UNITED  STATES
                     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  Pursuant  to  Section  13  or  15(d) of the Securities
Exchange  Act  of  1934
     For  the  transition  period  from  _____________  to  ____________
     Commission  File  Number  2-94863

                           CANANDAIGUA  NATIONAL  CORPORATION
                           ----------------------------------
               (Exact  name  of  Registrant  as  specified  in  its  charter)

                        New  York                             16-1234823
                        ---------                             ----------
              (State  of Incorporation)        (IRS Employer Identification No.)

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

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

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

Securities  registered  pursuant  to  Section  12(g)  of  the  Act:

                              240,000  shares  $50  par  common
                              ---------------------------------
                                    (Title  of  class)

  Indicate  by  check mark whether the registrant (1) filed all reports required
to  be  filed
by  Section  13  or  15  (d)  of  the Securities Exchange Act of 1934 during the
preceding  12
months (or for such shorter period that the registrant was required to file such
reports),  and
(2)  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.  [  ]

Aggregate  market  value  of  the  voting  stock  held  by non-affiliates of the
Registrant  as  of  January  31,  1999.

     Common  Stock,  $50.00  par  value  -  described  on  page 8 of 1998 Annual
     Report  and Common Stock Data disclosed on page 30 of the Annual Report are
     incorporated  herein  by  reference.

     Number  of  shares  outstanding  of the Registrant's shares of common stock
     as  of  January  31,  1999.  159,531 shares, common stock, $50.00 par value

     The  Company's  stock  is  not  actively  traded  nor  is  it traded in the
over-the-
     counter  market.  In  addition, it is not listed with a national securities
exchange.
     Due  to the limited number of transactions, the weighted average sale price
     disclosed  on  page  30  of  the Annual Report may not be indicative of the
actual
     market  value  of  the  Company's  stock.


                                                            Page  1




                        Documents  Incorporated  by  Reference
                      ---------------------------------------------------

Portions  of  the Registrant's Annual Report to Shareholders for the fiscal year
ended  December  31,  1998  are  incorporated  by  reference into Part I and II.

Portions  of  the Registrant's Definitive Proxy Statement relating to the Annual
Meeting  of  Shareholders  held  on March 10, 1999 are incorporated by reference
into  Part  III.

This  annual report contains certain "forward-looking statements" covered by the
"safe  harbor"  provisions  of  the  Private Securities Litigation Reform Act of
1995.  When  used  or  incorporated  by  reference  in  the Company's disclosure
documents,  the  words  "anticipate," "estimate," "expect," "project," "target,"
"goal"  and  similar expressions, as well as discussion regarding the "Year 2000
issue,"  are  intended to identify forward-looking statements within the meaning
of  Section  27A  of  the  Securities  Act.  Such forward-looking statements are
subject  to  certain  risks,  uncertainties  and assumptions, including, but not
limited  to  (1)  economic  conditions, (2) real estate market, and (3) interest
rates. Should one or more of these risks or uncertainties materialize, or should
underlying  assumptions prove incorrect, actual results may vary materially from
those  anticipated,  estimated,  expected  or  projected.  These forward looking
statements  speak  only  as  of  the date of the document. The Company expressly
disclaims  any  obligation  or  undertaking  to  publicly release any updates or
revisions  to  any  forward-looking  statement  contained  herein to reflect any
change in the Company's expectation with regard thereto or any change in events,
conditions  or  circumstances  on  which  any  such  statement  is  based.


































                                                            Page  2



     CANANDAIGUA  NATIONAL  CORPORATION
     FORM  10-K
     INDEX
                                                                Page No.
PART  I.
Item  1.  Business                                                    4

Item  2.  Properties                                                 18

Item  3.  Legal  Proceedings                                         19

Item  4.  Submission  of  Matters  to  a  Vote  of
             Security  Holders                                       19

PART  II.
Item  5.  Market  for  the  Registrant's  Common  Stock
              and  Related  Security  Holder  Matters                20

Item  6.  Selected  Financial  Data                                  20

Item  7.  Management's  Discussion  and  Analysis  of
             Financial  Condition  and  Results  of  Operation       20

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

Item  8.  Financial  Statements  and  Supplementary  Data            29

Item  9.  Changes  in  and  Disagreements  with  Accountants
            on  Accounting  and  Financial  Disclosure               29

PART  III.
Item  10.  Directors  and  Executive  Officers  of
          the  Registrant                                            30

Item  11.  Executive  Compensation                                   31

Item  12.  Security  Ownership  of  Certain
              Beneficial  Owners  and  Management                    33

Item  13.  Certain  Relationships  and  Related  Transactions        33

PART  IV.
Item  14.  Exhibits,  Financial  Statement
          Schedules  and  Reports  on  Form  8-K                     34

Signatures                                                           35















                                                            Page  3

PART  I

Item  1.  Business

Canandaigua  National  Corporation

     The  Canandaigua National Corporation, referred to as The Corporation, is a
one-bank  holding  company  which  builds  lasting  customer  relationships  by
providing  comprehensive  financial  solutions  to individuals, be they building
families  or  businesses.  It  was organized on October 31, 1984, and registered
under  the  Bank  Holding  Company  Act  of  1956, for the purpose of becoming a
one-bank  holding  company.  The  formation  of  the  bank  holding  company was
consummated  on  May  31,  1985,  through  the  exchange  of  80,000  shares  of
Canandaigua  National  Corporation  $50  par  value  common stock for all of the
outstanding  shares  of  The  Canandaigua  National Bank and Trust Company.  The
one-bank  holding  company  serves as a means of increasing the scope of banking
and  financial  services  in  the market area served by The Canandaigua National
Bank  and  Trust Company.  The Corporation acquired Greater Funding of New York,
Inc. The Corporation acquired 100% of Home Town Funding, Inc. (HTF) during 1997.
HTF  offers  mortgage products that the bank is not licensed to offer, therefore
offering the Corporation's customers a larger range of products.  HTF is engaged
in  underwriting and funding mortgages in western New York State.  HTF typically
resells residential mortgages to unaffiliated entities, which service the loans.
On January 1, 1999 the Corporation merged the mortgage banking operations of HTF
and  Greater  Funding  of  New  York,  Inc  (GFNYI),  a mortgage banking company
acquired  in  1996.  The  Bank  will  remain  the  principal  source  of  the
Corporation's  operating  revenue  and  net  income.

The  Canandaigua  National  Bank  and  Trust  Company

     The  Canandaigua  National Bank and Trust Company ("Bank") was incorporated
under  the  laws  of  The  United  States of America as a national bank in 1887.
Since  that  time, the Bank has operated as a national banking association doing
business  at  its main office at 72 South Main Street, Canandaigua, New York and
several  locations  in Ontario County and at its Monroe County community banking
offices  in  Webster  (town  of  Penfield),  Mendon  and  Pittsford,  New  York.

     As  of  December  31,  1998,  Bank  had total assets of $422,783,000; total
capital  of  $36,870,000;  and total deposits of $376,635,000.  Its deposits are
insured  through  the  Bank  Insurance  Fund  by  the  Federal Deposit Insurance
Corporation.

     The  Bank  provides  a  full  range  of  financial  services to its retail,
commercial and municipal customers through a variety of deposit, lending, trust,
investment  and  insurance  products.  These products are delivered by employees
through  a  "life-stage"  marketing  concept,  whereby  customers'  needs  are
anticipated  and  evaluated  based  upon  their life stage (e.g. growing family,
retirement,  college  student,  etc.).  New  products  are developed around this
concept.  These  services  are  delivered  through  the Bank's network of eleven
community  banking  offices,  which  include  drive-up  facilities and automatic
teller  machines,  its  customer  call  center,  the  internet  and other remote
cash-dispensing machines.  The locations and staffing of the Bank's full service
offices  are  described  in  more  detail in Item 2 and on page 33 of the Annual
Report.

     The  Bank's  deposit  services  include  accepting time, demand and savings
deposits,  NOW  accounts,  regular  savings accounts, money market certificates,
investment  certificates,  fixed rate certificates of deposit and club accounts.
The  Bank  also  provides its retail customers safe-keeping services through the
renting  of  safe  deposit  facilities.

     The Bank's lending services include making secured and unsecured commercial
and consumer loans, financing commercial transactions either directly or through
regional  industrial  development corporations, making construction and mortgage
loans.  Other  services  include  making  residential  mortgage loans, revolving
credit  loans  with  overdraft  checking  protection,  small business loans, and
student  loans.  The Bank's business loans include seasonal, credit, collateral,
and  term  loans.


                                                            Page  4


Item  1.  Business

The  Canandaigua  National  Bank  and  Trust  Company  (continued)

     Trust and investment services provided by Bank include services as executor
and  trustee under wills and deeds, as guardian and custodian and as trustee and
agent  for  pension,  profit  sharing,  individual  retirement account and other
employee  benefit  trusts  as  well  as  various  investment, pension and estate
planning  services.  Trust  services  also include service as transfer agent and
registrar  of  Canandaigua  National  Corporation  stock and as paying agent for
various  bond  issues  and  as  escrow  agent.

     Since  the  formation  of  its  insurance  subsidiary  in 1995 and upon its
successful  lawsuit  against the New York State Superintendent of Insurance, the
Bank  has been offering a full line of auto, home and life insurance products to
its  customers  through  its  wholly owned subsidiaries CNB Operating Subsidiary
No.1,  Inc.  and  the  Burlingham  Agency.

      The  Bank  also  administers the assets of the Canandaigua Equity Fund and
the  Canandaigua  Bond  Fund.  [Shares  of  these funds are not bank deposits or
obligations  of,  or guaranteed or endorsed by, any bank, and are not insured by
the  Federal  Deposit  Insurance  Corporation,  the Federal Reserve Board or and
other  agency.]

The Bank has a relatively stable deposit base and no material amount of deposits
are  obtained from a single depositor or group of depositors (including federal,
state  and  local  governments).  The  Bank  has not experienced any significant
seasonal
fluctuations  in  the  amount  of its deposits nor does the Bank rely on foreign
sources
of  funds  or  income.

Territory  Served

     The  Company's market area currently covers the western Ontario and eastern
Monroe  counties  of  New  York  State.  In  recent years the Bank expanded into
Monroe  County  by  opening  community banking offices in Pittsford and Webster.
Under  renovation are locations in Irondequoit and Greece and, in February 1999,
the  Company  installed  three  cash  dispensing  machines  in  the  Rochester
International  Airport.

Competition

     The  Company considers its business to be highly competitive in its service
areas.  The  Company competes with respect to its lending services as well as in
attracting  deposits,  with  commercial  banks,  savings banks, savings and loan
associations,  insurance  companies,  regulated  small  loan companies, non-bank
banks and credit unions and investment managers.  The Company also competes with
insurance  companies,  investment  counseling  firms,  mutual  funds  and  other
business  firms  and  individuals  in  corporate trust and investment management
services.

     The Company is generally competitive with all financial institutions in its
service  area  with  respect to interest rates paid on time and savings deposits
and  interest  rates  charged  on loans and service charges on deposit accounts.

     One  measure  of competitive strength is the percentage of deposits held by
an  institutions  in  a  geographic  location.  Based  upon the most recent data
available from the FDIC as of June 30, 1998, the Company's share of deposits for
all  banks  was  35%  in  Ontario  County  and  less  than  1% in Monroe County.

Employees

     At  December 31, 1998, the Company had 292 employees of whom 81 worked on a
part-time  basis.  None  of the employees are covered by a collective bargaining
agreement.  The  Company  considers its relations with its employees to be good.


