<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _____________to________________

Commission file Number:  0-19028

                               CCFNB BANCORP, INC.
                 (Name of small business issuer in its charter)

PENNSYLVANIA                                              23-2254643
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification Number)

232 East Street, Bloomsburg, Pennsylvania                 17815
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:  (570) 784-4400

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $1.25 per share.

                  Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the past 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
                                                  ---  ---
                  Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

                  The aggregate market value of the voting and non-voting equity
held by non-affiliates of the Registrant based on the average of the bid and
asked prices of $21.25 at February 28, 1999, was $28,743,026.25.

                  As of February 28, 1999, the Registrant had outstanding
1,375,306 shares of its common stock, par value $1.25 per share.

                       DOCUMENTS INCORPORATED BY REFERENCE

                  Portions of the Registrant's 1999 definitive Proxy Statement
are incorporated by reference in Part III of this Annual Report. In addition,
portions of the Annual Report to stockholders of the Registrant for the year
ended December 31, 1998, are incorporated by reference in Part II of this Annual
Report.

                                  Page 1 of 95
                            Exhibit Index on Page 30


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                               CCFNB BANCORP, INC.
                                    FORM 10-K

                                      INDEX

<TABLE>
<CAPTION>
Part                                                                                                 Page
----                                                                                                 ----
<S>                                                                                             <C>
Item 1.       Business........................................................................         3

Item 2.       Properties......................................................................        20

Item 3.       Legal Proceedings...............................................................        20

Item 4.       Submission of Matters to a Vote of Security Holders.............................  Not Applicable

Part II
-------

Item 5.       Market for Registrant's Common Equity and Related Stockholder
                Matters.......................................................................        21

Item 6.       Selected Financial Data.........................................................        23

Item 7.       Management's Discussion and Analysis of Financial Condition
                and Results of Operation......................................................        23

Item 7A.      Quantitative and Qualitative Disclosure About Market Risk.......................        24

Item 8.       Financial Statements and Supplementary Data.....................................        24

Item 9.       Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure......................................................  Not Applicable


Part III

Item 10.      Directors and Executive Officers of the Registrant..............................        24

Item 11.      Executive Compensation..........................................................        26

Item 12.      Security Ownership of Certain Beneficial Owners and Management..................        26

Item 13.      Certain Relationships and Related Transactions..................................        26

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K.................        26

Signatures    ...............................................................................         28

Index to Exhibits.............................................................................        30
</TABLE>


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                               CCFNB BANCORP, INC.
                                    FORM 10-K

                                     PART I

ITEM 1. BUSINESS

                  General

                  CCFNB Bancorp, Inc. ("Bancorp"), a Pennsylvania business
corporation, is a bank holding company, registered with and supervised by the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board").
Bancorp was organized on June 20, 1983, and commenced operations on March 31,
1984. Bancorp has one wholly-owned subsidiary, the Columbia County Farmers
National Bank (the "Bank"). Bancorp's business has consisted primarily of
managing and supervising the Bank, and its principal source of income has been
dividends paid by the Bank. At December 31, 1998, Bancorp had total consolidated
assets, deposits and stockholders' equity of approximately $185 million, $138
million and $23 million, respectively.

                  The Bank was organized in 1917. The Bank is a national banking
association that is a member of the Federal Reserve System and the deposits of
which are insured by the Federal Deposit Insurance Corporation (the "FDIC")
under the Bank Insurance Fund ("BIF"). As of December 31, 1998, the Bank has 6
branch locations, including its main office in Bloomsburg, Pennsylvania. All of
the Bank's offices are located in Columbia County, Pennsylvania. The Bank is a
full service commercial bank providing a wide range of services to individuals
and small to medium sized businesses in its north eastern Pennsylvania market
area, including accepting time, demand, and savings deposits and making secured
and unsecured commercial, real estate and consumer loans. In addition, the Bank
has a trust department.

                  Supervision and Regulation - Bancorp

                  Bancorp is subject to the jurisdiction of the Securities and
Exchange Commission ("SEC") relating to the offering and sale of its securities.
Bancorp is currently subject to the SEC's rules and regulations relating to
periodic reporting, insider trading reports and proxy solicitation material in
accordance with the Securities Exchange Act of 1934 (the "Exchange Act").

                  Bancorp is also subject to the provisions of the Bank Holding
Company Act of 1956, as amended ("Bank Holding Company Act"), and to supervision
by the Federal Reserve Board. The Bank Holding Company Act will require Bancorp
to secure the prior approval of the Federal Reserve Board before it owns or
controls, directly or indirectly, more than 5% of the voting shares of
substantially all of the assets of any institution, including another bank. The
Bank Holding Company Act prohibits acquisition by Bancorp of more than 5% of the
voting shares of, or interest in, or substantially all of the assets of, any
bank located outside Pennsylvania unless such an acquisition is specifically
authorized by laws of the state in which such bank is located.


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                  A bank holding company is prohibited from engaging in or
acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in non-banking activities unless the Federal Reserve Board, by
order or regulation, has found such activities to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto. In
making this determination, the Federal Reserve Board considers whether the
performance of these activities by a bank holding company would offer benefits
to the public that outweigh possible adverse effects.

                  The Bank Holding Company Act also prohibits acquisitions of
control of a bank holding company, such as Bancorp, without prior notice to the
Federal Reserve Board. Control is defined for this purpose as the power,
directly or indirectly, to direct the management or policies of a bank holding
company or to vote twenty-five percent (25%) (or ten percent (10%), if no other
person or persons acting on concert, holds a greater percentage of the Common
Stock) or more of Bancorp's Common Stock.

                  Bancorp is required to file an annual report with the Federal
Reserve Board and any additional information that the Federal Reserve Board may
require pursuant to the Bank Holding Company Act. The Federal Reserve Board may
also make examinations of Bancorp and any or all of its subsidiaries. Subject to
certain exceptions, a bank holding company and its subsidiaries are generally
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit or provision of credit or provision of any property or
services. The so-called "Anti-tie-in" provisions state generally that a bank may
not extend credit, lease, sell property or furnish any service to a customer on
the condition that the customer provide additional credit or service to the
bank, to its bank holding company or to any other subsidiary of its bank holding
company or on the condition that the customer not obtain other credit or service
from a competitor of the bank, its bank holding company or any subsidiary of its
bank holding company.

                  Subsidiary banks of a bank holding company are subject to
certain restrictions imposed by the Federal Reserve Act on any extensions of
credit to the bank holding company or any of its subsidiaries, on investments in
the stock or other securities of the bank holding company and on taking of such
stock or securities as collateral for loans to any borrower.

                  Permitted Non-Banking Activities

                  The Federal Reserve Board permits bank holding companies or
their subsidiaries to engage in nonbanking activities so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
While the types of permissible activities are subject to change by the Federal
Reserve Board, the principal nonbanking activities that presently may be
conducted by a bank holding company or its subsidiary without prior approval of
the Federal Reserve Board are:

                  (1) Extending credit and servicing loans. Making, acquiring,
brokering, or servicing loans or other extensions of credit (including
factoring, issuing letters of credit and accepting drafts) for the company's
account or for the account of others.


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                  (2) Activities related to extending credit. Any activity usual
in connection with making, acquiring, brokering or servicing loans or other
extensions of credit, as determined by the Federal Reserve Board. The Federal
Reserve Board has determined that the following activities are usual in
connection with making, acquiring, brokering or servicing loans or other
extensions of credit:

                           (i)   Real estate and personal property appraising.
         Performing appraisals of real estate and tangible and intangible
         personal property, including securities.

                           (ii)  Arranging commercial real estate equity
         financing. Acting as intermediary for the financing of commercial or
         industrial income-producing real estate by arranging for the transfer
         of the title, control, and risk of such a real estate project to one or
         more investors, if the bank holding company and its affiliates do not
         have an interest in, or participate in managing or developing, a real
         estate project for which it arranges equity financing, and do not
         promote or sponsor the development of the property.

