrowings                    25,000,000     24,581,867      10,000,000      10,068,773
----------------------------------------------------------------------------------------------------
</TABLE>


15.  Related Party Transactions

Some of the corporation's or the bank's directors, principal officers,
principal  shareholders, and their related interests had  transactions  with
the  bank  in  the ordinary course of business during 1999.  All  loans  and
commitments  to  loans in such transactions were made on  substantially  the
same terms, including collateral and interest rates, as those prevailing  at
the  time for comparable transactions.  In the opinion of management,  these
transactions  do  not  involve more than normal risk  of  collectibility  or
present  other  unfavorable features.  It is anticipated that  further  such
extensions  of credit will be made in the future.  The aggregate  amount  of
credit  extended to these directors and principal officers was approximately
$7,218,856 and $5,206,868 at December 31, 1999 and 1998.

The  following  is  an analysis of loans to those parties  whose  loan
balances exceeded $60,000 for the years ended December 31:



<TABLE>
<CAPTION>
                                               1999               1998
--------------------------------------------------------------------------
      <S>                                 <C>
      Balances at January 31,             $5,007,250          $2,141,813
      Advances                             2,122,457           4,255,836
      Repayments                          (3,589,316)         (1,390,399)
--------------------------------------------------------------------------
      Balances at December 31,            $3,540,391          $5,007,250
                                          ===========         ===========

During 1999, the corporation elected two new directors, thus the aggregate
amount of credit extended and the balances and activity for 1998 has been
restated to reflect the addition of the new directors.

</TABLE>

(At this point the following text is back to three-column format
beginning at the third column.)


16.  Capital Requirements and Dividend Restrictions

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

Quantitative  measures  established by regulation  to  ensure  capital
adequacy require the maintenance of minimum amounts and ratios (set forth in
the  tables  below)  of  total  and  Tier  I  capital  (as  defined  in  the
regulations) to risk-weighted assets (as defined), and of Tier I Capital
(as defined). Management believes,  as of  December  31, 1999, that the
corporation and the bank meet  all  capital adequacy requirements to which
they are subject.

As  of  December  31,  1999,  the most recent  notification  from  the
regulatory  agencies   categorized the  bank  as  well capitalized under
the regulatory framework for prompt corrective action.  To be  categorized
as well capitalized the corporation and  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 those notifications
that management believes have changed those categories.

<PAGE>

<TABLE>
<CAPTION>
                                                                                            To Be Well Capitalized
                                                                       For Capital               Under Prompt
                                                Actual              Adequacy Purposes    Corrective Action Provisions:
----------------------------------------------------------------------------------------------------------------------
                                             Amount     Ratio       Amount      Ratio        Amount        Ratio
----------------------------------------------------------------------------------------------------------------------

                                                                  As of December 31, 1998:
----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>       <C>            <C>        <C>           <C>
Total Capital (to Risk Weighted Assets)

  Commercial National Financial Corp.        $43,131,006  20.8%     $16,592,553    >8.0%
  Commercial National Bank                    43,150,074  20.8%      16,591,455    >8.0%       20,739,319   >10.0%
----------------------------------------------------------------------------------------------------------------------
Tier I Capital (To Risk Weighted Assets)

  Commercial National Financial Corp.         41,211,553  19.9%       8,296,276    >4.0%
  Commercial National Bank                    41,230,621  19.9%       8,295,727    >4.0%       12,443,591    >6.0%
----------------------------------------------------------------------------------------------------------------------
Tier I Capital (to Average Assets)

  Commercial National Financial Corp.         41,211,553  11.8%      10,505,245    >3.0%
  Commercial National Bank                    41,230,621  11.8%      10,504,838    >3.0%       19,407,136   >5.0%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                  As of December 31, 1998:
----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>       <C>            <C>        <C>           <C>
Total Capital (to Risk Weighted Assets)

  Commercial National Financial Corp.        $43,247,180  23.1%     $15,007,898    >8.0%
  Commercial National Bank                    43,258,545  23.1%      15,006,498    >8.0%       18,758,122   >10.0%
----------------------------------------------------------------------------------------------------------------------
Tier I Capital (to Risk Weighted Assets)

  Commercial National Financial Corp.         41,333,006  22.0%       7,503,949    >4.0%
  Commercial National Bank                    41,344,371  22.0%       7,503,249    >4.0%       11,254,873   >6.0%
-----------------------------------------------------------------------------------------------------------------------
Tier I Capital (to Average Assets)

  Commercial National Financial Corp.         41,333,006  12.8%       9,712,796    >3.0%
  Commercial National Bank                    41,344,371  12.8%       9,712,696    >3.0%       16,187,827   >5.0%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


(At this point the following text occupies two columns of the three column
format. It begins in the first column a little more than three-quarters of
the way down the page.)


The  amount  of funds available to a parent from its subsidiary  bank  is
limited for all national banks by restrictions imposed by the Comptroller of
the  Currency.   Dividends  from  the bank were  restricted  not  to  exceed
$5,841,000 at December 31, 1999.  These restrictions have  not had, and are
not expected to have, a significant impact on the corporation's ability to
meet its cash obligations.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
-------------------------------------------------------------------------

17. Condensed Financial Information fo Commercial National Financial Corporation
    (Parent Only)

<TABLE>
Balance Sheets
-----------------------------------------------------------------------
<CAPTION>
                                                   December 31,
                                                1999          1998
                                           ----------------------------
    <S>                                    <C>            <C>
    Assets:
     Cash                                  $      4,620   $      6,441
     Investment in subsidiaries              39,438,719     43,193,014
-----------------------------------------------------------------------
                                           $ 39,443,339   $ 43,199,455
                                            ===========    ===========
    Liabilities and shareholders' equity:
     Accounts payable                      $     39,446   $     37,806
     Shareholders' equity                    39,403,893     43,161,649
-----------------------------------------------------------------------
                                           $ 39,443,339   $ 43,199,455
                                            ===========    ===========
</TABLE>

<TABLE>
Statements of Income and Changes in Retained Earnings
------------------------------------------------------------------------
<CAPTION>
                                                              Years Ended December 31,
                                                    ------------------------------------------
                                                        1999           1998           1997
  <S>                                              <C>            <C>            <C>
  Dividends and fees from subsidiaries             $  3,472,058   $  1,582,000   $  1,380,000
  Expenses                                              152,245        109,997         78,824
                                                    ------------------------------------------
                                                      3,319,813      1,472,003      1,301,176
  Applicable tax benefit (expense)                        1,784         13,014        (14,000)
                                                    ------------------------------------------
                                                      3,321,597      1,485,017      1,287,176
  Equity in undistributed earnings of subsidiaries     (117,992)     3,155,869      2,799,433
                                                    ------------------------------------------
  Net income                                          3,203,605      4,640,886      4,086,609
  Retained earnings January 1,                       34,133,006     34,604,120     31,777,511
  Dividends paid                                     (2,145,625)    (1,512,000)    (1,260,000)
  Stock split                                              -        (3,600,000)          -
                                                    ------------------------------------------
  Retained earnings December 31,                    $35,190,986    $34,133,006    $34,604,120
                                                     ==========     ==========     ===========
</TABLE>