                                                            Page  5

Item  1.  Business  (continued)

Supervision  and  Regulation

     Canandaigua  National  Corporation  is  incorporated  under the laws of the
State
of  New  York.  As  a  bank  holding company, the Company is subject to the Bank
Holding  Company  Act  of  1956, as amended (the "Act"), and is required to file
annual reports and such additional information as may be required by the Federal
Reserve  Board  (the  "FRB")  pursuant to the Act.  The FRB has the authority to
examine  the  Company  and  its  subsidiaries.

     The  Act  and  regulations  thereunder  limit, with certain exceptions, the
business  which  a  bank  holding company  may engage in, directly or indirectly
through  subsidiaries, to  banking, managing or controlling banks, furnishing or
performing  services  for banks controlled by the Company, and services incident
thereto.  In  addition,  the  Act  and  regulations thereunder require the prior
approval  of  the  FRB  for the acquisition of a bank or bank holding company if
thereafter  the  bank holding company will, directly or indirectly, control more
than  5%  of  the  voting  stock  of  such  bank  or  bank  holding  company, or
substantially  all  the  assets of such bank or bank holding company.  Among the
activities  permitted  bank  holding companies is the ownership of shares of any
company  which  engages  in  activities that the FRB determines to be so closely
related  to  banking,  managing, or controlling banks as to be a proper incident
thereto.  The FRB has determined a number of activities to be closely related to
banking,  and  has  proposed  others  for consideration. Such activities include
leasing  real  or  personal  property  under  certain conditions; operating as a
mortgage financing or factoring company; servicing loans and other extensions of
credit;  acting  as  a  fiduciary; acting as an investment  or financial advisor
under  certain conditions; acting as an insurance agent or broker principally in
connection  with  the  extension  of  credit  by the bank holding company or any
subsidiary;  acting as underwriter for credit life insurance and credit accident
and health insurance that is directly related to extension of credit by the bank
holding  company  or  any  subsidiary;  providing bookkeeping or data processing
services  for  the  bank  holding  company,  its  affiliates,  other  financial
institutions  and  others,  with  certain limitations; making certain equity and
debt  investments  in community rehabilitation and development corporations; and
providing  certain  kinds of management consulting advice to unaffiliated banks.

     The  Federal  Reserve  Act imposes  restrictions on extensions of credit by
subsidiary banks of a bank holding company to the bank holding company or any of
its subsidiaries, or investments in the stock or other securities of the holding
company,  and  on the use of such stock or securities as collateral for loans to
any  borrower.  Further, under the FRB's regulations, a bank holding company and
its  subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection  with  any  extension  of  credit,  lease  or  sale  of  property, or
furnishing  of  services.

     From  time  to  time  the FRB may adopt further regulations pursuant to the
Act.  The Company cannot predict whether any further regulations will be adopted
or  how  such  regulations  will  affect  the  consolidated operating results or
business  of  the  Company.

     In  addition,  the  Corporation  reports  to  the  Securities  and Exchange
Commission  under  the  laws  governing corporations with registered securities.

     The  primary  supervisory  authority  of  the  Bank  is  the  Office of the
Comptroller  of  the  Currency (the " OCC"), which regularly examines aspects of
the  Bank's'  operations  such  as  risk  as  capital adequacy, reserves, loans,
investments,  management  practices,  and  other.  In  addition to these regular
examinations,  the  Bank  must  furnish quarterly and annual reports to the OCC.
The  OCC  has  the  authority to issue cease-and-desist orders to prevent a bank
from  engaging  in  an  unsafe  or  an  unsound practice or violating the law in
conducting  its  business.





                                                            Page  6


Item  1.  Business

Supervision  and  Regulation  (continued)

     The  Bank  is  also a member of the Federal Reserve System, and as such, is
subject  to  certain laws and regulations administered  by the FRB.  As a member
of  the  Federal  Reserve  System, the Bank is required to maintain non-interest
bearing  reserves  against certain accounts.  The amount of reserves required to
be  maintained  is  established  by  regulations  of  the  FRB and is subject to
adjustment from time to time.  In President Clinton's fiscal 2000 budget, he has
proposed  that  the Federal Reserve pay interest on these currently non-interest
bearing  reserves.  The  outcome  of  this  proposal  cannot  be  determined  by
management.

     The  Bank's  deposits  are  insured by the Bank Insurance Fund (BIF) of the
FDIC  up  to  a  maximum of $100,000 per insured deposit account, subject to the
rules  and  regulations  of  the  FDIC.  For  this  protection,  the Bank pays a
quarterly  statutory  assessment.

Government  Monetary  Policies  and  Economic  Controls

     The earnings of Company and Bank are affected by the policies of regulatory
authorities including the Comptroller of the Currency, the Board of Governors of
the  Federal  Reserve  System and the Federal Deposit Insurance Corporation.  An
important function of the Federal Reserve System is to regulate the money supply
and  interest  rates.  Among  the instruments used to implement these objectives
are  open  market  operations  in U.S. Government Securities, changes in reserve
requirements  against  member bank deposits, and changes in the federal discount
rate.  These  instruments  are used in varying combinations to influence overall
growth  and  distribution of bank loans, investments and deposits, and their use
may  also  affect  interest  rates  charged  on  loans  or  paid  for  deposits.

     The  policies  and  regulations  of the Federal Reserve Board have had, and
will  probably  continue to have, a significant effect on Bank's deposits, loans
and  investment growth, as well as the rate of interest earned and paid, and are
expected to affect Bank's operations in the future.  The effect of such policies
and  regulations,  if  any, upon the future business and earnings of Bank cannot
accurately  be  predicted.
     The  United  States  Congress  has  periodically  considered  and  adopted
legislation that has resulted in deregulation of  both banks and other financial
institutions.  Congress  has  adopted further legislation to modify or eliminate
geographic restrictions on banks and bank holding companies, and could modify or
eliminate current prohibitions against banks engaging in one or more non-banking
activities.  Such  legislative  changes  could  place  the  Bank  in more direct
competition with other financial institutions including mutual funds, securities
brokerage  firms,  insurance companies, and investment banking firms. The effect
of  any  such  legislation  on  the  business  of  the Bank cannot be predicted.

Consolidated  Financial  and  Statistical  Data

     A detailed review of the business activities of the Corporation and Bank is
presented  in  the  following  pages.
















                                                            Page  7

STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES

     Distribution  of  Assets,  Liabilities  and  Stockholders' Equity; Interest
Rates  and  Interest  Differential

A.  and  B.  Average  Balance  Sheets  and  Analysis  of  Net  Interest  Margin

     The  following  table  reflects  the  net interest margin and interest rate
spread  for  the  years  shown. Average amounts are based upon the average daily
balances.  No  tax  equivalent  adjustments  have  been  made.
<TABLE>

<CAPTION>

           Average Balance Sheets and Analysis of Net Interest Margin
                 For the Years December 31, 1998, 1997 and 1996
                             (Dollars in thousands)



December 31, 1998                      Average    Average
                                      ---------  ----------     
                                       Balance    Interest    Rate
                                      ---------  ----------  -------
<S>                                   <C>        <C>         <C>
Assets
Interest earning assets:
  Interest bearing deposits with
    others                            $     368  $       19     5.16 %
  Federal funds sold                        630          33     5.24
  Securities Note (1):
    Taxable                              41,131       2,400     5.84
    Tax-exempt                           34,511       1,567     4.54
  Loans, net Note (2)                   303,940      26,834     8.83
                                        -------      ------     ----
      Total interest earning assets     380,580      30,853     8.11 %
                                                     ------  
Noninterest earning assets               36,421
                                        -------                     
      Total assets                    $ 417,001
                                        =======                     

Liabilities and Stockholders'
Equity
Interest bearing liabilities:
  Savings, interest checking and
    money market                      $ 152,018       3,675     2.42 %
  Certificates of deposit               128,942       7,071     5.48
  FHLB Advances                          29,926       1,687     5.64
                                        -------      ------     ----
      Total interest bearing
        liabilities                     310,886      12,433     4.00 %
                                                     ------  
Noninterest bearing liabilities          65,758
Stockholders' equity                     40,357
                                        -------                     
      Total liabilities and
        stockholder's equity          $ 417,001
                                        =======                     

Interest rate spread                                            4.11 %
                                                                ====  
Net interest margin                               $  18,420     4.84 %
                                                     ======     ====  
<FN>

(1)  Securities  available-for  sale  are  included  at fair value. Includes the
Company's  required investments  in  Federal  Reserve  Bank  Stock and Federal 
Home Loan Bank Stock.
(2)  Average  balance includes non-accrual loans and interest includes fees of $
227,000
</TABLE>











                                                            Page  8
<TABLE>

<CAPTION>

STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)


December 31, 1997                      Average    Average
                                      ---------  ----------     
                                       Balance    Interest    Rate
                                      ---------  ----------  -------
<S>                                   <C>        <C>         <C>
Assets
Interest earning assets:
  Interest bearing deposits with
    Others                            $     264  $       16     6.06 %
  Federal funds sold                         19           1     5.26
  Securities Note (1):
    Taxable                              43,240       2,587     5.98
    Tax-exempt                           31,037       1,440     4.64
  Loans, net Note (2)                   282,894      25,389     8.97
                                        -------      ------     ----
      Total interest earning assets     357,454      29,433     8.23 %
                                                     ------     
Noninterest earning assets               28,313
                                        -------                     
      Total assets                    $ 385,767
                                        =======                     

Liabilities and Stockholders'
Equity
Interest bearing liabilities:
  Savings, interest checking and
    Money market                      $ 145,418       3,521     2.42 %
  Certificates of deposit               112,661       6,212     5.51
  FHLB Advances                          26,942       1,506     5.59
                                        -------      ------     ----
      Total interest bearing
        Liabilities                     285,021      11,239     3.94 %
                                                     ------  
Noninterest bearing liabilities          61,363
Stockholders' equity                     39,383
                                        -------                     
      Total liabilities and
        stockholder's equity          $ 385,767
                                        =======                     

Interest rate spread                                            4.29 %
                                                                ==== 
Net interest margin                              $  18,194      5.09 %
                                                    ======      ==== 
<FN>


(1)  Securities  available-for  sale  are  included  at fair value. Includes the
Company's required investments in Federal  Reserve  Bank  Stock and Federal Home
Loan Bank Stock.
(2)  Average  balance includes non-accrual loans and interest includes fees of $
402,000
</TABLE>

























                                                            Page  9
<TABLE>

<CAPTION>

STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)



December 31, 1996                      Average    Average
                                      ---------  ----------     
                                       Balance    Interest    Rate
                                      ---------  ----------  -------
<S>                                   <C>        <C>         <C>
Assets
Interest earning assets:
  Interest bearing deposits with
    Others                            $     270  $       16     5.93 %
  Federal funds sold                      7,184         373     5.19
  Securities Note(1):
    Taxable                              44,478       2,728     6.13
    Tax-exempt                           28,370       1,342     4.73
  Loans, net Note (2)                   228,311      20,681     9.06
                                        -------      ------     ----
      Total interest earning assets     308,613      25,140     8.15 %
                                                     ------     
Noninterest earning assets               26,046
                                        -------                     
      Total assets                    $ 334,659
                                        =======                     

Liabilities and Stockholders'
Equity
Interest bearing liabilities:
  Savings, interest checking and
    money market                      $ 146,189       3,532     2.42 %
  Certificates of deposit                96,965       5,203     5.37
  FHLB Advances                           1,652          62     3.75
                                        -------      ------     ----
      Total interest bearing
        Liabilities                     244,806       8,797     3.59 %
                                                     ------     
Noninterest bearing liabilities          52,019
Stockholders' equity                     37,834
                                        -------                     
      Total liabilities and
        stockholder's equity          $ 334,659
                                        =======                     

Interest rate spread                                            4.56 %
                                                                ==== 
Net interest margin                               $  16,343     5.30 %
                                                     ======     ==== 
<FN>

(1)  Securities  available-for  sale  are  included  at fair value. Includes the
Company's required investments in Federal  Reserve  Bank  Stock and Federal Home
Loan Bank Stock.
(2)  Average  balance includes non-accrual loans and interest includes fees of $
388,000
</TABLE>


C.  Rate/Volume  Analysis

The  following  table sets forth the dollar and volume of increase (decrease) in
interest  income  and  interest  expense resulting from changes in the volume of
earning  assets  and  interest  bearing  liabilities, and from changes in rates.
Volume  changes  are  computed by multiplying the volume difference by the prior
year's  rate.  Rate  changes  are computed by multiplying the rate difference by
the  prior  year's  balance.  The change in interest due to both rate and volume
has  been  allocated  to  rate  and  volume  changes in proportion to the dollar
amounts  of  the  change  in  each.