                           (iii) Check-guaranty services. Authorizing a
         subscribing merchant to accept personal checks tendered by the
         merchant's customers in payment for goods and services, and purchasing
         from the merchant validly authorized checks that are subsequently
         dishonored.

                           (iv)  Collection agency services. Collecting overdue
         accounts receivable, either retail or commercial.

                           (v)   Credit bureau services. Maintaining information
         related to the credit history of consumers and providing the
         information to a credit grantor who is considering a borrower's
         application for credit or who has extended credit to the borrower.

                           (vi)  Asset management, servicing, and collection
         activities. Engaging under contract with a third party in asset
         management, servicing, and collection of assets of a type that an
         insured depository institution may originate and own, if the company
         does not engage in real property management or real estate brokerage
         services as part of these services.

                           (vii) Acquiring debt in default. Acquiring debt that
         is in default at the time of acquisition under certain conditions.

                           (viii) Real estate settlement servicing. Providing
real estate settlement services.

                  (3) Leasing personal or real property. Leasing personal or
real property or acting as agent, broker, or adviser in leasing such property
under certain conditions.



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                  (4) Operating nonbank depository institutions:

                           (i)  Industrial banking. Owning, controlling, or
         operating an industrial bank, Morris Plan bank, or industrial loan
         company, so long as the institution is not a bank.

                           (ii) Operating savings association. Owning,
         controlling or operating a savings association, if the savings
         association engages only in deposit-taking activities, lending, and
         other activities that are permissible for bank holding companies.

                  (5) Trust company functions. Performing functions or
activities that may be performed by a trust company (including activities of a
fiduciary, agency, or custodial nature), in the manner authorized by federal or
state law, so long as the company is not a bank for purposes of the Bank Holding
Company Act.

                  (6) Financial and investment advisory activities. Acting as
investment or financial advisor to any person, including (without, in any way,
limiting the foregoing):

                           (i)   Serving as investment adviser (as defined in
         section 2(a)(20) of the Investment Company Act of 1940, 15 U.S.C.
         80a-2(a)(20)), to an investment company registered under that act,
         including sponsoring, organizing, and managing a closed-end investment
         company;

                           (ii)  Furnishing general economic information and
         advice, general economic statistical forecasting services, and industry
         studies;

                           (iii) Providing advice in connection with mergers,
         acquisitions, divestitures, investments, joint ventures, leveraged
         buyouts, recapitalizations, capital structurings, financing
         transactions and similar transactions, and conducting financial
         feasibility studies;

                           (iv)  Providing information, statistical forecasting,
         and advice with respect to any transaction in foreign exchange, swaps,
         and similar transactions, commodities, and any forward contract,
         option, future, option on a future, and similar instruments;

                           (v)   Providing educational courses, and 
         instructional materials to consumers on individual financial management
         matters; and

                           (vi)  Providing tax-planning and tax-preparation
         services to any person.

                  (7) Agency transactional services for customer investments:

                           (i)   Securities brokerage. Providing securities
         brokerage services (including securities clearing and/or securities
         execution services on an exchange), whether alone or in combination
         with investment advisory services, and incidental activities (including
         related securities credit activities and custodial services), if the


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         securities brokerage services are restricted to buying and selling
         securities solely as agent for the account of customers and do not
         include securities underwriting or dealing.

                           (ii)  Riskless principal transactions. Buying and
         selling in the secondary market all types of securities on the order of
         customers as a "riskless principal" to the extent of engaging in a
         transaction in which the company, after receiving an order to buy (or
         sell) a security from a customer, purchases (or sells) the security for
         its own account to offset a contemporaneous sale to (or purchase from)
         the customer. This does not include:

                                    (A) Selling bank-ineligible securities at
                  the order of a customer that is the issuer of the securities,
                  or selling bank-ineligible securities in any transaction where
                  the company has a contractual agreement to place the
                  securities as agent of the issuer; or

                                    (B) Acting as a riskless principal in any
                  transaction involving a bank-ineligible security for which the
                  company or any of its affiliates acts as underwriter (during
                  the period of the underwriting or for 30 days thereafter) or
                  dealer.

                           (iii) Private placement services. Acting as agent for
         the private placement of securities in accordance with the requirements
         of the Securities Act of 1933 ("1933 Act") and the rules of the
         Securities and Exchange Commission, if the company engaged in the
         activity does not purchase or repurchase for its own account the
         securities being placed, or hold in inventory unsold portions of issues
         of these securities.

                           (iv)  Futures commission merchant. Acting as a 
         futures commission merchant ("FCM") for unaffiliated persons in the 
         execution, clearance, or execution and clearance of any futures 
         contract and option on a futures contract traded on an exchange in the
         United States or abroad under certain conditions.

                           (v)   Other transactional services. Providing to
         customers as agent transactional services with respect to swaps and
         similar transactions.

                  (8) Investment transactions as principal:

                           (i)  Underwriting and dealing in government
         obligations and money market instruments. Underwriting and dealing in
         obligations of the United States, general obligations of states and
         their political subdivisions, and other obligations that state member
         banks of the Federal Reserve System may be authorized to underwrite and
         deal in under 12 U.S.C. 24 and 335, including banker's acceptances and
         certificates of deposit, under the same limitations as would be
         applicable if the activity were performed by the bank holding company's
         subsidiary member banks or its subsidiary nonmember banks as if they
         were member banks.

                           (ii) Investing and trading activities. Engaging as
         principal in:


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                                    (A) Foreign exchange;

                                    (B) Forward contracts, options, futures,
                  options on futures, swaps, and similar contracts, whether
                  traded on exchanges or not, based on any rate, price,
                  financial asset (including gold, silver, platinum, palladium,
                  copper, or any other metal approved by the Board),
                  nonfinancial asset, or group of assets, other than a
                  bank-ineligible security under certain conditions.

                                    (C) Forward contracts, options, futures,
                  options on futures, swaps, and similar contracts, whether
                  traded on exchanges or not, based on an index of a rate, a
                  price, or the value of any financial asset, nonfinancial
                  asset, or group of assets, if the contract requires such
                  settlement.

                           (iii) Buying and selling bullion, and related
         activities. Buying, selling and storing bars, rounds, bullion, and
         coins of gold, silver, platinum, palladium, copper, and any other metal
         approved by the Federal Reserve Board, for the company's own account
         and the account of others, and providing incidental services such as
         arranging for storage, safe custody, assaying, and shipment.

                  (9) Management consulting and counseling activities:

                           (i)   Management consulting. Providing management
         consulting advice under certain conditions.

                           (ii)  Employee benefits consulting services. 
         Providing consulting services to employee benefit, compensation and
         insurance plans, including designing plans, assisting in the
         implementation of plans, providing administrative services to plans,
         and developing employee communication programs for plans.

                           (iii) Career counseling services. Providing career
         counseling services to: 


                                    (A) A financial organization and individuals
                  currently employed by, or recently displaced from, a financial
                  organization;

                                    (B) Individuals who are seeking employment
                  at a financial organization; and

                                    (C) Individuals who are currently employed
                  in or who seek positions in the finance, accounting, and audit
                  departments of any company.

                  (10) Support services:

                           (i)   Courier services. Providing courier services 
         for:

                                    (A) Checks, commercial papers, documents,
                  and written instruments (excluding currency or bearer-type
                  negotiable instruments) that are exchanged among banks and
                  financial institutions; and



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                                    (B) Audit and accounting media of a banking
                  or financial nature and other business records and documents
                  used in processing such media.

                           (ii)  Printing and selling MICR-encoded items.
         Printing and selling checks and related documents, including corporate
         image checks, cash tickets, voucher checks, deposit slips, savings
         withdrawal packages, and other forms that require Magnetic Ink
         Character Recognition ("MICR") encoding.