<TABLE>
Statements of Cash Flows
<CAPTION>
                                                                Years Ended December 31,
                                                         -------------------------------------
                                                            1999         1998          1997
----------------------------------------------------------------------------------------------
 <S>                                                    <C>          <C>          <C>
 Operating activities:
 Net income                                             $ 3,203,605  $ 4,640,886  $  4,086,609
 Adjustments to reconcile net income to
   net cash provided by operating activities:
     Equity in undistributed earnings of subsidiaries       117,992   (3,155,869)   (2,799,433)
     Increase (decrease) in accounts payable                  1,640       (9,100)       29,344
                                                         --------------------------------------
 Net cash provided by operating activities                3,323,237    1,475,917     1,316,520
                                                         --------------------------------------
 Investing activities:
   Investment subsidiary                                       -         (20,000)         -

 Financing activities:
   Dividends paid                                        (2,145,625)  (1,512,000)   (1,260,000)
   Purchase of treasury stock                            (1,179,433)        -             -
                                                         --------------------------------------
         Net cash used by financing activities           (3,325,058)  (1,512,000)   (1,260,000)
 Net increase (decrease) in cash                             (1,821)     (56,083)       56,520
 Cash at beginning of year                                    6,441       62,524         6,004
                                                         --------------------------------------
 Cash at end of year                                    $     4,620   $    6,441    $   62,524
                                                        ===========   ==========    ==========
</TABLE>

<PAGE>

(At this point, the following text is in the second and third columns of the
three-column format. The address to the Board and shareholders is located
at the top of first column.)

Board of Directors and Shareholders
Commercial National Financial Corporation and Subsidiaries
Latrobe, PA

Report of Stokes Kelly & Hinds, LLC  Independent Certified Public Accountants
--------------------------------------------------------------------------
We have audited the accompanying consolidated balance sheets of Commercial
National Financial Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, changes in share-
holders' equity, and cash flows for each of the three years in the period
ended December 31, 1999. These consolidated financial statements are the
responsibility of the corporation's management. Our responsibility is to
express an opinion on these consolidated 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 consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated 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
Commercial National Financial 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.

/s/ Stokes Kelly & Hinds, LLC
January 28, 2000
Pittsburg, Pennsylvania

Logo

Stokes Kelly & Hinds, LLC
Certified Public Accountants & Business Advisors


Management's Statement on Financial Reporting
---------------------------------------------

The management of Commercial National Financial Corporation and its
subsidiaries, Commercial National Bank of Pennsylvania and
Commercial National Investment Corporation, are responsible for the
preparation, content and integrity of the financial statements
contained in this annual report and all other information in the other
sections of the annual report, including amounts that must necessarily
be based on management's judgements and estimates. Management believes
that the financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
to reflect, in all respects, the substance of events and transactions
that should be included, and that the other information in the annual
report is consistent with those financial statements. In meeting its
responsibility for the reliability of the financial statements,
management depends upon the bank's accounting system and related
internal accounting controls. This system is designed to provide
reasonable assurance that assets are safeguarded and that transactions
are properly recorded and executed in accordance with management's
authorization. This system is augmented by written policies and
procedures and by examinations performed by our internal audit staff
which reports to the Board of Directors through the Board's Audit Committee.

The appointment of the independent certified public accountants for
the corporation and its subsidiaries is recommended by the Audit
Committee, approved by the Board of Directors and ratified by
the shareholders of the corporation. The Audit Committee, composed
solely of outside directors, meets on a scheduled basis with the
internal auditors and, as requested, with the independent auditors
to discuss and review the scope and findings of their respective
audits. The independent auditors and the internal auditors each
have full access to the Audit Committee, without management present,
to discuss internal accounting control, accounting, auditing and
financial reporting matters.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Quarterly Summary of Financial Data (Unaudited)
----------------------------------------------------------------

The unaudited quarterly results of operations for the years ended
December 31, 1999 and December 31, 1998 are  as follows:

<TABLE>
<CAPTION>
                                                          1999
                                      ----------------------------------------------
                                        First      Second       Third       Fourth
                                       Quarter     Quarter      Quarter     Quarter
------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>         <C>
Interest income                       $5,956,183  $5,975,508  $6,123,967  $6,247,074
Interest expense                       2,409,985   2,411,734   2,497,350   2,694,387
                                       ---------------------------------------------
  Net interest income                  3,546,198   3,563,774   3,626,617   3,552,687

Provision for loan losses                120,000     120,000     165,000   2,884,706
                                       ---------------------------------------------
  Net interest income after
  provision for loan losses            3,426,198   3,443,774   3,461,617     667,981

Other income (including security
   transactions)                         539,806     490,705     528,743     425,966

Other expenses                         2,271,739   2,268,946   2,306,697   2,446,699
                                       ---------------------------------------------
  Income before taxes                  1,694,265   1,665,533   1,683,663  (1,352,752)
Applicable income taxes                  407,800     406,100     420,500    (747,296)
------------------------------------------------------------------------------------
  Net income                          $1,286,465  $1,259,433  $1,263,163  $ (605,456)
                                       =========   =========   =========   =========
Earnings per share                    $      .36  $      .35  $      .35  $     (.16)
                                       =========   =========   =========   =========
</TABLE>


<TABLE>
<CAPTION>
                                                          1998
                                       ---------------------------------------------
                                        First      Second       Third      Fourth
                                       Quarter     Quarter     Quarter     Quarter
------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>         <C>
Interest income                       $5,926,333  $5,901,234  $5,831,114  $6,008,411
Interest expense                       2,642,444   2,564,825   2,551,856   2,559,456
                                       ---------------------------------------------
  Net interest income                  3,283,889   3,336,409   3,279,258   3,448,955

Provision for loan losses                 90,000     105,000     120,000     120,000
                                       ---------------------------------------------
  Net interest income after
  provision for loan losses            3,193,889   3,231,409   3,159,258   3,328,955

Other income (including security
  transactions)                          458,511     408,110     433,118     433,351

Other expenses                         2,090,072   2,136,342   2,159,940   2,154,290
                                       ---------------------------------------------
  Income before taxes                  1,562,328   1,503,177   1,432,436   1,608,016
Applicable income taxes                  382,000     355,000     336,000     392,071
------------------------------------------------------------------------------------
  Net income                          $1,180,328  $1,148,177  $1,096,436  $1,215,945
                                       =========   =========   =========   =========
Earnings per share                    $      .33  $      .32  $      .30  $      .34
                                       =========   =========   =========   =========
</TABLE>


(At this point, the text is located in the lefthand column about three
quarters down the page. A table appears to the right of the text
occupying the second and third columns.)