                                                            Page  10
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

C.  Rate/Volume  Analysis  (continued)
<TABLE>
<CAPTION>

                              Rate/Volume Analysis
                      For the Years December 31, 1998, 1997
                             (Dollars in thousands)


1998  vs.  1997

                              Increase/(decrease)  due
                                  to  change  in

                                  Volume    Rate    Total
                                  -------  ------  -------
<S>                               <C>      <C>     <C>
Assets
Interest bearing deposits with
  others                          $     3  $  --   $    3 
Federal funds sold                     32     --       32 
  Securities                           73   (133)     (60)
  Loans, net                        1,864   (419)   1,445 
                                  -------  ------  -------
      Total                         1,972   (552)   1,420 
                                  =======  ======  =======

Liabilities
  Savings, interest checking and
    money market                      160     (6)     154 
  Certificates of deposit             893    (34)     859 
  FHLB Advances                       168     13      181 
                                  -------  ------  -------
      Total                         1,221    (27)   1,194 
                                  =======  ======  =======

Net change                        $   751  $(525)  $  226 
                                  =======  ======  =======
</TABLE>



<TABLE>

<CAPTION>


1997  vs.  1996

                                 Increase/(decrease)  due
                                      to  change  in

                                   Volume    Rate    Total
                                  --------  ------  -------
<S>                               <C>       <C>     <C>
Assets
Interest bearing deposits with
  Others                          $    --   $  --   $   -- 
Federal funds sold                   (377)      5     (372)
  Securities                           79    (122)     (43)
  Loans, net                        4,900    (192)   4,708 
                                  --------  ------  -------
      Total                         4,602    (309)   4,293 
                                  ========  ======  =======

Liabilities
  Savings, interest checking and
    money market                      (19)      8      (11)
  Certificates of deposit             862     147    1,009 
  FHLB Advances                     1,400      44    1,444 
                                  --------  ------  -------
      Total                         2,243     199    2,442 
                                  ========  ======  =======

Net change                        $ 2,359   $(508)  $1,851 
                                  ========  ======  =======
</TABLE>








                                                            Page  11
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

II.  Securities  Portfolio

A.  Securities  Portfolio

     The  following  table summarizes the Company's carrying value of securities
available for sale and held to maturity. Other securities includes the Company's
required  investments  in  Federal Reserve Bank Stock and Federal Home Loan Bank
Stock
<TABLE>

<CAPTION>

                                   Securities
                     As of December 31, 1998, 1997 and 1996
                             (Dollars in thousands)



                                      1998     1997    1996
                                     -------  ------  ------
<S>                                  <C>      <C>     <C>
US Treasury and other U.S.
  Government agencies' obligations   $29,936  31,413  30,671
Obligations of states and political
  Subdivisions                        39,253  34,273  30,320
Other securities                       7,275   8,813  10,780
                                     -------  ------  ------
      Total                          $76,464  74,499  71,771
                                     =======  ======  ======

</TABLE>


B.  Maturity  and  Yields  of  Securities  Portfolio

     The  following  table summarizes the maturities and weighted average yields
of  the  Company's securities available for sale and held to maturity. Yields on
"Obligations  of  States  and Political Subdivisions" are not reflected on a tax
equivalent  basis.  Other securities includes the Company's required investments
in Federal Reserve Bank Stock and Federal Home Loan Bank Stock.  Mortgage backed
securities,  included  in  other  securities,  are  reported  at  their  final
contractual  maturity,  notwithstanding  that  principal  is received regularly,
reducing  their  effective  maturity.

<TABLE>

<CAPTION>

                      Maturities and Weighted Average Yields of Securities
                             As of December 31, 1998, 1997 and 1996
                                     (Dollars in thousands)



                                                   After           After
                                                     One            Five
                                  One            through         through           After
                              Year or               Five             Ten             Ten
                                 Less              Years           Years           Years
                             --------           --------         -------         -------       
                               Amount    Yield    Amount  Yield   Amount  Yield   Amount  Yield
                             --------  -------  --------  -----  -------  -----  -------  -----
<S>                          <C>       <C>      <C>       <C>    <C>      <C>    <C>      <C>
US Treasury and other U.S.
  Government agencies'
  Obligations                $ 17,444     5.36  $ 12,492   5.31  $    --     --  $    --     --
Obligations of states and
political subdivisions (1)      7,648     4.51    26,480   4.54    5,072   4.28       53   5.12
Other securities                1,009     6.40     2,016   6.79       42   7.90    4,208   7.00
                             --------  -------  --------  -----  -------  -----  -------  -----
      Total                  $ 26,101     5.15  $ 40,988   4.89  $ 5,114   4.31  $ 4,261   6.98
                             ========  =======  ========  =====  =======  =====  =======  =====

<FN>

 (1)  Yields  are  not  reflected  on  a  tax  equivalent  basis.
</TABLE>






                                                            Page  12
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

III.  Loan  Portfolio

The  loan  portfolio  is  comprised  solely  of  domestic loans which are widely
diversified  with  no  concentrations  in  an  industry  group or with borrowers
engaged  in similar activities.  The following summary shows the classifications
of  loans  by  category.

A.  Types  of  Loans
<TABLE>

<CAPTION>

                          Composition of Loan Portfolio
                               As of December 31,
                             (Dollars in thousands)


                             1998       1997      1996      1995      1994
                           ---------  --------  --------  --------  --------
<S>                        <C>        <C>       <C>       <C>       <C>
Commercial, financial and
  Agricultural             $ 43,260    37,610    27,503    28,326    32,442 
Commercial mortgage          83,771    74,228    62,513    62,038    60,278 
Residential mortgage         76,130    94,593   101,349    86,641    83,018 
Consumer
     Auto                    84,370    73,211    45,747    15,339    12,617 
     Other                   17,753    15,245     9,925     9,146    14,511 
Other                         6,485    14,257    11,437     8,770     8,121 
                           ---------  --------  --------  --------  --------
                            311,769   309,144   258,474   210,260   210,987 
Less: Allowance for          (3,283)   (3,153)   (2,675)   (2,258)   (2,202)
                           ---------  --------  --------  --------  --------
Loans, net                 $308,486   305,991   255,799   208,002   208,785 
                           =========  ========  ========  ========  ========
</TABLE>


B.  Maturities  and  Sensitivities  of  Loans  to  Changes  in  Interest  Rates

     The following table sets forth the maturities and sensitivity to changes in
interest rates of the loan portfolio exclusive of real estate mortgage, consumer
and  other  loans.
<TABLE>

<CAPTION>

                        Maturity and Sensitivity of Loans
                             As of December 31, 1998
                             (Dollars in thousands)


                                                 After
                                                  One
                                         One     through  After
                                       Year or    Five    Five
                                         Less     Years   Years   Total
                                      --------  -------  ------  ------
<S>                                   <C>       <C>      <C>     <C>
Commercial, financial and
  Agricultural                        $ 12,681   14,224  16,355  43,260

Loans maturing after one year:
  With a predetermined interest rate              8,519  13,393
  With a floating or adjustable rate              5,705   2,962
</TABLE>


     The  maturities  set  forth  above  are  based upon contractual maturities.
Demand  loans, overdrafts and certain time loans, the principal of which will be
renewed  in  whole  or  in  part,  are  included  in  the  "Within  One  Year"
classification.  The Company's loan policy encourages a repayment schedule to be
established  whenever  possible.

     The  policy  provides  that  a  demand loan should not be renewed more than
once, with renewals at the then prevailing interest rates and with the assurance
the  borrower  demonstrates  the  ability  to  repay  on  maturity  of the loan.




                                                            Page  13
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

III.  Loan  Portfolio  (continued)

     The  Company  provides  standby  letters  of  credit commitments which also
provide for availability of funds over a period of generally one year.  All such
commitments  have  fixed  expiration dates and may require the payment of a fee.

     The  Company  extends lines of credit under which a customer may borrow for
various  purposes such as letters of credit.  The extension of these commitments
and  lines  of credit have been in the normal course of business. In the opinion
of management, at December 31, 1998, there are no material commitments to extend
credit  which  represent  unusual  risks.

C.  Risk  Elements

(1)  Non-accrual,  Past  Due  and  Restructured  Loans

     The  following  table  summarizes the Company's non-performing assets as of
December  31  for  each  of  the  last  five  years.
<TABLE>

<CAPTION>

                              Non-Performing Assets
                              (Dollars in thousands)


                                      1998     1997    1996     1995     1994
                                    --------  ------  -------  -------  -------
<S>                                 <C>       <C>     <C>      <C>      <C>
Loans past due 90 days or more and
  Accruing:
  Commercial, financial &
    agricultural                    $    14     347       --       12        4 
  Real estate-commercial                102     610       --       --       -- 
  Real estate-residential               157     508       48      101      254 
  Consumer                              108     501       28       55       44 
                                    --------  ------  -------  -------  -------
    Total past due 90 days or more
      and accruing                      381   1,966       76      168      302 
                                    --------  ------  -------  -------  -------

Loans in non-accrual status:
  Commercial, financial &
    agricultural                      1,498   1,210    2,285    1,640    2,350 
  Real estate-commercial                225   1,327    7,565    7,280    6,844 
  Real estate-residential               390     586    1,364    2,027    2,097 
  Consumer                               --      53       75       --       -- 
                                    --------  ------  -------  -------  -------
    Total non-accrual loans           2,113   3,176   11,289   10,947   11,291 
                                    --------  ------  -------  -------  -------

    Total non-performing loans        2,494   5,142   11,365   11,115   11,593 
                                    --------  ------  -------  -------  -------

Other real estate owned:
  Commercial                          1,642   2,494    1,012    1,856      301 
  Residential                            --      18      129      302      422 
                                    --------  ------  -------  -------  -------
    Total other real estate owned     1,642   2,512    1,141    2,158      723 
                                    --------  ------  -------  -------  -------

    Total non-performing assets     $ 4,136   7,654   12,506   13,273   12,316 
                                    ========  ======  =======  =======  =======

Non performing loans to total
  period end loan                      0.80%   1.66%    4.40%    5.29%    5.49%
                                    ========  ======  =======  =======  =======

Non performing assets to total
  period end loans and other real
  estate                               1.33%   2.48%    4.84%    6.30%    5.83%
                                    ========  ======  =======  =======  =======

Allowance to non-performing loans    131.64%  61.32%   23.54%   20.31%   18.99%
                                    ========  ======  =======  =======  =======

Restructured loans                  $    --      --       --       --      196 
                                    ========  ======  =======  =======  =======
</TABLE>


                                                            Page  14
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

III.  Loan  Portfolio  (continued)

     The accrual of interest on commercial and real estate loans is discontinued
and  previously  accrued  interest  is  reversed  when  the loans become 90 days
delinquent  or  when,  in management's judgment, the collection of principal and
interest  is uncertain.  Recognition of interest income on nonaccrual loans does
not  resume  until  management  considers  principal  and  interest collectible.
Consumer  loans  are  generally  charged  off  upon  becoming 120 days past due.