                  (11) Insurance agency and underwriting:

                           (i)   Credit insurance. Acting as principal, agent, 
         or broker for insurance (including home mortgage redemption insurance)
         that is:

                                    (A) Directly related to an extension of
                  credit by the bank holding company or any of its subsidiaries;
                  and

                                    (B) Limited to ensuring the repayment of the
                  outstanding balance due on the extension of credit in the
                  event of the death, disability, or involuntary unemployment of
                  the debtor.

                           (ii)  Finance company subsidiary. Acting as agent or
         broker for insurance directly related to an extension of credit by a
         finance company that is a subsidiary of a bank holding company under
         certain conditions.

                           (iii) Insurance in small towns. Engaging in any
         insurance agency activity in a place where the bank holding company or
         a subsidiary of the bank holding company has a lending office and that:

                                    (A) Has a population not exceeding 5,000 (as
                  shown in the preceding decennial census); or

                                    (B) Has inadequate insurance agency
                  facilities, as determined by the Federal Reserve Board, after
                  notice and opportunity for hearing.

                           (iv)  Insurance-agency activities conducted on May 1,
         1982. Under certain restrictions, engaging in any specific
         insurance-agency activity if the bank holding company, or subsidiary
         conducting the specific activity, conducted such activity on May 1,
         1982, or received the Federal Reserve Board approval to conduct such
         activity on or before May 1, 1982.

                           (v)   Supervision of retail insurance agents.
         Supervising on behalf of insurance underwriters the activities of
         retail insurance agents who sell:

                                    (A) Fidelity insurance and property and
                  casualty insurance on the real and personal property used in
                  the operations of the bank holding company or its
                  subsidiaries; and


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                                    (B) Group insurance that protects the
                  employees of the bank holding company or its subsidiaries.

                           (vi)  Small bank holding companies. Engaging in any
         insurance-agency activity if the bank holding company has total
         consolidated assets of $50 million or less.

                           (v)   Insurance-agency activities conducted before
         1971. Engaging in any insurance-agency activity performed at any
         location in the United States directly or indirectly by a bank holding
         company that was engaged in insurance-agency activities prior to
         January 1, 1971, as a consequence of approval by the Federal Reserve
         Board prior to January 1, 1971.

                  (12) Community development activities:

                           (i)   Financing and investment activities. Making
         equity and debt investments in corporations or projects designed
         primarily to promote community welfare, such as the economic
         rehabilitation and development of low-income areas by providing
         housing, services, or jobs for residents.

                           (ii)  Advisory activities. Providing advisory and
         related services for programs designed primarily to promote community
         welfare.

                  (13) Money orders, savings bonds, and traveler's checks. The
issuance and sale at retail of money orders and similar consumer-type payment
instruments; the sale of U.S. savings bonds; and the issuance and sale of
traveler's checks.

                  (14) Data processing. Providing data processing and data
processing and data transmission services, facilities (including data processing
and data transmission hardware, software, documentation, or operating
personnel), data bases, advice, and access to such services, facilities, or data
bases by any technological means under certain conditions.

                  Pennsylvania Banking Law

                  Under the Pennsylvania Banking Code of 1965, as amended (the
"Code"), Bancorp is permitted to control an unlimited number of banks. However,
Bancorp would be required, under the Bank Holding Company Act, to obtain the
prior approval of the Federal Reserve Board before it could acquire all or
substantially all of the assets of any bank, or acquire ownership or control of
any voting shares of any bank other than the Bank, if, after such acquisition,
it would own or control more than five percent (5%) of the voting shares of such
bank.

                  Interstate Banking and Branching

                  The Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Banking Law"), amended various federal banking laws
to provide for nationwide interstate banking, interstate bank mergers and
interstate branching. The interstate banking 



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provisions allow for the acquisition by a bank holding company of a bank located
in another state.

                  Interstate bank mergers and branch purchase and assumption
transactions were allowed effective June 1, 1997; however, states may "opt-out"
of the merger and purchase and assumption provisions by enacting a law which
specifically prohibits such interstate transactions. States could, in the
alternative, enact legislation to allow interstate merger and purchase and
assumption transactions prior to June 1, 1997. States could also enact
legislation to allow for de novo interstate branching of out-of-state banks.
Pennsylvania adopted "opt-in" legislation which allows such transactions.

                  As of the filing date of this report, Bancorp and the Bank
have no plans to engage in interstate banking or branching.

                  Legislation and Regulatory Changes

                  From time to time, legislation is enacted which has the effect
of increasing the cost of doing business, limiting or expanding permissible
activities or affecting the competitive balance between banks and other
financial institutions. Proposals to change the laws and regulations governing
the operations and taxation of banks, bank holding companies and other financial
institutions are frequently made in Congress, and before various bank regulatory
agencies. No prediction can be made as to the likelihood of any major changes or
the impact such changes might have on Bancorp and its subsidiary bank. Certain
changes of potential significance to Bancorp which have been enacted or
promulgated, as the case may be, by Congress or various regulatory agencies,
respectively, are discussed below.

                  Financial Institutions Reform, Recovery and Enforcement Act of
                  1989 ("FIRREA")

                  On August 9, 1989, major reform and financing legislation,
i.e., FIRREA, was enacted into law in order to restructure the regulation of the
thrift industry, to address the financial condition of the Federal Savings and
Loan Insurance Corporation and to enhance the supervisory and enforcement powers
of the Federal bank and thrift regulatory agencies. The Office of the
Comptroller of the Currency ("OCC"), as the primary Federal regulator of the
Bank, is primarily responsible for supervision of the Bank. The OCC and FDIC
have far greater flexibility to impose supervisory agreements on an institution
that fails to comply with its regulatory requirements, particularly with respect
to the capital requirements. Possible enforcement actions include the imposition
of a capital plan, termination of deposit insurance and removal or temporary
suspension of an officer, director or other institution-affiliated party.

                  Under FIRREA, civil penalties are classified into three
levels, with amounts increasing with the severity of the violation. The first
tier provides for civil penalties of up to $5,000 per day for any violation of
law or regulation. A civil penalty of up to $25,000 per day may be assessed if
more than a minimal loss or a pattern of misconduct is involved. Finally, a
civil penalty of up to $1.0 million per day may be assessed for knowingly or
recklessly causing a substantial loss to an institution or taking action that
results in a substantial pecuniary gain or other benefit. Criminal penalties are
increased to $1.0 million per violation, up to $5.0 million 



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for continuing violations or for the actual amount of gain or loss. These
monetary penalties may be combined with prison sentences for up to five years.

                  Federal Deposit Insurance Corporation Improvement Act of 1991
                  ("FDICIA")

                  General. The FDICIA reformed a variety of bank regulatory
laws. Certain of these provisions are discussed below.

                  Examinations and Audits. Annual full-scope, on-site
examinations are required for all FDIC-insured institutions with assets of $500
million or more. For bank holding companies with $500 million or more in assets,
the independent accountants of such companies shall attest to the accuracy of
management's report. Such accountants shall also monitor management's compliance
with governing laws and regulations. Such companies are also required to select
an independent audit committee composed of outside directors who are independent
of management, to review with management and the independent accountants the
reports that must be submitted to the appropriate bank regulatory agencies. If
the independent accountants resign or are dismissed, written notification must
be given to the FDIC and to the appropriate federal and state bank regulatory
agency.

                  Prompt Corrective Action. In order to reduce losses to the
deposit insurance funds, the FDICIA established a format to more closely monitor
FDIC-insured institutions and to enable prompt corrective action by the
appropriate federal supervisory agency if an institution begins to experience
any difficulty. The FDICIA established five "Capital" categories. They are: (1)
well-capitalized; (2) adequately capitalized; (3) undercapitalized; (4)
significantly undercapitalized; and (5) critically undercapitalized. The overall
goal of these new capital measures is to impose more scrutiny and operational
restrictions on depository institutions as they descend the capital categories
from well capitalized to critically undercapitalized.