Common Stock Information

The  following table sets forth the high and low sales prices for
the  common stock,  as  reported on The Nasdaq Stock Market, Inc.
and the cash  dividends declared per share on the common stock for
the periods indicated.

Commmercial National Financial Corporation stock is traded in the
over-the-counter market on  The Nasdaq Stock Market, Inc., under
the trading symbol "CNAF" with an additional descriptive listing of
"CmclNat."

<TABLE>
<CAPTION>
                                                          Cash Dividend
1999                              High         Low          Per Share
------------------------------------------------------------------------
<S>                              <C>         <C>             <C>
First Quarter                    $21.50      $19.50          $ .13
Second Quarter                    20.00       17.875           .15
Third Quarter                     19.25       17.00            .15
Fourth Quarter                    21.25       15.375           .17

</TABLE>

<TABLE>
<CAPTION>
1998
------------------------------------------------------------------------
<S>                              <C>         <C>             <C>
First Quarter                    $19.25      $17.75          $ .10
Second Quarter                    19.375      18.50            .10
Third Quarter                     20.125      18.50            .11
Fourth Quarter                    21.00       18.375           .11

</TABLE>

<PAGE>

Commercial National Financial Corporation and Subsidiaries
----------------------------------------------------------

Selected Financial Data
-----------------------

The following financial information is not covered by the auditor's report
and must be read in conjunction with the consolidated financial statements
and related notes along with management's discussion and analysis of
financial condition and results of operations.
<TABLE>
<CAPTION>
                                                               Years Ended December 31
                                         -------------------------------------------------------------------
                                            1999          1998          1997           1996           1995
-------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>           <C>             <C>
Interest Income
  Interest and fees on loans           $ 16,693,455  $ 16,755,493  $ 15,312,410  $  13,549,080   $ 12,843,170
  Interest and dividends on securities    7,475,668     6,862,194     6,521,952      6,305,557      6,138,993
  Interest on money market investments      133,609        49,405        47,530         92,930        240,311
-------------------------------------------------------------------------------------------------------------
Total interest income                    24,302,732    23,667,092    21,881,892     19,947,567     19,222,474
Interest Expense
  Deposits                                8,749,173     9,537,002     9,388,643      8,394,110      8,251,854
  Short-term borrowings                     471,712       493,784       288,495         51,016            365
  Long-term borrowings                      792,571       287,795          -              -              -
-------------------------------------------------------------------------------------------------------------
Total Interest Expense                   10,013,456    10,318,581     9,677,138      8,445,126      8,252,219
-------------------------------------------------------------------------------------------------------------
Net interest income                      14,289,276    13,348,511    12,204,754     11,502,441     10,970,255
Provision for loan losses                 3,289,706       435,000       270,000        105,000         90,000
-------------------------------------------------------------------------------------------------------------
Net interest income after provision
   for loan losses                       10,999,570    12,913,511    11,934,754     11,397,441     10,880,255
Other operating income                    1,985,220     1,733,090     1,489,069      1,256,190      1,112,942
Other operating expenses                  9,294,081     8,540,644     8,063,437      7,644,576      7,046,171
-------------------------------------------------------------------------------------------------------------
Income before taxes                       3,690,709     6,105,957     5,360,386      5,009,055      4,947,026
Applicable income taxes                     487,104     1,465,071     1,273,777      1,252,589      1,253,833
-------------------------------------------------------------------------------------------------------------
Net income                             $  3,203,605  $  4,640,886  $  4,086,609   $  3,756,466   $  3,693,193
                                       ============  ============  ============   ============   ============
Per Share Data
  Net income                           $        .90  $       1.29  $       1.14   $       1.04   $       1.03
  Dividends declared                   $        .60  $        .42  $        .35   $        .31   $        .28
  Average shares outstanding (a)          3,578,894     3,600,000     3,600,000      3,600,000      3,600,000


At End of Period
  Total assets                         $355,297,990  $326,379,353  $319,741,956   $278,110,524   $266,176,018
  Securities                            124,743,186   119,103,480   118,382,089    102,355,972    103,480,616
  Loans and leases, net of
    unearned income                     204,839,335   182,115,160   183,481,157    159,935,523    144,288,002
  Allowance for loan losses               1,919,453     1,914,174     1,882,251      2,035,818      2,081,700
  Deposits                              272,947,403   266,460,521   260,689,757    238,808,071    230,736,311
  Shareholders' equity                   39,403,893    43,161,649    38,445,011     35,388,254     33,036,470

Key Ratios
  Return on average assets                      .95%         1.46%         1.39%          1.39%          1.43%
  Return on average equity                     7.50         11.47         11.14          11.02          11.80
  Net loan-to-deposit ratio                   74.34         71.38         69.66          66.12          61.63
  Dividend payout ratio (dividends
    declared divided by net income)           66.98         32.58         30.83          29.87          27.29
  Equity-to-assets ratio (average equity
    divided by average total assets)          12.68         12.72         12.47          12.64          12.13
</TABLE>

[FN]
(a)  Retroactively adjusted for a two-for-one stock split in the form of a
     dividend declared in November 1998.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------

(At this point, the following text occupies the first and second columns
of the three column text. The third column is blank.)


  INTRODUCTION

  The purpose of this discussion and the accompanying financial data is to
  provide aid in understanding and evaluating the financial condition and
  results of operations of Commercial National Financial Corporation (the
  corporation) for the years ending on December 31, 1999, 1998 and 1997.
  This information should be read in conjunction with the consolidated
  financial statements and related footnotes for the years under review.

  As previously noted in the 1999 Annual Report, the earnings performance
  of the corporation was affected materially by way of default on the loans
  of a single commercial relationship.

  In November 1998, the Board of Directors authorized a two-for-one stock
  split effected in the form of a stock dividend to shareholders of record
  as of December 15, 1998.  All per share data has been restated to allow
  meaningful comparison with prior periods.

  All material intercompany transactions have been eliminated in
  consolidation.

  RESULTS OF OPERATIONS

  Net income for 1999 was $3,203,605, compared to $4,640,886 in 1998 and
  $4,086,609 in 1997. Earnings per share were $.90 in 1999 compared to
  1998's earnings of $1.29 per share. In 1997, earnings per share were
  $1.14.

  Return on average assets was .95% in 1999, 1.46% in 1998 and 1.39% in
  1997. For the same years return on average equity was 7.50%, 11.47% and
  11.14%, respectively.

  NET INTEREST INCOME

  The largest segment of earnings is represented by net interest income
  which is calculated by deducting the interest paid on interest-bearing
  liabilities from the interest received on interest-earning assets. In
  1999, net interest income was $14,289,276 compared  to $13,348,511 in 1998
  and $12,204,754 in 1997.