     The  Company  earned interest on a cash basis of $281,000 in 1998, $259,000
in  1997  and  $149,000  in  1996  on non-performing loans.  Additional interest
income  of  $  239,000,  $636,000 and $841,000 would have been recognized during
1998,  1997,  and 1996, respectively, if the loans reported above as non-accrual
had  been  current  in  accordance  with  the  original  terms.

(2)  Potential  Problem  Loans

     Management  is  unaware of any potential problem loans ad December 31, 1998
which  are  not  already  disclosed  in  the  table  above.


IV.  Summary  of  Loan  Loss  Experience

A.  Analysis  of  Loss  Experience

     The  determination of the allowance for loan losses is based on an analysis
of  the  loan portfolios and reflects an amount which, in management's judgment,
is  adequate to provide for loan losses inherent in the portfolio. This analysis
is  based  on  management's periodic evaluation, which considers factors such as
past  loss  experience,  identification  of adverse conditions that may affect a
borrower's  ability  to  repay,  an  assessment of current and expected economic
conditions  and  the  estimated  value  of  any  underlying  collateral.





























                                                             Page  15


STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

IV.  Summary  of  Loan  Loss  Experience  (continued)

The  following table summarizes the changes in the allowance for loan losses for
each  of  the  years  ended  December  31,  1994  through  1998.
<TABLE>

<CAPTION>

                         Summary of Loan Loss Allowance
                              (Dollars in thousands)


                                    1998     1997    1996     1995     1994
                                  --------  ------  -------  -------  -------
<S>                               <C>       <C>     <C>      <C>      <C>
Balance at beginning of year      $ 3,153   2,675    2,258    2,202    2,227 

Provision charge to operations        641     851    1,490    1,031      699 
Charge-offs:
  Commercial, financial &
    agricultural                     (274)   (257)  (1,356)    (810)    (712)
  Real estate-commercial               --      --      (44)      --       -- 
  Real estate-residential             (19)    (40)     (16)    (151)     (65)
  Consumer                           (760)   (498)    (221)    (268)    (234)
                                  --------  ------  -------  -------  -------
                                   (1,053)   (795)  (1,637)  (1,229)  (1,011)
                                  --------  ------  -------  -------  -------

Recoveries:
  Commercial, financial &
    agricultural                       25     190      216       90       82 
  Real estate-commercial               --      --       71       --       -- 
  Real estate-residential             102      19        1       20       -- 
  Consumer                            415     213      276      144      155 
                                  --------  ------  -------  -------  -------
                                      542     422      564      254      237 
                                  --------  ------  -------  -------  -------

    Net charge-offs:                 (511)   (373)  (1,073)    (975)    (774)
                                  --------  ------  -------  -------  -------

Balance at end of year            $ 3,283   3,153    2,675    2,258    2,202 
                                  ========  ======  =======  =======  =======

Net charge-offs to average loans     0.17%   0.13%    0.47%    0.47%    0.38%
                                  ========  ======  =======  =======  =======

Allowance to total loans             1.05%   1.02%    1.03%    1.07%    1.04%
                                  ========  ======  =======  =======  =======
</TABLE>


B.  Allocation  of  Allowance  for  Loan  Losses

     The following table presents an allocation of the allowance for loan losses
and  the  percentage  of loans in each category to total loans at December 31 of
each  year.  In  addition  to  an  allocation  for  specific problem loans, each
category  includes a portion of the non-specific allowance for loan losses based
upon loans outstanding, credit risk and historical charge-offs.  Notwithstanding
the  following  allocation, the entire allowance for loan losses is available to
absorb  charge-offs  in  any  category  of  loans.















                                                            Page  16
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

IV.  Summary  of  Loan  Loss  Experience  (continued)
<TABLE>

<CAPTION>

                       Allocation of Allowance for Loan Losses
                                (Dollars in thousands)


                             1998       1997      1996
                            -------  ----------  -------                          
  Allowance                  % (1)   Allowance    % (1)   Allowance    % (1)
--------------------------  -------  ----------  -------  ----------  -------     
<S>                         <C>      <C>         <C>      <C>         <C>      <C>
Commercial, financial &
    agricultural (2)        $1,484        40.7%  $1,974        36.2%  $1,982    34.8%
  Real estate-residential       54        24.4%     111        30.6%     122    39.2%
  Consumer                   1,745        34.8%   1,068        33.2%     571    26.0%
                            -------  ----------  -------  ----------  -------  ------
                            $3,283       100.0%  $3,153       100.0%  $2,675   100.0%
                            =======  ----------  =======  ----------  =======  ------


                              1995        1994 
                            -------  ----------                                      
  Allowance                   % (1)  Allowance     % (1)
--------------------------  -------  ----------  -------                             
Commercial, financial &
    agricultural (2)        $1,927        43.0%  $1,645        43.9%
  Real estate-residential       86        41.2%     172        39.3%
  Consumer                     245        15.8%     386        16.7%
                            -------  ----------  -------  ----------                 
                            $2,258       100.0%  $2,202       100.0%
                            =======  ----------  =======  ----------                 


<FN>

(1)Percentage  of  loans  in  each  category  to  total  loans.
(2)Includes  commercial  real  estate.
</TABLE>



V.  Deposits

     The  following tables summarize the average deposits and average rates paid
during  the  years  presented.
<TABLE>

<CAPTION>

                          Average Deposits and Rates Paid
               For the Years Ended December 31, 1998, 1997 and 1996
                               (Dollars in thousands)


                                     1998               1997             1996
                              ----------------  -----------------  ---------------
                               Amount     Rate    Amount     Rate    Amount   Rate
                              -------  -------  --------  -------  --------  -----
<S>                          <C>       <C>      <C>       <C>      <C>       <C>
Non-interest bearing demand  $ 62,944      --%  $ 59,920      --%  $ 50,801    --%
Interest-bearing demand        42,099    1.50%    34,464    1.43%    33,695  1.36%
Savings and money market      109,919    2.77%   110,954    2.73%   112,494  2.73%
Time                          128,942    5.48%   112,661    5.51%    96,965  5.37%
                             --------  -------  --------  -------  --------  -----
                             $343,904    3.12%  $317,999    3.06%  $293,955  2.97%
                             ========  -------  ========  -------  ========  -----

</TABLE>


     The following table sets forth the time certificate of deposits of $100,000
or  greater,  classified  by  the  time  remaining until maturity, which were on
deposit  as  of  December  31,  1998.
<TABLE>

<CAPTION>

           Maturity Distribution of Time Deposits of $100,000 or More
                            As of  December 31, 1998
                              (Dollars in thousands)


<S>                  <C>
3 months or less     $42,791
3 through 6 months     2,383
6 through 12 months      623
Over 12 months        13,532
                     -------
                     $59,329
                     =======

</TABLE>


                                                            Page  17
STATISTICAL  DISCLOSURE  BY  BANK  HOLDING  COMPANIES  (continued)

VI.  Return  on  Equity  and  Assets

     The  following  table  sets  forth  certain  ratios  used in evaluating the
Company's  financial  position  and  results  of  operations.
<TABLE>

<CAPTION>

                                Financial Ratios
              For the Years Ended December 31, 1998, 1997 and 1996


                                   1998    1997    1996
                                  ------  ------  ------
<S>                               <C>     <C>     <C>
Return on average assets           0.86%   0.97%   0.88%
Return on average equity           8.89%   9.49%   7.79%
Dividend payout ratio             49.15%  43.07%  48.08%
Average equity to average assets   9.68%  10.21%  11.31%
                                  
</TABLE>



VII.  Short-term  Borrowings

     The  following table sets forth the Company's short terms borrowings at the
dates  indicated.  The  Company considers short-term borrowings to be those with
an  original  maturity  date  of  one  month  or  less.
<TABLE>

<CAPTION>

                              Short-term Borrowings
              For the Years Ended December 31, 1998, 1997 and 1996
                             (Dollars in Thousands)


                                             1998      1997     1996
                                            -------  --------  -------
<S>                                         <C>      <C>       <C>
Amount outstanding at December 31,           2,300    44,800   10,600 
  Weighted average rate                       4.84%     5.85%    7.38%

Maximum outstanding at any month end        48,200    44,800   10,600 

Average amount outstanding during the year  24,753    24,970      661 
  Weighted average rate                       5.66%     5.71%    5.47%
</TABLE>



Item  2.  Properties

     Canandaigua  National  Corporation occupies space at the main office of the
Bank.  The  Company  owns  a  building in Pittsford and is occupied by Home Town
Funding,  Inc.  and  is  sublet  them  and  other  unrelated  businesses.  The
Corporation  leases  real  property  in  Farmington,  Mendon, Manchester, Victor
(Eastview  Mall), Pittsford, under long-term renewable leases.  The premises are
sublet  to  the  Bank  for  its  Farmington  Branch  Office.

     As  of  December  31,  1998  The Bank's operations were conducted from nine
offices  located in Ontario County, New York and three offices located in Monroe
County,  New  York.  The  main  office  of  the  Bank is a three-story structure
located  at  72  South  Main Street, Canandaigua, New York.  The administrative,
operational  and  electronic  data processing offices of the Bank are located in
this  facility.  There are drive-up facilities located at all offices except for
the  Eastview  Mall  and  Pittsford offices. Some of the leases also provide for
contingent  rent  to  be  paid annually based upon increases the cost of living.
Properties  providing  customer  service  are  as  follows:


                                                              Page  18




<TABLE>

<CAPTION>

Item  2.  Properties  (continued)


Location                         Use                      Ownership       Expiration (1)
---------------  -----------------------------------  ------------------  ---------------
<S>              <C>                                  <C>                 <C>
Canandaigua, NY  Main office space                    Owned                            --
Bloomfield, NY   Bloomfield bank office               Owned                            --
Canandaigua, NY  Customer call center                 Leased office             6/30/1999
Victor, NY       Eastview Mall bank office            Leased office             6/30/2003
Farmington, NY   Farmington bank office               Owned, leased land        6/30/2002
Honeoye, NY      Honeoye bank office                  Owned                            --
Canandaigua, NY  Lakeshore bank office                Leased office            12/31/2001
Shortsville, NY  Manchester-Shortsville bank office   Leased office       Month to month
Mendon, NY       Mendon bank office                   Leased office            12/31/2004
Pittsford, NY    Pittsford bank office                Leased office            12/31/2000
Victor, NY       Victor bank office                   Owned                            --
Penfield, NY     Webster bank office                  Leased office             8/31/2008
Greece, NY       Greece Bank office (2)               Leased office            10/31/2003
Pittsford, NY    Home Town Funding                    Owned                            --
Canandaigua, NY  Home Town Funding branch office      Leased office             4/30/2001
Bloomfield, NY   CNB Agency office                    Leased office             4/30/2001
<FN>

(1)  If  applicable
(2)  Scheduled  to  open  in  1999
</TABLE>



     Throughout  1999  the  Bank  will  continue  to expand its number of Monroe
County  offices.  It  has entered into lease agreements for an office in Greece,
New  York and Chili, New York and has accepted a purchase offer for an office in
Irondequoit,  New  York.  These  three  new offices are expected to be opened in
1999.

     The  Bank also provides, free to its customers, 24-hour banking services to
Bank  customers  through  automatic teller facilities located at each office and
through  remote  automatic  teller  machines  and cash dispenser machines at the
following  locations:

  Finger  Lakes  Community  College                   Hopewell,  New  York
  F.F.  Thompson  Hospital                            Canandaigua,  New  York
  Finger  Lakes  Performing  Arts  Center             Hopewell,  New  York
  Bristol  Mountain                                   Bristol,  New  York
  Case's  Convenient                                  Canandaigua,  New  York
  Roseland  Bowl                                      Canandaigua,  New  York
  The  Greater  Rochester  International  Airport     Rochester,  New  York

The  Bank  anticipates  that,  in  order to expand its service to its Monroe and
Ontario  County  customers, it will increase the number of remote cash-dispenser
machines  in  operation.