                  The FDIC, the OCC, the Federal Reserve Board and the Office of
Thrift Supervision have issued jointly final regulations relating to these
capital categories and prompt corrective action. These capital measures for
prompt corrective action are defined as follows:

                  A "well-capitalized" institution would be one that has at
least a 10% total risk-based capital ratio, a 6% or greater Tier I risk-based
capital ratio, a 5% or greater Tier I leverage capital ratio, and is not subject
to any written order or final directive by the FDIC to meet and maintain a
specific capital level.

                  An "adequately capitalized" institution would be one that
meets the required minimum capital levels, but does not meet the definition of a
"well-capitalized" institution. The existing capital rules generally require
banks to maintain a Tier I leverage capital ratio of at least 4% and an 8% or
greater total risk-based capital ratio. Since the risk-based standards also
require at least half of the total risk-based capital requirement to be in the
form of Tier I capital, this also will mean that an institution would need to
maintain at least a 4% Tier I risk-based capital ratio. Thus, an institution
would need to meet each of the required minimum capital levels in order to be
deemed "adequately capitalized."



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                  An "undercapitalized" institution would fail to meet one or
more of the required minimum capital levels for an "adequately capitalized"
institution. An "undercapitalized" institution must file a capital restoration
plan and is automatically subject to restrictions on dividends, management fees
and asset growth. In addition, the institution is prohibited from making
acquisitions, opening new branches or engaging in new lines of business without
the prior approval of its primary federal regulator. A number of other
discretionary restrictions also may be imposed on a case-by-case basis, and
harsher restrictions that otherwise would apply to "significantly
undercapitalized" institutions may be imposed on an "undercapitalized"
institution that fails to file or implement an acceptable capital restoration
plan.

                  A "significantly undercapitalized" institution would have a
total risk-based capital ratio of less than 6%, a Tier I risk-based capital
ratio of less than 3%, or a Tier I leverage capital ratio of less than 3%, as
the case may be. Institutions in this category would be subject to all the
restrictions that apply to "undercapitalized" institutions. Certain other
mandatory prohibitions also would apply, such as restrictions against the
payment of bonuses or raises to senior executive officers without the prior
approval of the institution's primary federal regulator. A number of other
restrictions may be imposed.

                  A "critically undercapitalized" institution would be one with
a tangible equity (Tier I capital) ratio of 2% or less. In addition to the same
restrictions and prohibitions that apply to "undercapitalized" and
"significantly undercapitalized" institutions, the FDIC's rule implementing this
provision of FDICIA also addresses certain other provisions for which the FDIC
has been accorded responsibility as the insurer of depository institutions. At a
minimum, any institution that becomes "critically undercapitalized" is
prohibited from taking the following actions without the prior written approval
of its primary federal supervisory agency: engaging in any material transactions
other than in the usual course of business; extending credit for highly
leveraged transactions ("HLTs"); amending its charter or bylaws; making any
material changes in accounting methods; engaging in certain transactions with
affiliates; paying excessive compensation or bonuses; and paying interest on
liabilities exceeding the prevailing rates in the institution's market area. In
addition, a "critically undercapitalized" institution is prohibited from paying
interest or principal on its subordinated debt and is subject to being placed in
conservatorship or receivership if its tangible equity capital level is not
increased within certain mandated time frames.

                  At any time, an institution's primary federal supervisory
agency may reclassify it into a lower capital category. All institutions are
prohibited from declaring any dividends, making any other capital distribution,
or paying a management fee if it would result in downward movement into any of
the three undercapitalized categories. The FDICIA provides an exception to this
requirement for stock redemptions that do not lower an institution's capital and
would improve its financial condition, if the appropriate federal supervisory
agency has consulted with the FDIC and approved the redemption.

                  The regulation requires institutions to notify the FDIC
following any material event that would cause such institution to be placed in a
lower category. Additionally, the FDIC monitors capital levels through call
reports and examination reports.



                                       13
<PAGE>   14



                  Real Estate Lending Standards. Pursuant to the FDICIA, the OCC
and other federal banking agencies adopted real estate lending guidelines which
would set loan-to-value ("LTV") ratios for different types of real estate loans.
A LTV ratio is generally defined as the total loan amount divided by the
appraised value of the property at the time the loan is originated. If the
institution does not hold a first lien position, the total loan amount would be
combined with the amount of all senior liens when calculating the ratio. In
addition to establishing the LTV ratios, the guidelines require all real estate
loans to be based upon proper loan documentation and a recent appraisal of the
property.

                  Bank Enterprise Act of 1991. Within the overall FDICIA is a
separate subtitle called the "Bank Enterprise Act of 1991." The purpose of this
Act is to encourage banking institutions to establish "basic transaction
services for consumers" or so-called "lifeline accounts." The FDIC assessment
rate is reduced for all lifeline depository accounts. This Act establishes ten
(10) factors which are the minimum requirements to qualify as a lifeline
depository account. Some of these factors relate to minimum opening and balance
amounts, minimum number of monthly withdrawals, the absence of discriminatory
practices against low-income individuals and minimum service charges and fees.
Moreover, the Housing and Community Development Act of 1972 requires that the
FDIC's risk-based assessment system include provisions regarding life-line
accounts. Assessment rates applicable to life-line accounts are to be
established by FDIC rule.

                  Truth in Savings Act. The FDICIA also contains the Truth in
Savings Act ("TSA"). The Federal Reserve Board has adopted regulations
("Regulation DD") under the TSA. The purpose of TSA is to require the clear and
uniform disclosure of the rates of interest which are payable on deposit
accounts by depository institutions and the fees that are assessable against
deposit accounts, so that consumers can make a meaningful comparison between the
competing claims of banks with regard to deposit accounts and products. In
addition to disclosures to be provided when a customer establishes a deposit
account, TSA requires the depository institution to include, in a clear and
conspicuous manner, the following information with each periodic statement of a
deposit account: (1) the annual percentage yield earned; (2) the amount of
interest earned; (3) the amount of any fees and charges imposed; and (4) the
number of days in the reporting period. TSA allows for civil lawsuits to be
initiated by customers if the depository institution violates any provision or
regulation under TSA.

                  FDIC Insurance Assessments

                  The FDIC has implemented a risk-related premium schedule for
all insured depository institutions that results in the assessment of premiums
based on capital and supervisory measures.

                  Under the risk-related premium schedule, the FDIC, on a
semiannual basis, assigns each institution to one of three capital groups (well
capitalized, adequately capitalized or under capitalized) and further assigns
such institution to one of three subgroups within a capital group corresponding
to the FDIC's judgment of the institution's strength based on supervisory
evaluations, including examination reports, statistical analysis and other
information relevant to gauging the risk posed by the institution. Only
institutions with a total capital to risk-adjusted 


                                       14
<PAGE>   15


assets ratio of 10.0% or greater, a Tier 1 capital to risk-adjusted assets ratio
of 6.0% or greater and a Tier 1 leverage ratio of 5.0% or greater, are assigned
to the well-capitalized group.