  Average earning assets grew $18,875,552 in 1999, $20,956,507 in 1998 and
  $23,235,041 in 1997. Average interest-bearing liabilities increased
  $13,088,953 in 1999, $15,869,057 in 1998 and $20,639,642 in 1997. The return
  on earning assets, calculated on a tax-equivalent basis, equaled 7.94% in
  1999 compared to 8.20% in 1998 and 8.14% in 1997. The cost-of-funds rate
  was 4.00% in 1999, 4.35% in 1998 and 4.36% in 1997.  The tax-equivalent
  net interest margin was 4.82% in 1999, 4.78% in 1998 and 4.69% in 1997.


<PAGE>
<TABLE>
                                                                    Financial  Comparisons
                                               Consolidated Average Balance Sheet, Interest Income/Expense and Rates
<CAPTION>
                                              1999                              1998                             1997

                                             Interest                          Interest                         Interest
                                  Average    Income/   Yield or   Average      Income/    Yield or  Average     Income/     Yield oR
                                  Balance    Expense   Rate(a)    Balance      Expense    Rate(a)   Balance     Expense     Rate(a)
--------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>     <C>           <C>          <C>    <C>           <C>          <C>
Interest-earning Assets

  Loans(b)(c) net of
     unearned income           $194,664,755 $16,693,454  8.63%  $186,418,665  $16,755,493  9.03%  $169,849,234  $15,312,410  9.06%
  Taxable securities             82,519,029   5,432,186  6.58     77,380,692    4,967,679  6.42     77,615,939    4,827,530  6.22
  Non-taxable securities         40,568,028   2,043,482  7.63     36,888,885    1,894,515  7.78     32,285,316    1,694,422  7.95
  Interest-bearing deposits
     with banks                     136,426      10,824  7.93        108,280        7,858  7.26        110,211        7,167  6.50
  Federal funds sold              2,542,740     122,785  4.83        758,904       41,547  5.47        738,219       40,363  5.47
---------------------------------------------------------------------------------------------------------------------------------
Total earning assets            320,430,978  24,302,732  7.94    301,555,426   23,667,092  8.20    280,598,919   21,881,892  8.14

Non-interest-earning Assets
  Cash                            7,826,298                        7,027,443                         6,572,767
  Allowance for loan losses      (1,909,438)                      (1,876,326)                       (1,950,574)
  Other assets                   10,460,125                       11,117,942                         9,039,928
-----------------------------------------------------------------------------------------------------------------------------------
Total non-interest-
     earning assets              16,376,985                       16,269,059                        13,662,121
-----------------------------------------------------------------------------------------------------------------------------------
Total assets                   $336,807,963                     $317,824,485                      $294,261,040
                               ============                     ============                      ============

Liabilities and Shareholders' Equity

Interest-bearing Deposits
  NOW accounts                 $ 21,376,716     154,154   .72%  $ 20,709,992     350,081  1.69%   $ 20,204,634     386,186   1.91
  Money Market accounts          43,545,503   1,528,089  3.51     41,921,741   1,630,147  3.89      42,542,349   1,732,133   4.07
  Savings deposits               46,836,966   1,180,938  2.52     45,672,055   1,337,385  2.93      44,871,628   1,387,360   3.09
  Time deposits                 115,189,889   5,885,992  5.11    112,647,588   6,085,057  5.40     108,744,105   5,882,964   5.41
  Short-term borrowings           8,588,090     471,712  5.49     10,976,287     628,116  5.72       4,819,178     288,495   5.99
  Long-term borrowings           14,602,740     792,571  5.43      5,123,288     287,795  5.62             -           -       -
----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing
  liabilities                   250,139,904  10,013,456  4.00    237,050,951  10,318,581  4.35     221,181,894   9,677,138   4.36

Non-Interest-bearing Liabilities and Capital

  Non-interest-bearing deposits  41,744,536                       37,565,870                        34,124,049
  Other liabilities               2,227,436                        2,756,896                         2,255,578
  Shareholders' equity           42,696,087                       40,450,768                        36,699,519
----------------------------------------------------------------------------------------------------------------------------------
Total non-interest-bearing
  funding sources                86,668,059                       80,773,534                        73,079,146
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
  shareholders' equity         $336,807,963                     $317,824,485                      $294,261,040
                                ===========                      ===========                       ===========
Net Interest Income and
Net Yield on Interest-
earning Assets                              $14,289,276  4.82%                 $13,348,511  4.78%                $12,204,754   4.69%
                                            ===========                        ===========                       ===========
</TABLE>

[FN]
(a) Yields on interest earning assets have been computed on a tax-equivalent
    basis using the 34% federal income tax statutory rate.
(b) Income on non-accrual loans is accounted for on the cash basis, and
    the loan balances are included in interest earning assets.
(c) Loan income includes net loan fees.

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
------------------------------------------------------------

(At this point, a table appears at the top and occupies the first third
of the page.)

The following table illustrates the impact and interaction of rate and
volume changes for the years under review:


<TABLE>
                                                   Analysis of Year-to-Year Changes in Net Interest Income
                                        -----------------------------------------------------------------------------
                                              1999 Change from 1998                   1998 Change from 1997
                                        -----------------------------------------------------------------------------
<CAPTION>
                                          Total      Change Due   Change Due      Total       Change Due   Change Due
                                          Change     to Volume      to Rate       Change      to Volume      to Rate
---------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>          <C>            <C>          <C>          <C>
Interest-earning Assets
Loans net of unearned income           $(  62,038)  $  741,166   $ (803,204)    $1,443,083   $1,493,783   $  (50,700)
Securities
  Taxable                                 464,507      347,035      117,472        140,149      (14,632)     154,781
  Non-taxable                             148,967      171,786     ( 22,819)       200,093      241,608      (41,515)
Interest-bearing deposits with banks        2,966        2,043          923            691         (126)         817
Federal funds sold                         81,238       97,658     ( 16,420)         1,184        1,131           53
---------------------------------------------------------------------------------------------------------------------
Total interest income                     635,640    1,359,688     (724,048)     1,785,200    1,721,764       63,436


Interest-bearing Liabilities
Deposits                                 (653,497)      255,234     (908,731)        14,027      199,116     (185,089)
Short-term borrowings                    (156,404)     (136,663)    ( 19,741)       339,621      368,589      (28,968)
Long-term debt                            504,776       532,498     ( 27,722)       287,795         -         287,795
---------------------------------------------------------------------------------------------------------------------
Total interest expense                   (305,125)      651,069     (956,194)       641,443      567,705       73,738
---------------------------------------------------------------------------------------------------------------------
Net interest income                    $  940,765   $  708,619     $ 232,146     $1,143,757   $1,154,059   $  (10,302)
                                       ==========   ==========     =========     ==========   ==========   ===========

</TABLE>

[FN]
Included in interest income are loan fees of $211,752 in 1999,
$305,826 in 1998 and $212,453 in 1997.