     The  carrying  value  of  the Company's properties as of December 31, 1998,
which  is required to be included herein pursuant to Item 102 of Regulation S-K,
is  included  under the caption "Notes to Consolidated Financial Statements" set
forth  on  pages  12 through 29 of the 1998 Annual Report to Stockholders and is
incorporated  herein  by  reference.

Item  3.  Legal  Proceedings

     The  Company  and  its  subsidiaries  are not involved in any pending legal
proceeding  other  than  routine  legal  proceedings  undertaken in the ordinary
course  of  business.  In the opinion of the management, after consultation with
counsel,  the  aggregate  amount involved in such proceedings is not material to
the  consolidated  financial  condition or results of operations of the Company.

Item  4.  Submission  of  Matters  to  a Vote of Security Holders (in the fourth
quarter  of  1998)

     None.

                                                            Page  19
PART  II

Item  5.  Market  for  the Registrant's Common Stock and Related Security Holder
Matters

     The  market  and  dividend  information  required  to  be  included herein,
pursuant to Item 201 of Regulation S-K, is incorporated herein by reference from
page  30  of  the  1998  Annual  Report to Stockholders and the Proxy Statement.

     While  there  can  be  no assurance that the amount and timing of dividends
paid  in  recent  years  will  continue,  management has no knowledge of current
activities  that  would  restrict the payment of dividends in an amount at least
equal  to  recent  years  and  at  the  same  times.

       At  December 31, 1998, the Corporation had approximately 753 shareholders
of record. Information regarding beneficial ownership of the Corporation's stock
is  set  forth  in  the Corporation's Proxy Statement and incorporated herein by
reference.


Item  6.  Selected  Financial  Data

     This  following  table  represents  a summary of selected components of the
Corporation's  consolidated  financial  statements  for  the  five  years  ended
December 31, 1998.  All information concerning the Corporation should be read in
conjunction  with  the  consolidated  financial  statements  and  related notes.
<TABLE>

<CAPTION>

                             Selected Financial Data
                  (Dollars in Thousands except per share data)


                                 1998     1997     1996     1995     1994
                               --------  -------  -------  -------  -------
<S>                            <C>       <C>      <C>      <C>      <C>
Income Statement Information:
  Net interest income          $ 18,420   18,194   16,343   16,035   14,760
  Provision for loan losses         641      851    1,490    1,031      699
  Non-interest income             5,924    3,788    3,401    3,393    3,268
  Non-interest expense           18,430   15,632   14,163   12,684   12,022
  Income taxes                    1,686    1,762    1,144    1,797    1,604
  Net income                      3,587    3,737    2,947    3,916    3,703

Balance Sheet Data:
  Total investments            $ 76,464   74,499   71,771   71,920   72,594
  Total loans, net              308,486  305,991  255,799  208,002  208,785
  Total assets                  428,047  418,942  360,623  317,209  310,541
  Total deposits                376,507  324,761  307,966  277,051  274,837
  Total borrowings                7,142   50,667   11,590    1,013       --
  Total equity                   42,478   40,932   39,119   37,397   34,538
  Average assets                417,001  385,767  334,659  320,770  315,312
  Average equity                 40,357   39,383   37,834   35,987   33,035

Per Share Data:
  Net income                   $  22.38    23.22    18.20    24.31    23.01
  Cash dividends                  11.00    10.00     8.75     7.00     6.00
</TABLE>



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

     The purpose of this discussion is to focus on information about Canandaigua
National  Corporation's  financial  condition and results of operations which is
not  otherwise apparent from the consolidated financial statements in the annual
report.  Reference should be made to those statements and the selected financial
data  presented  elsewhere  in this report for an understanding of the following
discussion  and  analysis.



                                                            Page  20

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

Overview
--------

     1998  proved  to be a year of transition for the Company.  During the first
and  into  the second quarters the Company completed the final steps of its core
banking  system  conversion.  These  final  steps  led to unbudgeted expenses in
excess  of  $.4  million.  However,  this  new  system  allowed  the  Company to
introduce  a number of new products to the marketplace, including it Generations
Gold(TM)  suite  of deposit accounts, a Business Sweep Account, and a new credit
card.  As  the  second  quarter began and interest rates continued to fall, (and
throughout  the remainder of the year,) the Company' mortgage banking operations
generated record origination volumes.  The fourth quarter began with the opening
of  the Webster Bank Office (the Company's third Monroe County branch) and ended
with the announcement of a local community bank competitor's announcement of its
acquisition by a regional bank.  This acquisition has caused the acceleration of
the  Company's  expansion  in the marketplace.  Already the Company has plans to
open  offices  in  the  Monroe  County  towns  of  Greece  and  Irondequoit.

     At  December  31,  1998 the Company's assets reached $428.0 million.  Total
assets  increased  $9.1  million or 2.2% for the year.  Net loans increased $2.5
million  or  .8%  while  securities  increased  $1.5  million  or  2.2%.  More
significantly,  deposits  increased $ 51.7 million or 15.9% and borrowings (from
the  FHLB)  decreased  $43.5  million or 85.9%.  Funds generated through deposit
inflows  were  used for loan originations, security purchases and FHLB borrowing
repayments.

     Net  income for the year ended December 31, 1998 was $3.6 million, down $.1
million  or  4.0% from 1997.  Basic earnings per share decreased by $.84 or 3.6%
over  the  same  period.  The  decrease in net income for 1998 was a result of a
significant  legal  expense  reimbursement in 1997 relating one large credit and
one-time  charges  taken  in the first half of 1998 related to the completion of
the  Company's  core  banking system conversion. Also a portion of the increased
operating  expenses  was  derived  from  one  of  the Company's mortgage banking
subsidiaries,  which  was  not  acquired  until late 1997. For 1998 net interest
income  increased  only  $.2  million  or  1.2%  due  to  a  lower interest rate
environment  than  in  1997.

     The  quality  of  the Company's assets continued to improve throughout 1998
with  non-performing  loans at December 31, 1998 at less than 1% of total loans;
the  first  time in over 5 years.  The allowance for loan losses stood at 131.6%
of non-performing loans at year-end 1998 versus 61.3% at December 31, 1997. As a
result  of  these  trends the provision for loan loss declined to $.6 versus $.9
for  the years then ended.  Other real estate owned also declined in 1998 as the
Company  liquidated  approximately  $1.2  million  during  the  year.

Financial  Condition
--------------------

     As  of  December 31, 1998, total assets of the Company were $428.0 million,
up  from  $418.9  million  at year end 1997. Cash and equivalents increased $4.6
million  to  $23.9  million  in connection with the growth in customer deposits.
     Securities  showed  an  increase  of  $1.5  million  to  $72.9 million. The
Company's securities, with the exception of a minor amount of equity securities,
are  held  to  maturity.  The portfolio is comprised mainly of US Treasuries and
Agencies  and  tax-exempt  obligations  of  state  and  local  subdivisions.
Approximately  90%  of  the  portfolio  is  pledged  to federal agencies and for
municipal deposits.  These deposits, in turn, are used to purchase securities of
local  municipalities.  Other  securities consist mainly of high-grade corporate
bonds.  As these bonds mature, they are being replaced with tax-exempt municipal
obligations.







                                                            Page  21

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

     Net  loans  increased  $2.5  million to $308.5 million. The growth in loans
came  mostly in the second and third quarters of 1998, following a $10.0 million
decline  in  the  first  quarter.  There  was  little net new loan volume in the
fourth  quarter.  Although declining market interest rates have resulted in loan
portfolio  payoffs  and  refinancings,  the Company continues to encounter local
loan  demand  for  commercial  and  residential  mortgages,  as well as indirect
automobile  loans.  With  Canandaigua National Bank and Trust company soon to be
the  only  locally  owned  full service community bank in the Monroe and Ontario
County marketplace, management anticipates greater portfolio loan growth in 1999
than  1998.  All  other  assets  rose  $.5  million  to  $22.4  million.
     Total  non-performing  loans  decreased  over the twelve month period ended
December  31,  1998 by $2.6 million to $2.5 million at year-end 1998 as compared
to  $5.1 million at year-end 1997. The decrease has come across all loan types -
commercial, residential real estate and consumer loans with the largest decrease
coming  from commercial real estate.  Management attributes these decreases to a
combination  of  strict underwriting procedures, strong collection efforts and a
relatively  stable  economic  cycle  in  the  Company's  market.
     The  allowance  for loan losses stood at $3.2 million at December 31, 1998,
up $.1 million from December 31, 1997.  1998's year end balance represents 1.05%
of total loans versus 1.02% for 1997.  The increase in the allowance balance for
1998  was  relatively  modest and is a reflection of little net new loan volume.
Net  charge-offs for the year remained favorable at .17% of average loans versus
 .13%  in  1997.

     Other  real  estate  owned  consists  of  six  parcels  of  property,  all
commercial,  for  $1.6  million. The decline in other real estate owned from the
same period in 1997 is a result of the Company's foreclosure on $ 2.1 million in
real estate assets in May 1997 offset by the liquidation of portions of this and
other  properties.   While other real estate owned trended downward during 1998,
the  Company  did  foreclose  on one commercial real estate property in October,
resulting  in an addition of $.3 million; however, total other real estate owned
remains  below  the  December  31,  1997  level.
     In  1998  the  Company  added approximately $2 million in fixed assets with
approximately  half  coming  from  the new Webster branch and computer hardware,
software  and  peripherals.  With  the  planned  opening of at least two banking
offices  in  1999,  more  fixed  assets  additions can be anticipated, which the
Company  expects  to  fund  from  current  operations.
     Total  deposits  at December 31, 1998 were $376.5 million and were up $51.7
million  from  December  31, 1997. For the same period borrowings from FHLB were
down $43.5 million to $7.1 million.  Other liabilities increased by $.07 million
to $1.9 million. The decline in borrowings is a direct result of deposit growth.
Deposit  growth  since December 31, 1997 has come in all interest-bearing types:
interest-bearing  demand  up  $19.6  million,  savings  and money market up $8.7
million  and certificates of deposit up $32.4 million.  Deposit growth came from
a number of sources, including the introduction of our Generations Gold suite of
accounts,  our Business Choice Sweep account, the opening of the Webster office,
and  our  "CD  Specials".  Also,  to  open  a  secondary  source of liquidity in
addition  to  FHLB  advances and reduce the short-term gap, the Company sold $10
million  in  nationally  market  CD's  with  an  average  maturity of 30 months.