                  Over the last two years, FDIC insurance assessments have seen
several changes for both BIF and SAIF institutions. The most recent change
occurred on September 30, 1996, when the President signed into law a bill
designed to remedy the disparity between BIF and SAIF deposit premiums. The
first part of the bill called for the SAIF to be capitalized by a one-time
assessment on all SAIF insured deposits held as of March 31, 1995. This
assessment, which was 65.7 cents per $100 in deposits, raised approximately $4.7
billion to bring the SAIF up to is required 1.25 reserve ratio. This special
assessment, paid in 1996, had no effect on the Bank. The second part of the bill
remedied the future anticipated shortfall with respect to the payment of FICO
interest. For 1997 through 1999, the banking industry will help pay the FICO
interest payments at an assessment rate that is one-fifth the rate paid by
thrifts. The FICO assessment on BIF insured deposits is 1.29 cents per $100 in
deposits; for SAIF insured deposits it is 6.44 cents per $100 in deposits.
Beginning January 1, 2000, the FICO interest payments will be paid pro-rata by
banks and thrifts based on deposits. At December 31, 1998, the FICO interest
assessment paid by the Bank was approximately $18,000. The Bank has not been
required to pay any FDIC insurance assessments since the fourth quarter of 1996
because BIF has met its statutorily required ratios and the Bank is categorized
as "well capitalized."

                  Regulatory Capital Requirements

                  The following table presents Bancorp's consolidated capital
ratios at December 31, 1998.

<TABLE>
<CAPTION>
                                                                  (In Thousands)
<S>                                                                 <C>     
Tier I Capital...................................................   $ 23,012
Tier II Capital..................................................   $    955
                                                                    --------
Total Capital....................................................   $ 23,967
                                                                    ========

Adjusted Total Average Assets....................................   $177,643
Total Adjusted Risk-Weighted Assets(1)...........................   $109,947

Tier I Risk-Based Capital Ratio(2)...............................      20.93%
Required Tier I Risk-Based Capital Ratio.........................       4.00%
Excess Tier I Risk-Based Capital Ratio...........................      16.93%

Total Risk-Based Capital Ratio(3)................................      21.80%
Required Total Risk-Based Capital Ratio..........................       8.00%
Excess Total Risk-Based Capital Ratio............................      13.80%

Tier I Leverage Ratio(4).........................................      12.57%
Required Tier I Leverage Ratio...................................       3.00%
Excess Tier I Leverage Ratio.....................................       9.57%
</TABLE>

------------------------------

(1) Includes off-balance sheet items at credit-equivalent values less intangible
    assets.
(2) Tier I Risk-Based Capital Ratio is defined as the ratio of Tier I Capital to
    Total Adjusted Risk-Weighted Assets.
(3) Total Risk-Based Capital Ratio is defined as the ratio of Tier I and Tier II
    Capital to Total Adjusted Risk-Weighted Assets.
(4) Tier I Leverage Ratio is defined as the ratio of Tier I Capital to Adjusted
    Total Average Assets.


                                       15
<PAGE>   16



                  Bancorp's ability to maintain the required levels of capital
is substantially dependent upon the success of Bancorp's capital and business
plans; the impact of future economic events on Bancorp's loan customers; and
Bancorp's ability to manage its interest rate risk and investment portfolio and
control its growth and other operating expenses.

                  Effect of Government Monetary Policies

                  The earnings of Bancorp are and will be affected by domestic
economic conditions and the monetary and fiscal policies of the United States
government and its agencies.

                  The monetary policies of the Federal Reserve Board have had,
and will likely continue to have, an important impact on the operating results
of commercial banks through its power to implement national monetary policy in
order, among other things, to curb inflation or combat a recession. The Federal
Reserve Board has a major effect upon the levels of bank loans, investments and
deposits through its open market operations in United States government
securities and through its regulations of, among other things, the discount rate
on borrowings of member banks and the reserve requirements against member bank
deposits. It is not possible to predict the nature and impact of future changes
in monetary and fiscal policies.

                  History and Business - Bank

                  The Bank's legal headquarters are located at 232 East Street,
Bloomsburg, Pennsylvania.

                  As of December 31, 1998, the Bank had total assets of $185
million, total shareholders' equity of $23 million and total deposits and other
liabilities of $162 million.

                  The Bank is a community bank which seeks to provide personal
attention and professional financial assistance to its customers. The Bank is a
locally managed and locally oriented financial institution established to serve
the needs of individuals and small and medium-sized businesses. The Bank's
business philosophy includes offering direct access to its President and other
officers and providing friendly, informed and courteous service, local and
timely decision making, flexible and reasonable operating procedures, and
consistently-applied credit policies.

                  The Bank is a full-service commercial bank offering a range of
commercial and retail banking services to its clients. These include personal
and business checking and savings accounts, certificates of deposit, and
mortgage, home equity and commercial loans. In addition, the Bank provides safe
deposit boxes, traveler's checks, wire transfers of funds, and certain personal,
corporate and pension trust services. The Bank is a member of the MAC system and
provides clients with access to this automated teller machine network. The Bank
also makes credit cards available to its customers. In addition, the Bank has a
trust department that provides traditional fiduciary services to its clients.



                                       16
<PAGE>   17


                  The Bank solicits small and medium-sized businesses located
primarily within the Bank's market area that typically borrow in the $25,000 to
$1.0 million range. In the event that certain loan requests may exceed the
Bank's lending limit to any one customer, the Bank seeks to arrange such loans
on a participation basis with other financial institutions.

                  Market Area

                  The Bank's primary market area is Columbia County, a 484
square mile area located in north eastern Pennsylvania with a population of
approximately 63,200 based on 1990 census data. The Town of Bloomsburg is the
County's largest municipality and its center of industry and commerce.
Bloomsburg has a population of approximately 12,400 based on 1990 census data,
and is the county seat. Berwick, located on the eastern boundary of the County,
is the second largest municipality, with a 1990 population of approximately
11,000. The Bank currently serves its market area through 6 branch offices
located in Bloomsburg, Benton, Lightstreet, Millville, Orangeville and South
Centre, Columbia County.

                  The Bank competes with six other commercial banks and two
thrift institutions in Columbia County. The Bank's major competitors are: First
National Bank of Berwick; PNC Bank, N.A., the largest commercial bank
headquartered in Pennsylvania; and First Columbia Bank and Trust Company of
Bloomsburg, Pennsylvania. Both PNC Bank, N.A. and First National Bank of Berwick
have greater financial resources than the Bank.

                  The Bank's extended market area includes the adjacent
Pennsylvania counties of Luzerne, Montour, Northumberland, Schuylkill and
Sullivan.

                  Supervision and Regulation - Bank

                  The operations of the Bank are subject to federal and state
statutes applicable to banks chartered under the banking laws of the United
States, to members of the Federal Reserve System and to banks whose deposits are
insured by the FDIC. Bank operations are also subject to regulations of the OCC,
the Federal Reserve Board and the FDIC.

                  The primary supervisory authority of the Bank is the OCC, that
regularly examines the Bank. The OCC has the authority under the Financial
Institutions Supervisory Act to prevent a national bank from engaging in an
unsafe or unsound practice in conducting its business.

                  Federal and state banking laws and regulations govern, among
other things, the scope of a bank's business, the investments a bank may make,
the reserves against deposits a bank must maintain, loans a bank makes and
collateral it takes, the activities of a bank with respect to mergers and
consolidations and the establishment of branches. All banks in Pennsylvania are
permitted to maintain branch offices in any county of the state. Branches of
national banks may be established only after approval by the OCC. The OCC is
required to grant approval only if it finds that there is a need for banking
services or facilities such as are contemplated by the proposed branch. The OCC
may disapprove the application if the bank does not have the capital and surplus
deemed necessary by the OCC, or if the application relates to the establishment
of a branch in a county contiguous to the county in which the applicant's
principal 



                                       17
<PAGE>   18

place of business is located, and another banking institution that has its
principal place of business in the county in which the proposed branch would be
located, has in good faith, notified the OCC of its intention to establish a
branch in the same municipal location in which the proposed branch would be
located.

                  Multi-bank holding companies are permitted in Pennsylvania
within certain limitations. See sections entitled "Pennsylvania Banking Law" and
"Interstate Banking and Branching."