(At this point, the following text reverts back to three-column format.)


The  provision  for  loan  losses  is  the  amount  added  to
the allowance against which actual loan losses are charged. The
amount of the provision is determined by an analysis of the
loan portfolio's size, quality and risk potential as compared
to the size of the allowance itself. The amount of the provision
was $3,289,706 in 1999, $435,000 in 1998 and $270,000 in 1997.
The 1999 provision was increased due to a default by one customer
on it's commercial loans aggregating $2,619,706. For each of the
same years the net charge-off against the allowance for loan losses
was $3,284,427, $403,077 and $423,567, respectively, with the 1999
increase due to the charge-off of the defaulted loans described
above. On  December  31,  1999  the  allowance  for
loan losses equaled .94% of total loans compared to 1.00% at
the end of 1998 and 1.03% at the end of 1997. Loans which were
past due 90 days or more, or were on non-accrual equaled 0.58%
of total loans on December 31, 1999, 0.22% on December 31,
1998 and 0.89% on December 31, 1997. The corporation's policy
is to place loans on a non-accrual basis when they become 90
days past due provided that the loan is well collateralized
and gives evidence of a reasonable likelihood for full
collection. During the review of the loan portfolio,
management did not note any trends such as industry
uncertainties which raise concerns regarding future adverse
impact on operating results, liquidity or capital resources.

NON-INTEREST INCOME AND EXPENSE
In 1999, total non-interest income increased $252,130 to
$1,985,220 from $1,733,090 in 1998. Asset management and trust
income grew $64,580 to $304,998. Service charges on deposit
accounts increased $107,116 to $691,899. Other service charges
and fees increased by $86,281 to $616,811.  Net losses on sold
 investments amounted to $349,940. Other income
increased by $354,206 to $721,452. This was due to a life insurance
benefit of $294,817 that the bank received. In 1997, total non-interest
income was $1,489,069.

Non-interest expense in 1999 was $8,540,644. This represented
an increase of $477,207 over 1998's non-interest expense which
totaled $8,540,644. The major area contributing to this
increase was personnel expense which rose $219,500. Coupled with
personnel expense was an increase in other operating expense of
$183,442. The large increases in the aforementioned items were
moderated somewhat by smaller increases in the following items.
Net occupancy expense increased $61,323 and furniture and
equipment expense declined slightly by $15,468. Pennsylvania
shares tax increased $28,410 over 1997. Non-interest expense
in 1997 was $8,063,437.

Income tax expense was $487,104 in 1999, $1,465,071 in 1998
and $1,273,777 in 1997. The effective tax rate was 13.20%,
23.99% and 23.76%, respectively. The disparity between 1999
and 1998 is related to the losses associated with the commercial
loan relationship and the corporation's sizeable tax-free
holdings.

LIQUIDITY
Liquidity measurements attempt to evaluate the corporation's
ability to meet the cash-flow needs of its depositors and
borrowers. One source of liquidity is deposit growth.
Additional liquidity is provided by the maturity of
investments in loans and securities and the interest received
from those earning assets. Another source of liquidity is
represented by the corporation's ability to sell both loans
and available for sale securities. Due to the rise in interest
rates

<PAGE>

(At this point in the 1999 annual report, the following text
is in three-column format and occupies the top quarter of the
page. The rest of the page comprises of two tables measuring
three columns wide.)

during 1999, liquidity from securities would result in
a loss given the shift in market values of the investments. The
bank is a member of the Federal Home Loan Bank (FHLB) system. The
FHLB is the primary liquidity source for long-term funding and also
provides short-term funding. Other supplemental external sources
have been established for short-term funding.

On December 31, 1999, total deposits were $6,486,882 greater
than on December 31, 1998. Interest-bearing deposits increased
$9,470,649  in  1999  while  demand  deposits  decreased
$2,983,767. The increase in interest-bearing deposits was
attributed to competitive pricing in a rising rate environment.

During the same period, total loans, net of unearned income, grew
by $12,724,175. Competition for high-quality loans remained intense
throughout 1999. All real-estate secured and commercial loan products
posted increases from year-end 1998.

The amortized cost of the corporation's securities portfolio increased
$11,149,255 and was $127,482,065 on December 31, 1999. On that same
date, the estimated market value of the entire securities portfolio was
$124,743,186 which was lower than amortized cost by $2,738,879 and
represented the net of $3,122,125 gross unrealized losses less
$383,246 gross unrealized gains. On December 31, 1999 the amount of
securities which would reach maturity within one year was $14,295,648
as compared to $15,468,716 at the end of the previous year.

The following tables present a five-year summary of loan classifications
and the maturity distribution of securities at December 31, 1999.

<TABLE>
<CAPTION>
                                                                       Loans by Classification on December 31,
------------------------------------------------------------------------------------------------------------------------------
                                        1999                1998               1997               1996                1995
                               -----------------------------------------------------------------------------------------------
                                            Per                 Per                Per                Per                 Per
                                  Amount    Cent      Amount    Cent    Amount     Cent     Amount    Cent      Amount    Cent
------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>    <C>          <C>   <C>          <C>   <C>          <C>    <C>          <C>
Commercial                     $ 23,069,385  12%   $ 20,893,911  11%  $ 19,052,486  10%  $ 17,115,404  11%   $ 14,494,356  10%
Real estate - commercial         59,386,543  29      52,165,384  27     44,289,723  24     33,437,360  21      32,460,803  23
Real estate - construction        4,275,988   2       2,754,964   1      3,510,809   2      1,924,619   1       1,523,490   1
Real estate - other              99,769,594  48      96,210,304  50     95,570,632  52     86,045,874  54      79,910,652  55
Consumer - installment            4,396,066   2       5,388,246   3      6,219,577   4      6,542,365   4       4,803,258   3
Municipal                         4,290,289   2       3,757,563   2      3,340,405   2      3,183,483   2       1,332,403   1
Other                             9,771,934   5      11,068,877   6     11,655,453   6     11,799,130   7       9,998,413   7
------------------------------------------------------------------------------------------------------------------------------
Total loans                    $204,959,798 100%   $192,239,249 100%  $183,639,085 100%  $160,048,235 100%   $144,523,755 100%
Unearned Income                    (120,463)           (124,089)          (157,928)          (112,712)           (235,373)
------------------------------------------------------------------------------------------------------------------------------
Total loans,
net of unearned income         $204,839,335        $192,115,160       $183,481,157       $159,935,523        $144,288,002
                                ===========         ===========        ===========        ===========         ===========

</TABLE>



<TABLE>
                                    Maturity Distribution of Securities on December 31, 1999
<CAPTION>
                         U.S. Treasury          State &                             Total      Weighted
                         & other U.S. Govt.     Political           Other         Amortized    Average
                         Agencies & Corp.       Subdivisions(1)   Securities        Cost        Yield
-------------------------------------------------------------------------------------------------------
<S>                         <C>                  <C>                <C>         <C>               <C>
Within 1 year               $12,006,536          $ 2,289,112        $     -     $ 14,295,648     6.42%
After 1 but within 5 years    5,493,574           23,081,975              -       28,575,549     7.25
After 5 but within 10 years  24,365,700           26,171,712              -       50,537,412     7.32
After 10 years               30,701,818                 -                 -       30,701,818     6.95
No fixed maturity                  -                    -            3,371,638     3,371,638     6.00
-------------------------------------------------------------------------------------------------------
                            $72,567,628          $51,542,799        $3,371,638  $127,482,065     7.07%
                            ===========          ===========        ==========  ============     =====

</TABLE>

[FN]
(1) Yield on tax-exempt obligations has been computed on a fully
    tax-equivalent basis (using statutory federal income tax rate of 34%)

<PAGE>

Commercial National Financial Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------------
(At this point in the 1999 annual report, the following text is in
three-column format occupying top quarter of the page followed by a
table that occupies the full three columns.)