Results  of  Operations
-----------------------
     Despite  a  $23.1  million  or 6.5% growth in earning assets for 1998 and a
corresponding  growth  in  interest  bearing  liabilities,  net  interest income
increased only $.2 million or 1.2% and is reflective of the decline in yields on
the assets due to a lower interest rate environment than in 1997.  The Company's
cost  of funds increased 6 basis points to 4.00% for the year ended December 31,
1998  as  compared to 1997.  The increase was mostly due to higher FHLB advances
in  early  1998,  which  were  replaced  during  the year with lower cost retail
deposits.  Management  believes  it  will face less refinancing pressure in 1999
than in 1998, however, management also anticipates the continuation of the trend
of  lower  interest  spread and margin as most of the Company's loan growth will
come  from  the  competitive  Monroe  County  market.  Refer  to  Interest  Rate
Sensitivity  and  Asset  /  Liability  Management  Review  section for a further
discussion.
                                                            Page  22

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

     Other income for the year ended December 31, 1998 increased $2.1 million or
56.4%  over  1997.  The  increase  was  reflected in all sources of non-interest
revenue.  Service  charges  on  accounts  rose  18%  attributed  to  increased
transaction volume, changes in account fee structures, and the implementation in
April  of  and  ATM  convenience fee for non-Canandaigua National Bank and Trust
Company  customers.  Trust  income  grew  31%  year on year due to the growth in
assets  under  management.  The  book value of assets under management increased
18.4%  to  $423.6 million at year end 1998.  The Company continues to see strong
demand  for  locally managed trust services in its market area.  In recent years
most of the Company's Trust competitors, large regional and national banks, have
reduced  the  local  control  and  decision  making authority and raised minimum
account  balances  for  personally managed accounts.  This trend is allowing the
Company,  with its focus on the personal touch, to see double digit growth.  Net
gains  on  loan  sales  and other income are both up due to the Company's strong
mortgage  banking  year.  It  is important to note that over 75% of the mortgage
banking  originations  were  for  home  purchases rather that refinancing.  This
factor is important for years when refinanicing activity is slower as local real
estate  brokers  should  continue  to refer their business to Home Town Funding.
Also  in  late  1998  Home  Town  Funding  began  brokering subprime residential
mortgages.  This  now  means  that  any customer can find a mortgage loan at the
Company,  from  its 20 year bi-weekly three-year callable mortgage to fixed rate
secondary  market  mortgages  originated  through  the  VA,  FNMA  and  FHLMC.
     Operating  expenses  increased  $2.8  million  or  17.9% for the year ended
December  31,  1998.  Increase  came  in  all  major expense categories and were
attributed  to  (1)  growth  in the Company's operations, (2) the acquisition of
Home Town Funding in late 1997, and (3) additional expenses for the core banking
conversion.   Based  upon  the  projected  growth  in  banking  offices in 1999,
operating  expenses  are  expected to increase further and will grow at a faster
pace  than  the  related  revenue.  Management  estimates that the Company's new
banking  offices  break  even  in  24  to  36  months.

Liquidity
---------

     Liquidity is defined as the ability to generate adequate amounts of cash to
meet  the  demand  from  depositors  who  wish  to withdraw funds, borrowers who
require  funds, and capital expansion.  Liquidity is produced by cash flows from
operating,  investing,  and  financing  activities of the Company.  For the year
ended  December  31,  1998  the  Company  generated  $4.6  million  in  cash and
equivalents  versus  $.5  million  for  the  year  ended  December  31,  1997.

     Net  cash  from  operating activities was $4.5 million in 1998, roughly the
same  as in 1997.  Both the largest source and use of operating cash in 1998 and
1997  were  mortgage  banking activity.  However, activity in 1998 was over four
times  that  in  1997.

     Cash  used  by  investing activities declined significantly in 1998 to $6.0
million  from  $58.3  million  in 1997.  The reduction in cash used in investing
activities  is primarily attributed to slower commercial and indirect automobile
loan  growth  relative  to  1997.

     Cash  provided  by  financing activities was $6.2 million in 1998 versus of
$53.9  million  in  1997.  With  little  net  loan  volume, financing growth was
minimal.  However,  the Company did experience a shift with financing activities
from  FHLB  advances  to  customer  deposits.

     FHLB  advances  remain an important liquidity source for the Company.  With
$7.1  million  outstanding  at  December  31,  1998  the  Company had additional
borrowing capacity from the FHLB of $35 million. Secondarily, the Company opened
a liquidity source through the sale of its CD's in the national brokered market.
Cash  for  growth  in 1999 is expected to come from these two sources as well as
customer  deposits  as  the  Company  expands  into  Monroe  County.




                                                            Page  23

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

Interest  Rate  Sensitivity  and  Asset  /  Liability  Management  Review
-------------------------------------------------------------------------
(Item  7a  Quantitative  and  Qualitative  Disclosures  about  Market  Risk)

     The  Company  realizes  income  principally from the differential or spread
between  the  interest  earned on loans, investments and other interest-earnings
assets  and  the  interest  paid  on  deposits  and borrowings. Loan volumes and
yields,  as  well  as  the  volume  of  and  rates  on investments, deposits and
borrowings,  are affected by market interest rates. Additionally, because of the
terms  and  conditions  of  many  of  the  Company's  loan documents and deposit
accounts,  a change in interest rates could also affect the projected maturities
of  the  loan portfolio and/or the deposit base, which could alter the Company's
sensitivity  to  future  changes  in  interest  rates.  Accordingly,  management
considers  interest  rate risk to be the Company's most significant market risk.
     Interest  rate  risk management focuses on maintaining consistent growth in
net  interest  income  within  Board  approved  policy  limits while taking into
consideration,  among  other  factors,  the  Company's overall credit, operating
income,  operating  cost,  and  capital  profile.  The Company's Asset/Liability
Committee  (ALCO),  which includes senior management and reports to the Board of
Directors,  monitors  and  manages  interest rate risk to maintain an acceptable
level of change to net interest income as a result of changes in interest rates.
     Management  of  the Company's interest rate risk, requires the selection of
appropriate  techniques  and  instruments  to  be utilized after considering the
benefits,  costs  and  risk  associated  with available alternatives.  Since the
Company does not utilize derivative instruments, management's techniques usually
consider  one  or more of the following: (1) interest rates offered on products,
(2)  maturity  terms offered on products, (3) types of products offered, and (4)
products  available to the Company in the wholesale market such as advances from
the  FHLB.
     The  Company  uses  an  interest  margin  simulation model as one method to
identify  and  manage  its  interest  rate  risk  profile. The model is based on
expected  cash flows and repricing characteristics for all financial instruments
and  incorporates  market-based  assumptions  regarding  the  impact of changing
interest  rates  on  these  financial  instruments.  Assumptions  based  on  the
historical  behavior  of  deposit  rates  and balances in relation to changes in
interest  rates  are  also  incorporated  into  the model. These assumptions are
inherently  uncertain  and,  as a result, the model cannot precisely measure net
interest  income  or  precisely  predict  the impact of fluctuations in interest
rates  on net interest income. Actual results will differ from simulated results
due  to  timing,  magnitude,  and  frequency of interest rate changes as well as
changes  in  market  conditions  and  management  strategies.
     Using the aforementioned simulation model, net earnings projections reflect
continued  growth  in  net  income  when  applying  the  declining interest rate
environment as of December 31, 1998 ("Base Case").  The table below, which shows
the  Company's  estimated  net  earnings  sensitivity profile as of December 31,
1998,  assumes  no  changes  in  the operating environment, but assumes interest
rates  increase/decrease  immediately  (rate  shock)  and  remain  unchanged
thereafter.  The  table  indicates  the estimated impact on net income under the
various  interest  rate  scenarios  as  a  percentage  of  Base  Case  earnings
projections.


          Changes in Interest            Estimated
                Rates                 Percentage Change
           (basis points)            in Future Net Income
          -------------------        --------------------
                                   12 Months      24 Months
                                   ---------      ---------

             Base  Case                 --             --
             +200                     (8.3)%         (6.2)%
             +100                     (5.5)          (4.5)
             -100                      5.0            4.0
             -200                      8.2            6.1

                                   Page  24

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

     A  second  method  used  to identify and manage the Company's interest rate
risk  profile  is  the  static  gap  analysis.  Interest sensitivity gap ("gap")
analysis measures the difference between the assets and liabilities repricing or
maturing  within  specific  time  periods. An asset-sensitive position indicates
that  there  are  more  rate-sensitive  assets  than  rate-sensitive liabilities
repricing or maturing within specific time horizons, which would generally imply
a  favorable  impact  on net interest income in periods of rising interest rates
and  a  negative  impact  in  periods  of  falling  rates. A liability-sensitive
position  would  generally  imply  a  negative  impact on net interest income in
periods  of  rising  rates  and  a  positive impact in periods of falling rates.

     The  following  table  presents  an  analysis  of  the  Company's  interest
rate-sensitivity gap position at December 31, 1998.  All interest-earning assets
and  interest-bearing  liabilities  are  shown  based  on  the  earlier of their
contractual  maturity  or  repricing  date  with  no  adjustment  for  estimated
prepayment  and  decay  rates.  It  should  be  noted  that  the  interest  rate
sensitivity  levels shown in the table could be changed by external factors such
as  loan prepayments and liability decay rates or by factors controllable by the
Company  such  as  asset  sales.
<TABLE>

<CAPTION>

                             Canandaigua National Corporation
                              Interest Rate Sensitivity Gap
                                    December 31, 1998
                                  (Dollars in thousands)


                                      Maturity/Repricing Period
                                ----------------------------------------
                                Within 3     4 to 12   1 to 5    Over 5
                                Months       Months    Years     Years
                                ---------    --------  --------  --------
<S>                             <C>         <C>       <C>       <C>
Interest-earning assets:
Interest-bearing deposits
  and federal funds sold        $      --         314        --       -- 
Securities                         10,812      15,279    35,036   15,337 
Loans                              70,639       3,866   160,038   77,226 
                                ---------   ---------  --------  -------
Total interest-earnings
assets                             81,451      19,459   195,074   92,563 
                                ---------   ---------  --------  -------

Interest-bearing liabilities:
NOW accounts                       56,877          --        --       -- 
Money market                       46,071          --        --       -- 
Savings                            63,245          --        --       -- 
Certificates of deposits           64,893      32,500    48,553       -- 
FHLB advances                       2,300       1,524     2,520      798 
                                ---------   ---------  --------  -------
Total interest-bearing
liabilities                       233,386      34,024    51,073      798 
                                ---------   ---------  --------  -------

Interest rate sensitivity gap   $(151,935)    (14,565)  144,001   91,765 
                                ==========  =========  ========  =======

Cumulative gap                  $(151,935)   (166,500)  (22,499)  69,266 
                                ==========  =========  ========  =======

Cumulative gap ratio (1)             34.9%      38.0%     93.5%   121.7%
                                ==========  =========  ========  =======

Cumulative gap as percent of
  Total assets                      (35.5%)    (38.9%)    (5.3%)    16.2%
                                ==========  =========  ========  =======
<FN>

(1)  Cumulative  total  interest-earning  assets  divided  by  cumulative  total
interest-bearing  liabilities.
</TABLE>





                                                            Page  25

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

     The  chart indicates that the Corporation was repricing $151.9 million more
of  interest  bearing  liabilities than interest earning assets in the 0-3 month
range.  The  Company  considers  this  gap  manageable, as a good portion of the
savings  balances  are  not  considered sensitive to rate changes.  However, the
Company  will  be  challenged  to maintain its interest margins in the case of a
rising interest rate environment.  For the 4-12 month period, the Corporation is
modestly  liability  sensitive,  as  $14.6  million  more  of  interest  bearing
liabilities are being repriced than interest earning assets.  For the entire one
year  range,  the  Corporation is repricing $166.5 million more interest bearing
liabilities than assets, or 38.0% of earning assets versus 43.6% at December 31,
1997.  The  Corporation is asset sensitive at $144.0 million for the one to five
year  range  and  $91.8  million  over  five  years.

     For the entire portfolio range, the Corporation is asset sensitive at $69.3
million  versus  asset sensitivity of $84.2 million last year reflecting a shift
of  retail deposits from non-interest bearing demand to interest-bearing demand.
1999's  interest  rate  forecast  is  mixed.  Early  in  the  year, experts were
predicting  the  possibility  of  a  further  rate  drop by the Federal Reserve.
During  February  this  forecast  changed  to  the  possibility  of a rate rise.
Company  management  sees  no  inherent reason for significant rate increases or
decreases  and, accordingly believe the 1999 will see relatively stable interest
rates.