                  A subsidiary bank of a bank holding company is subject to
certain restrictions imposed by the Federal Reserve Act on any extensions of
credit to the bank holding company or its subsidiaries, on investments in the
stock or other securities of the bank holding company or its subsidiaries and on
taking such stock or securities as collateral for loans. The Federal Reserve Act
and Federal Reserve Board regulations also place certain limitations and
reporting requirements on extensions of credit by a bank to principal
shareholders of its parent holding company, among others, and to related
interests of such principal shareholders. In addition, such legislation and
regulations may affect the terms upon which any person becoming a principal
shareholder of a holding company may obtain credit from banks with which the
subsidiary bank maintains a correspondent relationship.

                  Federal law also prohibits acquisitions of control of a bank
holding company without prior notice to certain federal bank regulators. Control
is defined for this purpose as the power, directly or indirectly, to influence
the management or policies of the bank or bank holding company or to vote
twenty-five percent (25%) or more of any class of voting securities of the bank
holding company.

                  From time to time, various types of federal and state
legislation have been proposed that could result in additional regulations of,
and restrictions on, the business of the Bank. It cannot be predicted whether
any such legislation will be adopted or how such legislation would affect the
business of the Bank. As a consequence of the extensive regulation of commercial
banking activities in the United States, the Bank's business is particularly
susceptible to being affected by federal legislation and regulations that may
increase the costs of doing business.

                  Under the Federal Deposit Insurance Act, the OCC possesses the
power to prohibit institutions regulated by it (such as the Bank) from engaging
in any activity that would be an unsafe and unsound banking practice and in
violation of the law. Moreover, the Financial Institutions and Interest Rate
Control Act of 1987 ("FIRA") generally expands the circumstances under which
officers or directors of a bank may be removed by the institution's federal
supervisory agency; restricts lending by a bank to its executive officers,
directors, principal shareholders or related interests thereof; restricts
management personnel of a bank from serving as directors in other management
positions with certain depository institutions whose assets exceed a specified
amount or which have an office within a specified geographic area; and restricts
management personnel from borrowing from another institution that has a
correspondent relationship with their bank. Additionally, FIRA requires that no
person may acquire control of a bank unless the appropriate federal supervisory
agency has been given 60-days prior written 


                                       18
<PAGE>   19


notice and within that time has not disapproved the acquisition or extended the
period for disapproval.

                  Under the Bank Secrecy Act ("BSA"), the Bank is required to
report to the Internal Revenue Service currency transactions of more than
$10,000 or multiple transactions of which the Bank is aware in any one day that
aggregate in excess of $10,000. Civil and criminal penalties are provided under
the BSA for failure to file a required report, for failure to supply information
required by the BSA or for filing a false or fraudulent report.

                  The Garn-St Germain Depository Institutions Act of 1982 ("1982
Act"), removes certain restrictions on the lending powers and liberalizes the
depository abilities of the Bank. The 1982 Act also amends FIRA (see above) by
eliminating certain statutory limits on lending of a bank to its executive
officers, directors, principal shareholders or related interests thereof and by
relaxing certain reporting requirements. However, the 1982 Act strengthened FIRA
provisions respecting management interlocks and correspondent bank relationships
by management personnel.

                  Community Reinvestment Act

                  The Community Reinvestment Act of 1977, as amended (the
"CRA"), and the regulations promulgated to implement the CRA are designed to
create a system for bank regulatory agencies to evaluate a depository
institution's record in meeting the credit needs of its community. Until May
1995, a depository institution was evaluated for CRA compliance based upon 12
assessment factors.

                  The CRA regulations were completely revised as of May 4, 1995,
to establish new performance-based standards for use in examining a depository
institution's compliance with the CRA (the "revised CRA regulations"). The
revised CRA regulations establish new tests for evaluating both small and large
depository institutions' investment in the community. A "small bank" is defined
as a bank which has total assets of less than $250 million and is independent or
is an affiliate of a holding company with less than $1 billion in assets.
Pursuant to the revised CRA regulations, a depository institution which
qualifies as a "small bank" will be examined under a streamlined procedure which
emphasizes lending activities.

                  A large retail institution is one which does not meet the
"small bank" definition, above. A large retail institution can be evaluated
under one of two tests: (1) a three-part test evaluating the institution's
lending, service and investment performance; or (2) a "strategic plan" designed
by the institution with community involvement and approved by the appropriate
federal bank regulator. A large institution must choose one of these options
prior to July 1997, but may opt to be examined under one of these two options
prior to that time.

                  In addition, the revised CRA regulations include separate
rules regarding the manner in which "wholesale banks" and "limited purpose
banks" will be evaluated for compliance.

                  For the purposes of the revised CRA regulations, the Bank is
deemed to be a "small bank," based upon financial information as of December 31,
1998. Therefore, the Bank 


                                       19
<PAGE>   20


will be evaluated for CRA compliance using the streamlined procedures for a
small bank. The Bank received a "satisfactory" rating in 1997.

                  Concentration

                  Bancorp and the Bank are not dependent for deposits nor
exposed by loan concentrations to a single customer or to a small group of
customers the loss of any one or more of which would have a materially adverse
effect on the financial condition of Bancorp or the Bank.

ITEM 2. PROPERTIES

                  Bancorp owns no property other than through the Bank as
follows:


<TABLE>
<CAPTION>
                                               Type of             Square
   Property            Location               Ownership            Footage              Use
   --------            --------               ---------            -------              ---
   <S>              <C>                       <C>                  <C>            <C>
      1             Orangeville, PA             Owned               2,259         Banking services.
      2             Benton, PA                  Owned               4,672         Banking services.
      3             South Centre, PA            Owned               3,868         Banking services.
      4             Bloomsburg, PA              Owned              11,686         Banking services.
      5             Scott Township, PA          Owned              16,500         Banking services, corporate,
                                                                                  credit and operations.
      6             Millville, PA               Owned               2,520         Banking services.
</TABLE>


                  It is management's opinion that the facilities currently
utilized are suitable and adequate for current and immediate future purposes.

ITEM 3. LEGAL PROCEEDINGS

                  General

                  The nature of Bancorp's and the Bank's business generates a
certain amount of litigation involving matters arising in the ordinary course of
business. However, in the opinion of management of Bancorp and the Bank, there
are no proceedings pending to which Bancorp and the Bank is a party or to which
their property is subject, which, if determined adversely to Bancorp and the
Bank, would be material in relation to Bancorp's and the Bank's undivided
profits or financial condition, nor are there any proceedings pending other than
ordinary routine litigation incident to the business of Bancorp and the Bank. In
addition, no material proceedings are pending or are known to be threatened or
contemplated against Bancorp and the Bank by government authorities or others.

                  Environmental Issues

                  There are several federal and state statutes that govern the
obligations of financial institutions with respect to environmental issues.
Besides being responsible under such statutes 


                                       20
<PAGE>   21


for its own conduct, a bank also may be held liable under certain circumstances
for actions of borrowers or other third parties on properties that collateralize
loans held by the bank. Such potential liability may far exceed the original
amount of the loan made by the bank. Currently, the Bank is not a party to any
pending legal proceedings under any environmental statue nor is the Bank aware
of any circumstances that may give rise to liability of the Bank under any such
statute.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                  Shares of Bancorp's Common Stock are traded in the
over-the-counter market and "bid" and "asked" quotations regularly appear on the
Over-the-Counter Bulletin Board system under the symbol "CCFN." As of March 10,
1999, six firms were listed on the Over-the-Counter Bulletin Board system as
market makers for Bancorp's Common Stock. The following table sets forth: (1)
the quarterly average bid and asked prices for a share of Bancorp's Common Stock
during the periods indicated as reported by Hopper Soliday & Co., Inc. of
Lancaster, Pennsylvania, one of the market makers of Bancorp's Common Stock, and
(2) quarterly dividends on a share of the Common Stock with respect to each
quarter since January 1, 1996. The following quotations represent prices between
buyers and sellers and do not include retail markup, markdown or commission.
They may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                              Average Stock Prices              Dividends
                                                              --------------------              ---------
                                                              Bid            Asked              Declared 
                                                              ---            -----              -------- 
<S>      <C>                                                <C>             <C>                  <C>  
1997:
         First quarter..................................    $17.29          $18.67               $.116
         Second quarter.................................    $18.42          $20.83               $.116
         Third quarter..................................    $20.33          $21.75               $.116
         Fourth quarter.................................    $22.21          $23.50               $.116

1998:
         First quarter..................................    $24.67          $26.42               $.116
         Second quarter.................................    $29.17          $35.17               $.116
         Third quarter..................................    $30.33          $32.17               $.116
         Fourth quarter.................................    $25.50          $26.50               $.116
</TABLE>


                  As of February 28, 1999, Bancorp had approximately 760
shareholders of record.