One of the desired goals of investment management is to
achieve a balance between the need for consistent income
growth and the risks inherent in achieving a portion of
that income through managed maturity imbalances between
interest-earning assets and interest-bearing liabilities.
These relationships are generally so complex that exact
measurement of the impact of interest rate changes is
virtually impossible. However, an indication of an
institution's vulnerability to such changes can be roughly
gauged through the measurement and analysis of the so-
called "gap" or the difference between the dollar volumes
of assets and liabilities eligible for repricing within a
variety of time periods. When the amount of the assets so
defined is greater than the liabilities, the gap is labeled
positive and the institution's interest rate spread will
widen and earnings will respond favorably to a general rise
in interest rates. The opposite relationship produces a
negative gap and the interest rate spread will increase and
earnings will show a favorable response in a declining rate
environment.

<TABLE>

                                           Interest Sensitivity Analysis (In Thousands)
<CAPTION>
                           0-30 Days  31-90 Days  91-180 Days  181-365 Days     1-5 Yrs    Over 5 Yrs
------------------------------------------------------------------------------------------------------
<S>                        <C>        <C>         <C>            <C>          <C>          <C>
Interest-earning Assets:
  Securities               $   1,349  $   2,729   $    5,035     $  9,865     $  51,074    $  54,060
  Federal funds sold and
   deposits with banks         6,309        -            -            -             -            -
  Loans                       39,394      2,923        5,219        9,187        83,660       63,807
------------------------------------------------------------------------------------------------------
Total interest-sensitive
   assets                     47,052      5,652       10,254       19,052       134,734      117,867



Interest-bearing liabilities:
  Certificates of deposit     22,528     26,354       20,212       22,973        22,692        2,270
  Other interest-bearing
    liabilities                 -         4,629        4,629        6,934        43,586       54,605
  Other borrowings            10,000      5,000         -            -           25,000         -
------------------------------------------------------------------------------------------------------
Total interest-sensitive
    liabilities               32,528     35,983       24,841       29,907        91,278       56,875
------------------------------------------------------------------------------------------------------
Interest sensitivity gap     $14,524   $(30,331)    $(14,587)    $(10,855)    $  43,456      $60,992
                             =======   =========    =========    =========    ==========     =======
Cumulative gap               $14,524   $(15,807)    $(30,394)    $(41,249)    $   2,207      $63,199
                             =======   =========    =========    =========    ==========     =======
Ratio of cumulative gap to
earning assets                  4.30%    (4.68%)      (9.00%)     (12.20%)         .65%       18.70%
                             ========  =========    =========    =========    ==========     =======

</TABLE>

(At this point the text is back to three column format with a table
included in the second column of the text.)

CREDIT REVIEW
Maintaining a high quality loan portfolio is of great importance to
the corporation. The corporation manages the risk characteristics of
the loan portfolio through the use of prudent lending policies and
procedures and monitors risk through a periodic review process
provided by internal auditors, regulatory authorities and our loan
review staff. These reviews include the analysis of credit quality,
diversification of industry, compliance to policies and procedures,
and an analysis of current economic conditions.

In the management of its credit portfolio, the corporation
emphasizes the importance of the collection of loans as well as
asset and earnings diversification. The corporation immediately
recognizes as a loss, all credits judged to be uncollectible and has
established an allowance for  loan  losses  that  may  exist  in the
loan portfolio at a point in time, but have not been specifically
identified.

For analytical purposes, the following table sets forth an
allocation of the allowance for loan losses on December 31,
1999 and December 31, 1998 according to the categories indicated:

<TABLE>
              Allocation of the Allowance for Loan Losses
                      (dollar amounts in thousands)
<CAPTION>
                                          1999      1998
    ----------------------------------------------------
    <S>                                 <C>       <C>
    Commercial, Industrial, Financial,
       Agricultural and Tax Free        $  397    $  455

    Residential mortgages                   65        29

    Loans to individuals                 1,069       913

    Off-balance sheet items                235       114

    Year 2000                              153       190

    Unallocated                              -       213
                                        ----------------
    Total                               $1,919    $1,914
                                        ======    ======
    Reserve as a percentage
           of average total loans          .99%     1.03%
                                        =======   =======
</TABLE>


CAPITAL RESOURCES
Shareholders' equity declined $3,757,756 during 1999 and was
$39,403,893 on December 31, 1999 compared to $43,161,649 on
December 31, 1998. Net unrealized gains on securities available for
sale on December 31, 1999 temporarily decreased shareholders'
equity by $1,807,660. The corporation's participation in a stock
buy-back program has reduced shareholder's equity by $1,179,433.
The retained earnings retention rate was 33.02% in 1999 as
compared to 67.42% in 1998.

The shareholders' equity or the capital base represents the
investment by the corporation's owners either initially or
through retention of earnings (net after income tax less
dividend payments). This investment acts as a safeguard against
future uncertainties. The amount of capital which is deemed
appropriate is dependent upon an assessment of the
corporation's total assets, the quality of its loans and
securities, its historical earnings record, its business prospects
for the near and long-term, the management and information systems
in place and the general competence and abilities of the corporation's
management.

<PAGE>

(At this point in the 1999 annual report, the following text
and table are in three column format.)

On December 31, 1999, the corporation's capital (not including
the  allowance  for  loan losses)  amounted  to  $39,403,893
or 11.09% of total assets. The inclusion of the allowance
increases the capital ratio to 11.63%. On the same basis of
calculation, these ratios were 13.22% and 13.81% respectively
on December 31, 1998.

The Federal Reserve Board's risk-based capital adequacy
standards are designed principally as a measure of credit risk.
These standards require that (1) at least 50% of total capital
must be common and certain other "core" equity capital (Tier I
Capital); (2) assets and off-balance sheet items must be
weighted according to risk; (3) the total capital to risk-
weighted asset ratio must be at least 8%; and (4) a minimum 4%
leverage ratio of Tier I Capital to average total assets must
be maintained.