Capital  Resources

     The Company and 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 Company's and Bank's financial statements. Under capital
adequacy  guidelines  and the regulatory framework for prompt corrective action,
the  Company  and  Bank  must  meet  specific  capital  guidelines  that involve
quantitative  measures  of  the  Company's  and  Bank's assets, liabilities, and
certain  off-balance-sheet  items  calculated  under  regulatory  accounting
practices. The Company's and Bank's capital amounts and classifications are also
subject  to  qualitative  judgments  by  regulators  about  components,  risk
weightings,  and  other  factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require  the  Company  and  Bank  to  maintain  minimum  amounts and ratios.  As
disclosed in the note 15 to the Consolidated Financial Statement, as of December
31,  1998  all  capital  adequacy  requirements  were  met.

     As  of  December  31, 1998, the most recent notification from the Office of
the  Comptroller  of the Currency categorized the Bank as well-capitalized under
the  regulatory  framework  for  prompt  corrective action. To be categorized as
well-capitalized,  the  Bank  must  maintain  a minimum total risk-based, Tier I
risk-based,  and  Tier I leverage ratios as set forth in the footnote. There are
no  conditions  or  events since that notification that management believes have
changed  the  Bank's  category.

Dividends

     Payments  of  dividends by the Bank to the Company is limited or restricted
in certain circumstances.  According to federal banking law, the approval of the
Office  of  the  Comptroller  of the Currency is required for the declaration of
dividends  in  any  year which dividends exceed the total of net income for that
year  plus  retained  income for the preceding two years.  At December 31, 1998,
approximately $.9 million was available for payment of dividends to the Company,
its  primary  cash  source  for  paying  dividends  to  stockholders.

     Cash  dividends  for 1998 were $1.8 million or $11.00 per outstanding share
versus  $1.6  million  or  $10.00  per  outstanding  share  in  1997.



                                                            Page  26

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

1997  versus  1996

     For  the  year  ended December 31, 1997, the Corporation had $357.5 million
average  earning  assets,  up  $48.9  million  or  15.9%  from the year earlier.
Average  interest  bearing  liabilities  were  $285.0 million for 1997, up $40.2
million  or  16.4%  from  1996.  The  increase  in  earning  assets reflects the
expansion  of  the  Company's indirect loan product into the Rochester, NY area.
Liability  growth was fueled by the Company borrowing from the Federal Home Loan
Bank  to  fund  the  asset  growth.  While  being  mindful  of the Corporation's
customers'  needs,  management was able to increase net interest income for 1997
to  $18.2  million,  up  from  $16.3 million for 1996, reflecting an increase of
11.7%  for  1997.

     The  yield  on  interest earning assets was 8.23% in 1997, up from 8.15% in
1996.  Cost  of  funds  increased  to  3.94%  from  3.59%  in  1996.  Management
continued  to  monitor  the  cost  and  size  of  liabilities  during  1997, and
maintained a higher than average spread of 4.29%, but was a reduction from 4.56%
in  1996.  Net  interest  rate  margin  decreased  to  5.09%  from  5.30%.

     The  provision  for  loan losses in 1997 was $0.9 million, down $.6 million
from  1996.  The  allowance  for  loan  loss  as  of  December 31, 1997 was $3.2
million, or 1.02% of loans outstanding at year end 1997.  This ratio is slightly
lower  than  that  of  1996  (1.03%)  on  a  balance  of  $2.7  million.

     Other  income  for  1997  increased  to  $3.8  million  from  $3.4 million,
reflecting  an  increase  of  $.4  million or 11.8%.  Service charges on deposit
accounts  were  down  slightly  mainly as a result of slightly lower transaction
volumes.  Strong  demand  for  the Company's trust services in Ontario County as
well  as  the  new  Pittsford  office led to an increase of trust income to $1.7
million  or  30.8%  from $1.3 million in 1996.  All other non-interest operating
income  for  1997  rose  to  $.5  million  from  $.4 million reflecting a modest
increase  of  $0.1  million  on  improved  mortgage  banking  operations.

     Operating  expenses  totaled  $15.6  million, up 9.9% from $14.2 million in
1996.  Salaries  and  employee  benefits  rose  $1.3  million,  accounting  for
substantially  all  of  the  increase.  This  increase  is  reflective of hiring
additional staff in the indirect lending operations as well as the effect of the
1996 acquisition of Greater Funding of New York, Inc. and the Burlingham Agency.

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

     The  Company  began  reviewing  its  year 2000 conversion needs in 1995 and
established a Year 2000 Project Committee that meets to review the status of the
conversion. The committee continues to direct the Company's Year 2000 activities
under  the framework of the Federal Financial Institutions Examination Council's
(FFIEC)  Five  Step  Program,  which  includes  the  following:
       1.  Awareness  Phase
       2.  Assessment  Phase
       3.  Renovation  Phase
       4.  Validation  Phase
       5.  Implementation  Phase

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

                                                              Page  27

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

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

     Considerable  progress  has been made, including the replacement/conversion
of  the  Bank's  core  operating  systems.  It is anticipated that all remaining
projects  will  be  completed  by internal staff. The Company does not expect to
spend  any significant amounts with outside contractors. Therefore, costs do not
represent  any  material  incremental  costs,  but  rather  will  represent  the
redeployment  of existing technology resources. In the opinion of management our
"opportunity cost" from 1996 through 2000 approximates $3.0 million and is based
upon  an  estimate  of  the  time  for  internal  staff  to complete testing and
remediation efforts multiplied by an estimated hourly rate.  Out-of-pocket costs
for  testing  and other services are estimated at no more than $300,000, most of
which  will  be  expended  in  1999.
     As  of December 31, 1998 the Company has substantially completed all of the
above  phases of its year 2000 compliance plan.  Management expects all material
year  2000 compliance items will be resolved no later than the second quarter of
1999.  Substantially  all  mission-critical  systems were validated by year -end
1998.  The Company still has validation testing to complete on some non-critical
systems.  Following  validation,  these  systems  will  be  implemented.
     All  of  the  remaining  systems to be validated and converted/replaced are
vendor-supplied,  and  most vendors have provided the Company with certification
or  a  delivery  commitment letter. The Company presently believes that with the
conversion  to new systems, and vendor delivery of millennium-compliant systems,
all  material  year  2000  compliance  issues  will  be  resolved.
     While  deemed  remote by management, if the Company's systems were to cease
processing  due  to  a  year  2000  failure,  any  interruption  would likely be
short-lived.  And  because  substantially  all  of  our  income and expenses are
earned  (paid)  on  an  accrual  basis,  any anticipated direct losses which may
result  from  a  year  2000  related  system failure would not be expected to be
material  over  the  long  term.  The  Company  can  continue  to earn (and pay)
interest in the event of an operating disruption. The Company assesses its worst
case Year 2000 scenarios to include: (1) material credit losses due to Year 2000
failures  adversely  affecting  its  commercial  banking  customer  base and (2)
liquidity  strain  resulting  from potential disruption of the financial markets
stemming  from  significant  Year  2000  failures.

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

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

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

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






                                                            Page  28

Item  7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
           Results  of  Operations  (continued)

     The  Company  is  also  subject, either directly or indirectly, to the year
2000  issue  with  respect  to  external  parties,  particularly commercial loan
customers  and  transaction  processing  parties.  The  Bank  is  addressing its
exposure  to  its  commercial  loan  customers by reviewing customers' plans and
procedures  for remediating their year 2000 risk.  This review is carried out in
the  context  of  the  Bank's  annual  loan review process, which includes a Y2K
assessment questionnaire for completion by borrowers.   By December 31, 1998 the
Bank had reviewed a majority of its commercial loan customers and had classified
the  entire loan portfolio in a "high-medium-low Y2K risk" rating system.  Using
this  system,  management  assessed  the Bank's risk of loan loss.  Through this
assessment  process the Company has concluded that no special provision for loan
loss  is  necessary  at  this  time  to  address  the  Y2K  risk.

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

     Management  believes  the  Company's  Year  2000  efforts  constitute  and
important  technology  project.  They  view  these  efforts as opportunities for
technological  advancement,  which  will  ultimately  increase  customer  value.


New  Accounting  Pronouncements
-------------------------------

     In  June  1998, the Financial Accounting Standards Board (FASB) issued SFAS
No.  133,  "Accounting  for Derivative Instruments and Hedging Activities". This
statement  requires the Company to recognize all derivatives as either assets or
liabilities,  with  the  instruments  measured at fair value. The accounting for
gains and losses results from changes in fair value of the derivative instrument
depends on the intended use of the derivative and the type of risk being hedged.
The  statement  is  effective  for  fiscal  years beginning after June 15, 1999,
although  earlier  adoption  is  permitted.  Based  upon current activities, the
adoption  of  the  statement  will not have an effect on the Company's financial
position  or  results  of  operation.

     In  October  1998,  the  FASB issued SFAS No. 134, "Accounting for Mortgage
Backed  Securities  Retained after the Securitization or Mortgage Loans Held for
Sale  by  a  Mortgage Banking Enterprise", which amends SFAS No. 65, "Accounting
for Certain Mortgage Banking Activities". This statement conforms the subsequent
accounting for securities retained after the securitization of mortgage loans by
a  mortgage  banking  enterprise  with  the  accounting for such securities by a
non-mortgage  banking  enterprise.  This  statement  is  effective for the first
quarter beginning January 1, 1999 and this statement will not have any impact on
the Company's financial position or results of operation as the Company does not
currently  securitize  mortgage  loans.

Item  8.  Financial  Statements  and  Supplementary  Data

     The  consolidated  financial  statements  of  the  Company, together with a
report  thereon of KPMG LLP dated January 28, 1999 appearing on pages 7 to 29 of
the  1998 Annual Report to Stockholders are incorporated herein by reference.  A
reference  index to the consolidated financial statements and accompanying notes
presented  in  the  Annual  Report  to  Stockholders is shown in Item 14 of this
filing.

     Supplementary  data  has  been  omitted  because  it  is  not  applicable)

Item  9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
Financial  Disclosure

     None


                                                            Page  29

PART  III

Item  10.  Directors  and  Executive  Officers  of  the  Registrant

(a)  Directors

     The  information with respect to the directors of the Corporation, which is
required  to  be  included  herein  pursuant  to  Item 401 of Regulation S-K, is
included under the caption "Election of Directors" on the Proxy Statement, dated
February  23,  1999,  and  is  incorporated  herein  from the Proxy Statement by
reference.  There are no arrangements or understandings between any director and
any  other  person  pursuant  to  which  the  director  was  selected.

(b)  Executive  Officers

     The  names, ages and positions of the executive officers of the Corporation
as  of December 31, 1998, are included under the caption "Principal Officers" on
the  Proxy  Statement,  dated February 23, 1999, and is incorporated herein from
the  Proxy  Statement  by reference.  Officers are generally elected annually by
the  Board  of  Directors  at the meeting of directors immediately following the
annual  meeting  of  stockholders.  There  are no arrangements or understandings
between  the  executive  officers  and  any  other  person pursuant to which the
executive  officers  were  selected.

     No  Director  or  executive  officer  of  the  Corporation has received any
remuneration  from  the Bank or the Corporation in his capacity as a director or
executive  officer  of  the  Corporation.

     The  executive  officers  of the Corporation have been officers of the Bank
for  five  years  or  more.

     Directors  and  the  executive officer as a group beneficially owned 13,217
shares  or  8.28% of the shares outstanding.  Shares owned directly total 12,504
and shares held by directors, executive officer, or their spouses in a fiduciary
capacity  or  by  their  spouses  individually  total  713.

(c)  Significant  Employees

     Not  applicable

(d)  Family  Relationship

     The  disclosure  of  family  relationships  between  executive officers and
directors  of  the  Corporation  is  included  under the caption "Information on
Directors and Nominees " on the Proxy Statement, dated February 23, 1999, and is
incorporated  herein  from  the  Proxy  Statement  by  reference.