                  Since its formation in 1983 as the parent holding company of
the Bank, Bancorp has paid cash dividends. It is the present intention of
Bancorp's Board of Directors to continue the dividend payment policy, although
the payment of future dividends must necessarily depend upon earnings, financial
condition, appropriate restrictions under applicable law and other factors
relevant at the time the Board of Directors considers any declaration of
dividends. Cash available for the payment of dividends must initially come from
dividends paid by the Bank to 



                                       21
<PAGE>   22

Bancorp. Therefore, the restrictions on the Bank's dividend payments are
directly applicable to Bancorp.

                  Dividend Restrictions on the Bank

                  The OCC has issued rules governing the payment of dividends by
national banks. Consequently, the Bank (which is subject to these rules) may not
pay dividends from capital (unimpaired common and preferred stock outstanding)
but only from retained earnings after deducting losses and bad debts therefrom.
"Bad debts" are defined as matured obligations in which interest is past due and
unpaid for ninety (90) days, but do not include well-secured obligations that
are in the process of collection.

                  Previously, the Bank was permitted to add the balances in its
allowance for possible credit and lease losses in determining retained earnings,
but the OCC's new regulations prohibit that practice. However, to the extent
that (1) the Bank has capital surplus in an amount in excess of common capital
and (2) if the Bank can prove that such surplus resulted from prior period
earnings, the Bank, upon approval of the OCC, may transfer earned surplus to
retained earnings and thereby increase its dividend paying capacity.

                  If, however, the Bank has insufficient retained earnings to
pay a dividend, the OCC's regulations allow the Bank to reduce its capital to a
specified level and to pay dividends upon receipt of the approval of the OCC as
well as that of the holders of two thirds of the outstanding shares of the
Common Stock.

                  The Bank is allowed to pay dividends no more frequently than
quarterly. Moreover, the Bank must obtain the OCC's approval before paying a
dividend if the total of all dividends declared by the Bank in any calendar year
would exceed the total of (1) the Bank's net profits for that year plus (2) its
retained net profits for the immediately preceding two years less (3) any
required transfers to surplus or a fund for the retirement of preferred stock.

                  The Bank may not pay any dividends on its capital stock during
the period in which it may be in default in the payment of its assessment for
deposit insurance premium due to the FDIC, nor may it pay dividends on Common
Stock until any cumulative dividends on the Bank's preferred stock (if any) have
been paid in full. The Bank has never been in default in the payments of its
assessments to the FDIC; and, moreover, the Bank has no outstanding preferred
stock. In addition, under the Federal Deposit Insurance Act, dividends cannot be
declared and paid if the OCC obtains a cease and desist order because such
payment would constitute an unsafe and unsound banking practice. As of December
31, 1998, there was $2 million in unrestricted retained earnings and net income
available at the Bank that could be paid as a dividend to Bancorp under the
current OCC regulations.

                  Dividend Restrictions on Bancorp

                  Under the Pennsylvania Business Corporation Law of 1988, as
amended (the "BCL"), Bancorp may not pay a dividend if, after giving effect
thereto, either (a) Bancorp would be unable to pay its debts as they become due
in the usual course of business or (b) Bancorp's total assets would be less than
its total liabilities. The determination of total assets and liabilities 



                                       22
<PAGE>   23


may be based upon: (i) financial statements prepared on the basis of generally
accepted accounting principles, (ii) financial statements that are prepared on
the basis of other accounting practices and principles that are reasonable under
the circumstances, or (iii) a fair valuation or other method that is reasonable
under the circumstances.

ITEM 6.  SELECTED FINANCIAL DATA

                  The information called for by this item is filed at Exhibit 13
hereto and is incorporated by reference in its entirety under this Item 6.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                  The caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Bancorp's Annual Report (at
page 20 thereto) filed at Exhibit 13 hereto is incorporated in its entirety by
reference under this Item 7.

                  Impact of the Year 2000 Issue

                  The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Bank's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, calculate correct accruals, or engage in similar normal business
activities.

                  An assessment of the Bank's software and hardware has revealed
those portions which will be required to be modified or replaced in order to
properly utilize dates beyond December 31, 1999. The Bank presently believes
that with modifications to existing software and conversions to new software,
the Year 2000 Issue can be mitigated. However, if such modifications and
conversions are not made, or are not completed timely, the Year 2000 Issue could
have a material impact on the operations of the Bank.

                  Another consideration is the fact that there can be no
guarantee that the systems of other companies on which the Bank's systems rely
will be timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Bank's systems, would not have a
material adverse effect on the Bank. Bancorp management is engaging in due
diligence to assure that these possibilities will not occur. The Bank has
determined it has no exposure to contingencies related to the Year 2000 Issue
for its products offered to it's customers.

                  The Bank will utilize both internal and external resources to
reprogram, or replace, and test the software for Year 2000 modifications. The
Bank plans to complete the Year 2000 project no later than June 30, 1999. The
Bank has already spent $265,000 and anticipates it will spend in the aggregate
$340,000 to complete the Year 2000 project. These costs are considered
manageable by the Bank and are being funded through operating cash flows. The
costs will not have a material effect on the results of operations in 1999 or
beyond.


                                       23
<PAGE>   24



                  The time lines and costs are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans. Specific factors that might cause such material difference include,
but are not limited to, the availability and cost of personnel trained in this
area, the ability to locate and correct all relevant computer codes and similar
uncertainties.

                  For further discussion, refer to the Year 2000 section in
Bancorp's Annual Report (at page 32 thereto) under "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  The information called for by this item is found under the
caption "Interest Rate Risk Management" in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in
Bancorp's Annual Report (at page 30 thereto) filed at Exhibit 13 hereto and is
incorporated in its entirety by reference under this Item 7A.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  Bancorp's Consolidated Financial Statements and notes thereto
contained in the Annual Report (beginning at page 4 thereto) filed at Exhibit 13
hereto are incorporated in their entirety by reference under this Item 8.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                  The captions "Board of Directors" and "Stock Ownership"
contained in Bancorp's Proxy Statement (at pages 2 and 6 thereof, respectively)
filed at Exhibit 99A hereto is incorporated in their entirety by reference under
this Item 10.

                  Principal Officers of the Corporation

                  The following table sets forth selected information about the
principal officers of the Corporation, each of whom is selected by the Board of
Directors and each of whom holds office at the discretion of the Board of
Directors:


                                       24
<PAGE>   25

<TABLE>
<CAPTION>
                                                Held         Bank            Number of Shares         Age as of
Name                Office and Position Held    Since   Employee Since      Beneficially Owned    March 23, 1999
----                ------------------------    -----   --------------      ------------------    --------------
<S>                 <C>                         <C>     <C>                 <C>                   <C>
William F. Hess     Vice Chairman of the Board  1996          (1)              4,050.212 (2)             65
                    Chairman of the Board       1998

Paul E. Reichart    President and CEO           1985         1960              7,566.000 (2)             61
                    Vice Chairman of the Board  1998

Don E. Bangs        Secretary                   1993          (1)              8,027.066 (2)             67

Virginia D. Kocher  Treasurer                   1991         1972                391.000 (2)             51
----------------------------
</TABLE>

(1) Messrs. Hess and Bangs are not employees of the Bank.