Under leverage guidelines, financial institutions are required
to maintain a leverage ratio of at least 3%. The 3% minimum
ratio is applicable only to financial institutions that meet
certain specified criteria, including excellent asset quality,
high liquidity, low interest rate exposure and the highest
regulatory rating. Financial institutions not meeting these
criteria are required to maintain a leverage ratio that exceeds
3% by a cushion of at least 100 to 200 basis points.

As of December 31, 1999, the corporation had Tier I and total
equity capital to risk adjusted asset ratios of 19.87% and
20.80%, respectively. The leverage ratio was 11.77%. At
December 31, 1998, the corporation had Tier I and total equity
capital to risk adjusted assets ratios of 22.03% and 23.05%,
respectively.





<TABLE>
    The table below presents the corporation's capital position on December 31, 1999
                         (dollar amounts in thousands)
<CAPTION>
                                                        Percent
                                                      of Adjusted
                                      Amount             Assets
     -------------------------------------------------------------
     <S>                              <C>                 <C>
     Tier I capital                   41,212              19.87
     Tier I capital requirement        8,296               4.00

     Total equity capital             43,131              20.80
     Risk-based requirement           16,593               8.00
     -------------------------------------------------------------
     Leverage capital                 41,212              12.26
     Leverage requirement             10,505               3.00

</TABLE>


INFLATION AND CHANGING PRICES
Inflation can have significance to a banking institution
because of its implication for the interest rate environment
and its influence on personnel expenses and the costs of
supplies and materials needed for day to day operations.
Because such a large portion of the corporation's assets and
liabilities are represented by monetary investments,
inflationary impact tends to be dampened except for the
dislocation caused by maturity variances. Management efforts to
gauge and control these variables have been discussed earlier
under rate sensitivity. The inflationary effect on non-interest
expenses is monitored closely by management and consistent
attention is given to controlling these cost areas in an
attempt to limit their increase to levels which are lower than
the rate of asset growth.

ASSESSMENT OF FUTURE ENVIRONMENT
Management has not identified nor is aware of any internal
matter or external condition, including potential regulatory
recommendations, which could have a critical impact on the
corporation's ability to continue its present business
activities or adversely impair future operating results.
The Year 2000 issue came and went with no significant issues
to reported. Of course, we will continue to monitor all dates
in the year 2000 that are being touted by computer consultants
as potential problems.

Certain interest rate movements will continue to influence
ongoing earnings levels. Even though the exact impact of these
factors cannot be predicted, the corporation believes that
given its financial strength and stability, it will be able to
meet these situations in a positive manner.

Collection efforts are underway to recapture any amount of the
defaulted loans that occured from a commercial account
relationship in 1999.

YEAR 2000
In 1997, the corporation's year 2000 committee was formed and
began and analysis of year 2000 issues that may affect the day
to day business operations of the corporation and the bank. The
year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year.
Any systems that have time sensitive software may recognize a
date using "00" as the year 1900 rather than 2000 and, in turn,
may result in miscalculations and/or system failures, which
could have a material impact on companies through business
interruption or shutdown, financial loss, reputation damage
and legal liability.

The corporation is primarily dependent upon systems that have been
developed by third parties and, therefore, is dependent upon vendor
compliance. To date, the corporation's vendors reported no
significant year 2000 problems and the corporation's financial
position has not been negatively impacted with third party Year
2000 failures. Because the corporation's continued compliance
in 2000 is dependent upon third party Year 2000 compliance,
the corporation cannot guarantee that its efforts alone have
resolved the Year 2000 issue or that the third party vendors
will not experience any Year 2000 problems.

The corporation has developed contingency plans for all mission
critical systems. These plans involve automated as well as manual
actions and may require additional staffing requirements and will
detail procedures to be followed in the unlikely event of any
disruptions.

Based on our assessment of the vendors and testing currently being
done, the corporation estimates the costs associated with addressing
the issue are approximately $500,000 with items being expensed as
incurred or capitalized, whenever appropriate. These costs or any
additional costs associated with the year 2000 issue are not
expected to have a material impact on the corporation's financial
position.

<PAGE>


(This page is left intentionally blank.)


<PAGE>

Commercial National Financial Corporation


CORPORATE OFFICERS
-------------------------------------------------------------------------
Louis A. Steiner           Chairman of the Board
Louis T. Steiner           Vice Chairman, President and Chief Executive Officer
Gregg E. Hunter            Vice Chairman and Chief Financial Officer
Wendy S. Schmucker         Vice President and Secretary/Treasurer
Ryan M. Glista             Vice President and Comptroller
Susan F. Robb              Assistant Secretary/Treasurer


CORPORATE DIRECTORS
-------------------------------------------------------------------------
John T. Babilya           Frank E. Jobe             Debra L. Spatola
President, C.E.O.         Retired,                  Vice President,
& Co-owner                former Executive Vice     Laurel Valley Foods, Inc.
Arc Weld, Inc.            President, Commercial
                          National Bank of
                          Pennsylvania

George A. Conti, Jr.      Roy M. Landers            Louis A. Steiner
Attorney at Law           Retired,                  Chairman of the Board
                          former Executive Vice     Commercial National Bank
                          President, R & L          of Pennsylvania
                          Development Co.

Richmond H. Ferguson      John C. McClatchey        Louis T. Steiner
Attorney at Law           Chief Executive Officer   Vice Chairman, President
Ferguson Law              JCM Industries            and Chief Executive Officer
Associates                                          Commercial National Bank
                                                    of Pennsylvania

Dorothy S. Hunter         Joseph A. Mosso           George V. Welty
Vice President,           Retired, former           Attorney, Partner,
Latrobe Foundry           President Mosso's         Flickinger & Welty
Machine & Supply Co.      Pharmacy Inc.

Gregg E. Hunter           Joedda M. Sampson         C. Edward Wible
Vice Chairman and         President, Allegheny      Certified Public Accountant
Chief Financial Officer   City Resorations, Inc.    Horner Wible & Associates,
of Commercial National                              Certified Public Accountants
Bank of Pennsylvania



All corporate directors also serve as directors of
Commercial National Bank of Pennsylvania

DIRECTORS EMERITI
----------------------------------------------------------------------------
James A. Charley          William M. Charley        William W. Washnock


<PAGE>

Commercial National Bank of Pennsylvania

BANK OFFICERS
-----------------------------------------------------------------------------
Chairman of the Board                                 Louis A. Steiner
-----------------------------------------------
Vice Chairman/President/Chief Executive Officer       Louis T. Steiner
-----------------------------------------------
Vice Chairman/Chief Financial Officer                 Gregg E. Hunter
-----------------------------------------------


Senior Vice Presidents
----------------------------------------------------------------------
Donna L. Belluchie        Michael J. Palko         Keith M. Visconti
Martin E. May             Philip S. Pettina