(e)  Business  Experience

     Disclosed  in  Items  10  (a)  and  10  (b)

(f)  Involvement  in  Certain  Legal  Proceedings

     Not  applicable

(g)  Promoters  and  Controlled  Persons

     Not  applicable





                                                            Page  30


Item  11.  Executive  Compensation

(a)  Cash  Compensation

     The  information  required  to  be  included  herein  regarding  executive
compensation  pursuant  to  Item  402  of  Regulation  S-K is included under the
caption  "Executive  Compensation"  on  the  Proxy Statement, dated February 23,
1999,  and  is  incorporated  herein  from  the  Proxy  Statement  by reference.

     During  the  year  ended December 31, 1998, officers of the Corporation did
not  receive any compensation from the Corporation for services rendered in such
capacity.  All  compensation  was  paid by the Bank for services rendered in the
course  of  their  employment  with  the  Bank.

(b)  Compensation  Pursuant  to  Plans

     The Bank has a non-contributory, profit sharing plan covering substantially
all  full-time  employees  who  have completed one year of service, subject to a
minimum  number  of hours of service with the Bank.  Contributions to the profit
sharing  plan  by  the  Bank  are  allocated  among eligible participants in the
proportion  that  each  participant's "points" for the calendar year bear to the
total  "points"  awarded  for  the  calendar year.  Participants are awarded one
point  for  each full calendar year of employment and one point for each $100 of
compensation  paid  such  participant during that year.  Voluntary contributions
may  be  made  and  invested  in  a  separate  "Voluntary  Account" in which the
participant  is  always  fully  vested.  Participants  become  fully-vested with
non-contributory  allocations  upon:  reaching  age  65, disability, death, or 7
years  of service as defined by the plan. If employment is otherwise terminated,
partial  vesting  will  be  accorded  depending  upon the participant's years of
service.  Retirement and death benefits may be distributed in a cash lump sum or
a  series  of  equal  installments,  payable  at  least  annually, over a period
selected  by  the Profit Sharing Plan Committee.  The amounts contributed to the
profit sharing plan by the Bank in 1998, 1997, and 1996 were $835,000, $763,000,
and  $658,000,  respectively.

     The  Corporation  has an Employee Stock Ownership Plan (ESOP) for employees
of  its  wholly-owned  subsidiaries,  and  executive officers are members of the
plan. Contributions to the ESOP are allocated among eligible participants in the
proportion  that  each  participant's  gross  compensation  bears  to  total
compensation of all participants.  Contributions to the plan for 1998, 1997, and
1996  were  $63,000,  $62,000,  and  $52,000  respectively.

     The  Corporation  has  an incentive stock plan for senior management of the
Corporation.  Annual  contributions  are  made  based  on  performance  factors
established  by the board of directors.  The Corporation has accrued a liability
of  $1,033,000  as  of  December  31, 1998 representing its obligation under the
plan. Expenses of the plan amounted to $137,000, $110,000, and  $371,000 for the
years  ended  December  31,  1998,  1997  and 1996 and were accrued by the Bank.

     The  following  table  sets forth the amount of profit sharing benefits set
aside  or  accrued by the Bank, directly or indirectly, under the Profit Sharing
Plan  for  the  year  ended  December 31, 1998 for all executive officers of the
Bank.

                         Amount  Set  Aside
                          or  Accrued  for             Cumulative
     Name  of              the  Year  Ended              Accrued
   Individual             December  31,  1998           Benefit
------------------------------------------------------------------------
George  W.  Hamlin,  IV         $22,569                  $1,260,545
Robert  G.  Sheridan             15,255                     759,951

     The  following  table  sets  forth the amount of ESOP benefits set aside or
accrued  by  the Bank, directly or indirectly, under the ESOP for the year ended
December  31,  1998  for  all  executive  officers  of  the  Bank.

                                                            Page  31

(b)  Compensation  Pursuant  to  Plans  (continued)

                         Amount  Set  Aside
                          or  Accrued  for             Cumulative
     Name  of              the  Year  Ended              Accrued
   Individual             December  31,  1998           Benefit
--------------------------------------------------------------------------
George  W.  Hamlin,  IV         $  1,786                  $  32,690
Robert  G.  Sheridan            $  1,192                  $  16,054

(c)  Other  Compensation  -  Option/SAR  Grants  Table

     The  information  required  to  be  included  herein  regarding  executive
compensation  pursuant  to  Item  402  of  Regulation  S-K is included under the
caption  "Executive  Compensation"  on  the  Proxy Statement, dated February 23,
1999,  and  is  incorporated  herein  from  the  Proxy  Statement  by reference.

(d)  Aggregated  Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table

     The  information  required  to  be  included  herein  regarding  executive
compensation  pursuant  to  Item  402  of  Regulation  S-K is included under the
caption  "Executive  Compensation"  on  the  Proxy Statement, dated February 23,
1999,  and  is  incorporated  herein  from  the  Proxy  Statement  by reference.

(e)  Long-Term  Incentive  Plan  Awards  Table

     None

(f)  Defined  Benefit  or  Actuarial  Plan  Disclosure

     None

(g)  Compensation  of  Directors

     The  information  required  to  be  included  herein  regarding  director
compensation  pursuant  to  Item  402  of  Regulation  S-K is included under the
caption "Board of Directors Compensation" on the Proxy Statement, dated February
23,  1999,  and  is  incorporated  herein from the Proxy Statement by reference.

(h)  Employment  Contracts  and  Termination of Employment and Change-In-Control
Arrangements

None

(i)  Report  on  Repricing  of  Options/SARS

None

(j)  Compensation  Committee  Interlocks

None

(k)  Board  Compensation  Committee  Report  on  Executive  Compensation

     The  information  required  to  be  included  herein regarding the Board of
Director's  Compensation  Committee  pursuant  to  Item 402 of Regulation S-K is
included  following  the  caption  "Stock  Appreciation Rights (SAR) and Phantom
Stock  Awards  (PSA)"  in  the  Proxy Statement, dated February 23, 1999, and is
incorporated  herein  from  the  Proxy  Statement  by  reference.




                                                            Page  32

 (l)  Performance  Graph

     The  performance  graph information required to be included herein pursuant
to  Item 402 of Regulation S-K is included under the caption "Performance Graph"
in the Proxy Statement, dated February 23, 1999, and is incorporated herein from
the  Proxy  Statement  by  reference.

Item  12.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management

     The information required to be included herein regarding security ownership
and  certain  beneficial owners and management pursuant to Items 403 (a) and (b)
of  Regulation S-K is included under the caption "Principal Beneficial Owners of
Common  Stock"  in  the  Proxy  Statement,  dated  February  23,  1999,  and  is
incorporated  herein  from  the  Proxy  Statement  by  reference.

(c)  Changes  in  Control

     None


Item  13.  Certain  Relationships  and  Related  Transactions

(a)  Transactions  with  Management  and  Others

     None

(b)  Certain  Business  Relationships

     None

(c)  Indebtedness  of  Management

     Certain  directors  and  executive officers of the Corporation and the Bank
and their associates were customers of and had transactions with the Bank in the
ordinary  course  of the Bank's business during 1998.  All outstanding loans and
commitments  included  in  such transactions were made on substantially the same
terms,  including interest rates and collateral, as those prevailing at the time
for comparable transactions with others, and in the opinion of the Bank, did not
involve  more  than a normal risk of collectibility or present other unfavorable
features.

(d)  Transactions  with  Promoters

     Not  applicable



















                                                            Page  33

PART  IV

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

(a)  The  following  documents  are  filed  as  part  of  this  report:

(1)  Consolidated  Financial  Statements  are  contained  in  the Company's 1998
Annual  Report to Shareholders which, as indicated below, is included as Exhibit
13  of  this  report.

     Independent  Auditors'  Report

     Consolidated  Balance  Sheets  as  of  December  31,  1998  and  1997

     Consolidated  Statements  of  Income for the Years Ended December 31, 1998,
          1997  and  1996

     Consolidated  Statements  of  Stockholders'  Equity  for  the  Years  Ended
          December  31,  1998,  1997,  and  1996

     Consolidated  Statements  of  Cash  Flows  for  the  Years  Ended
          December  31,  1998,  1997  and  1996

     Notes  to  Consolidated  Financial  Statements

(2)  Schedules

     Schedules are omitted because of the absence of conditions under which they
are required or because the required information is provided in the consolidated
financial  statements  or  notes  thereto.

(3.a)  Exhibits

 Exhibit                                           Incorporation by Reference or
page  in
                                                   sequential  numbering  where
exhibit  may  be
                                                   found:

(3.i.)    Certificate  of  Incorporation,  of the         Exhibit A on Form 10-K
            Registrant,  as  amended                     for  the  year  ended
December
                                                       31,  1994

(3.ii.)   By-laws  of  the Registrant,                   Exhibits B on Form 10-K
            as  amended                                 for  the  year  ended
December
                                                       December  31,  1994

 (13)     Annual  Report  to  Shareholders  for
          the  year  ended  December  31,  1998

 (20)     Definitive  Proxy  Statement  to
          Shareholders  dated  February  23,  1999

 (21)     Subsidiaries

 (27)     Financial  Data  Schedule


     (b)  Reports  on  Form  8-K:

           None




                                                            Page  34


                                 SIGNATURES

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


                                       CANANDAIGUA  NATIONAL  CORPORATION



March  30,  1999                         By:  /s/  George  W.  Hamlin,  IV
                                           George  W.  Hamlin,  IV,  President


<TABLE>

<CAPTION>

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 in
the  capacities  and  on  the  dates  indicated.


        Signature                  Title              Date
---------------------------  ------------------  --------------
<S>                          <C>                 <C>
/s/ George W. Hamlin, IV     President/Director  March 30, 1999
---------------------------                                    
(George W. Hamlin, IV)

/s/ Robert G. Sheridan       Secretary/Director  March 30, 1999
---------------------------                                    
(Robert G. Sheridan)

/s/ Gregory S. MacKay        Treasurer           March 30, 1999
---------------------------                                    
(Gregory S. MacKay)

/s/ Patricia A. Boland       Director            March 30, 1999
---------------------------                                    
Patricia A. Boland

/s/ James S. Fralick         Director            March 30, 1999
---------------------------                                    
James S. Fralick

/s/ Daniel P. Fuller         Director            March 30, 1999
---------------------------                                    
Daniel P. Fuller

/s/ David Hamlin, Jr.        Director            March 30, 1999
---------------------------                                    
David Hamlin, Jr.

/s/ Frank H. Hamlin, poa     Director            March 30, 1999
---------------------------                                    
Frank H. Hamlin

/s/ Stephen D. Hamlin        Director            March 30, 1999
---------------------------                                    
Stephen D. Hamlin

/s/ Richard P. Miller, Jr.   Director            March 30, 1999
---------------------------                                    
Richard P. Miller, Jr.

/s/ Caroline C. Shipley      Director            March 30, 1999
---------------------------                                    
Caroline C. Shipley

/s/ Alan J. Stone            Director            March 30, 1999
---------------------------                                    
Alan J. Stone
</TABLE>




                                                            Page  35


INDEX  OF  EXHIBITS

Exhibit

(3.i.)    Certificate  of  Incorporation,  of the        Exhibit A on Form 10-K
            Registrant,  as  amended                     for  the  year  ended
                                                         December 31, 1994

(3.ii.)   By-laws  of  the Registrant,                   Exhibits B on Form 10-K
            as  amended                                  for  the  year  ended
                                                         December  31,  1994

 (13)     Annual  Report  to  Shareholders  for
          the  year  ended  December  31,  1998

 (20)     Definitive  Proxy  Statement  to
          Shareholders  dated  February  23,  1999

 (21)     Subsidiaries

 (27)     Financial  Data  Schedule





































                                                            Page  36