(2) See footnotes under "Beneficial Ownership by Officers, Directors and
    Nominees" with respect to the stockholdings for this officer.


                  Principal Officers of the Bank

                  The following table sets forth selected information about the
principal officers of the Bank, each of whom is elected by the Board of
Directors of the Bank and each of whom holds office at the discretion of the
Board of Directors of the Bank:

<TABLE>
<CAPTION>
                                                  Held         Bank            Number of Shares        Age as of
Name                  Office and Position Held    Since   Employee Since      Beneficially Owned    March 23, 1999
----                  ------------------------    -----   --------------      ------------------    --------------
<S>                   <C>                         <C>     <C>                 <C>                    <C>
William F. Hess       Vice Chairman of the Board  1996          (1)              4,050.212 (2)            65
                      Chairman of the Board       1998

Don E. Bangs          Secretary                   1993          (1)              8,027.066 (2)            67

Paul E. Reichart      President and CEO           1985         1960              7,566.000 (2)            61
                      Vice Chairman of the Board  1998

J. Jan Girton         Executive Vice President,   1987         1985              1,524.792 (3)            58
                      Chief Operating Officer
                      and Assistant Secretary     1992

Lance O. Diehl(6)     Senior Vice President       1997         1995                142.000 (2)            33

Linda A. Huttenstine  Senior Vice President       1991         1963                355.000 (4)            54
                      and Cashier                 1985

Jacob S. Trump        Senior Vice President and   1989         1989                214.809 (4)            51
                      Financial Planning Officer

Edwin A. Wenner       Senior Vice President       1996         1974                325.000 (5)            45

Virginia D. Kocher    Vice President,             1987         1972                391.000 (2)            51
                      Controller and              1982
                      Assistant Secretary         1991

Richard L. Sierer     Financial Planner           1997         1997                 97.000 (4)            54
                      Trust Officer
----------------------------
</TABLE>

(1) Messrs. Hess and Bangs are not employees of the Bank.
(2) See footnotes under "Beneficial Ownership by Officers, Directors and
    Nominees" with respect to the stockholdings for this officer.
(3) Includes 131.087 shares of Common Stock held individually by Mr. Girton and
    1,393.705 shares of Common Stock held jointly with his spouse.
(4) All shares of Common Stock held by the named person are held as an
    individual.
(5) The 325 shares of Common Stock beneficially owned by Mr. Wenner are jointly
    held with his spouse.
(6) Mr. Diehl is the nephew of Mr. Kile, a Director of the Corporation and the
    Bank.



                                       25
<PAGE>   26


ITEM 11. EXECUTIVE COMPENSATION

                  The caption "Executive Compensation" contained in Bancorp's
Proxy Statement (at page 7 thereof) filed at Exhibit 99A hereto is incorporated
in its entirety by reference under this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  The caption "Stock Ownership" contained in Bancorp's Proxy
Statement (at page 6 thereof) filed at Exhibit 99A hereto is incorporated in its
entirety by reference under this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  The information under the caption "Other Information"
contained in Bancorp's Proxy Statement (at page 10 thereof) filed at Exhibit 99A
hereto is incorporated in its entirety by reference under this Item 13.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                  (a) 1. The Registrant's consolidated financial statements and
notes thereto as well as the applicable reports of the independent certified
public accountants are filed at Exhibit 13 hereto and are incorporated in their
entirety by reference under this Item 14(a)1.

                      2. All schedules are omitted because they are not 
applicable or the required information is shown in the financial statements or
notes thereto.

                      3. The exhibits required by Item 601 of the Regulation
S-K are included under Item 14(c) hereto.

                  (b) Bancorp filed no reports on Form 8-K during the last
quarter of the year ended December 31, 1998.

                  (c) Exhibits required by Item 601 of Regulation S-B:


<TABLE>
<CAPTION>
Exhibit Number Referred to
Item 601 of Regulation S-K                  Description of Exhibit
--------------------------                  ----------------------
<S>                                         <C>                          
         2                                  None.
         3(i)                               None.
         3(ii)
         4                                  None.
         9                                  None.
         10                                 None.
</TABLE>


                                       26
<PAGE>   27


<TABLE>
<CAPTION>
Exhibit Number Referred to
Item 601 of Regulation S-K                  Description of Exhibit
--------------------------                  ----------------------
<S>                                         <C>                                    
          11                                None.
          12                                None.
          13                                Annual Report to Shareholders for Fiscal Year Ended 
                                            December 31, 1998.
          16                                None.
          18                                None.
          21                                List of Subsidiaries of Bancorp.
          22                                None.
          23                                None.
          24                                None.
          27                                Financial Data Schedule.
          99A                               Proxy Statement, Notice of Annual Meeting and Form of 
                                            Proxy for the Annual Meeting of Shareholders to be held 
                                            May 12, 1999.
          99B                               SEC Guide 3 Financial Information.
</TABLE>


                                       27
<PAGE>   28


                                   SIGNATURES


                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

CCFNB BANCORP, INC.
         (Bancorp)


By:   /s/ Paul E. Reichart                                Date:   March 25, 1999
      -------------------------------
      Paul E. Reichart
      President and Vice Chairman
         of the Board


                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.



By:   /s/ Don E. Bangs                                    Date:   March 25, 1999
      -------------------------------
      Don E. Bangs
      Director and Secretary


By:   /s/ Stanley Barchik                                 Date:   March 25, 1999
      -------------------------------
      Stanley Barchik
      Director


By:   /s/ Robert M. Brewington, Jr.                       Date:   March 25, 1999
      -------------------------------
      Robert M. Brewington, Jr.
      Director


By:   /s/ Edward L. Campbell                              Date:  March 25, 1999
      -------------------------------
      Edward L. Campbell
      Director


By:   /s/ Elwood R. Harding, Jr.                          Date:   March 25, 1999
      -------------------------------
      Elwood R. Harding, Jr.
      Director

                                       28
<PAGE>   29


By:   /s/ William F. Hess                                 Date:   March 25, 1999
      -------------------------------
      William F. Hess
      Director and Chairman of the Board


By:   /s/ Willard H. Kile, Sr.                            Date:   March 25, 1999
      -------------------------------
      Willard H. Kile, Sr.
      Director


By:   /s/ Charles E. Long                                 Date:   March 25, 1999
      -------------------------------
      Charles E. Long
      Director


By:   /s/ Paul E. Reichart                                Date:   March 25, 1999
      -------------------------------
      Paul E. Reichart
      Director, President, Chief
        Executive Officer and Vice
        Chairman of the Board
      (Chief Executive Officer)


By:   /s/ Virginia D. Kocher                              Date:   March 25, 1999
      -------------------------------
      Virginia D. Kocher
      Treasurer
      (Principal Financial and
       Accounting Officer)




                                       29
<PAGE>   30


                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
   Item Number                      Description                                                  Page
   -----------                      -----------                                                  ----
  <S>                              <C>                                                           <C>   
       13                          Annual Report to Shareholders for the
                                    Fiscal Year Ended December 31, 1998........................    31

       21                          List of Subsidiaries of Bancorp.............................    73

       99A                         Proxy Statement, Notice of Annual
                                     Meeting and Form of Proxy for
                                     the Annual Meeting of Shareholders
                                     to be held May 12, 1999...................................    74

       99B                         SEC Guide 3 Financial Information...........................    90

       27                          Financial Data Schedule.....................................    94
</TABLE>

                                       30