Vice Presidents
----------------------------------------------------------------------
Ryan M. Glista            Michael L. Matthews      Wendy S. Schmucker
William N. Hamilton, Jr.  Patricia A. Nemchik      Thomas D. Watters
Cheryl M. Letterio

Assistant Vice Presidents
-----------------------------------------------------------------------
Karen E. Burick           Marsha J. Salley         James T. Vaughan
Donna J. Daugherty        Michael A. Schmidt       Rebecca J. Weiner
William J. Johnston       Thomas E. Sylvester*     Phyllis S. Yesh*
Kelly R. Moreman

Community Office Managers
-------------------------------------------------------------------------
Douglas P. Arndt          Jennifer M. Chemski      Jerome M. Supko
Linda A. Burns            Laura A. Steiner         Patricia L. Torrance
Regina L. Calabrace

Service Officers
--------------------------------------------------------------------------
Thaddeus S. Anderson      Judy A. Hoffer           Elizabeth M. Rosa
Lisa A. Ball              Donald G. Jones          Kristin Rossi
Jennifer L. Battaglia     Lori J. Krise            Roxanne Shadron
Mona R. Birt              Jonna M. Kundla          John H. Sperandio
Terrie L. Bowman          Susan M. Matenkosky      Kimberly A. Stefkovich
Eleanor A. Bridge         William T. McBeth        Sean E. Swansboro
Judith J. Ciocco          Charles H. McDowell      Charles L. Taylor
Karen J. Ciocco           Tiffany D. McMahon       Marilyn A. Tlumach
Kathy S. Claycomb         Florence E. Pevarnik     Kimberly A. Turchek
James V. Conforti         Patricia A. Queer        Cynthia M. Varner
Beth Ann Ferlin           Susan F. Robb            Jodi L. Zyvith
Cynthia A. Fontaine       Susan L. Roebuck
Virginia E. Halucka
[FN]
* also serve as community office manager

<PAGE>

BUSINESS LOCATIONS
-------------------------------------------------------------------------------

Corporate Headquarters      Latrobe                     Murrysville
900 Ligonier Street         900 Ligonier Street         4785 Old William Penn
P.O. Box 429                P.O. Box 429                Highway
Latrobe, PA 15650           Latrobe, PA 15650           P.O. Box 4
724/539-3501                724/539-3501                Murrysville, PA 15668
724/539-2973 (Fax)          724/537-9966 (Fax)          724/733-4888
                                                        724/733-7110 (Fax)
Asset Management and        Lawson Heights
Trust Division              Route 981 at Terry Way      Pleasant Unity
19 North Main Street        P.O. Box 429                Routes 981 and 130
Greensburg, PA 15601        Latrobe, PA 15650           P.O. Box 503
724/836-7670                724/539-9774                Pleasant Unit, PA 15676
724/836-7675 (Fax)          724/539-3523 (Fax)          724/423-5222
                                                        724/423-1155 (Fax)

Courthouse Square           Ligonier                    West Newton
19 North Main Street        201 West Main Street        109 East Main Street
Greensburg, PA 15601        P.O. Box 528                P.O. Box 219
724/836-7699                Ligonier, PA 15668          West Newton, PA 15089
724/836-7675 (Fax)          724/238-9538                724/872-5100
                            724/238-9530 (Fax)          724/872-5143 (Fax)

Eastgate                    Lincoln Road
Georges Station Road        Lincoln Road Shopping Center
P.O. Box 3206               P.O. Box 429
Greensburg, PA 15601        Latrobe, PA 15650
724/836-7600                724/537-9980
724/836-7604 (Fax)          724/537-9982 (Fax)



In addition to the full-service MAC machines located at all Commercial
National Bank offices indicated above (except Latrobe and Courthouse Square),
additional ATMs are available for your 24-hour banking convenience at Arnold
Palmer Regional Airport, Greensburg Kirk Nevin Arena, Latrobe Area Hospital,
New Alexandria Qwik Mart, Norvelt Open Pantry and Saint Vincent College. All
are linked to the national Cirrus, Honor and Plus networks and also accept
MasterCard, Visa, Discover and American Express for cash advances.


TOUCH TONE TELLER 24-hour banking service              WEBSITE
------------------------------------------------------------------------
724/537-9977                                           Further information on
FREE from Blairsville, Derry                           Commercial National Bank
Greensburg, Kecksburg, Latrobe                         of Pennsylvania now is
Ligoner and New Alexandria.                            available at
1-800-803-BANK                                         www.cnbthebank.com
FREE from all other locations.

Insurance
-----------------------------------------------------------------------
Commercial National Insurance Services                 Commercial National
232 North Market Street                                Insurance Services is
Ligonier, PA 15658                                     a partnership of Gooder
724/238-4617                                           & Mary, Inc., and
877/205-4617 (toll free)                               Commercial National
724/238-0160 (fax)                                     Investment Corporation,
srgooder@wpa.net                                       a wholly owned subsidiary
www.cnbinsurance.com                                   of Commercial National
                                                       Financial Corporation.


<PAGE>

Commercial National Financial Corporation
-----------------------------------------------------------------------


Market Makers
------------------------------------------------------------------------
The  following firms have committed to make a market  in  the
stock of Commercial National Financial Corporation. Inquiries
concerning their services should be directed to:

Ferris Baker Watts        Knight Securities             Spear, Leads & Kellogg
100 Light Street          525 Washington Boulevard      10 Exhange Place
Baltimore, MD 21202       Jersey City, NJ 07310         Jersey City, NJ 07302
800-638-7411              800-342-2325                  800-275-9682


FJ Morrissey & Co Inc.    Ryan, Beck & Co.
Suite 1420                740 Broad Street
1700 Market Street        Shrewsbury, NJ 07702
Philadelphia, PA 19103    800-342-2325
800-842-8928




Transfer Agent
-----------------------------------------------------------------------------
Should   you  need  assistance  regarding  changes   in   the
registration   of   certificates   or   in   reporting   lost
certificates please contact:

Commercial National Financial Corporation
Stock Transfer Department
P.O. Box 429
Latrobe, PA 15650
724/537-9923
724/539-1137 (Fax)

More general shareholder inquiries also may be directed to this department.

Form 10-K
-----------------------------------------------------------------------------
The   corporation  will  provide  without   charge   to   any
shareholder a copy of its 1999 Annual Report on Form 10-K  as
required  to  be  filed  with  the  Securities  and  Exchange
Commission. Requests should be made in writing to:

Commercial National Financial Corporation
P.O. Box 429
Latrobe, PA 15650

<PAGE>

(The inside of the back cover is intentionally left blank.)

<PAGE>

(The following appears in the upper left corner of the back cover along
with the corporate logo)

Commercial National Financial Corporation
900 Ligonier Street
P.O. Box 429
Latrobe, PA 15650

<PAGE>