<TABLE>

<CAPTION>

TABLE  OF  CONTENTS


                                                           Page
<S>                                                        <C>
President's Message                                           2
Canandaigua National Corporation Directors and Officers       4
Financial Highlights                                          5
Independent Auditors' Report                                  7
Consolidated Financial Statements                             8
Notes to Consolidated Financial Statements                   12
Common Stock Data                                            30
The Canandaigua National Bank and Trust Company Community
Advisory Committees                                          31
The Canandaigua National Bank and Trust Company Officers     32
Arthur S. Hamlin Award for Excellence                        34
Welcome Our New Directors                                    35
Webster Office Dedication                                    36
</TABLE>







Annual  Meeting:
The  Annual  Meeting  of  Stockholders  will  be  held at the Main Office of The
Canandaigua  National Bank and Trust Company, 72 South Main Street, Canandaigua,
New  York  14424;  March  10,  1999  at  1:00  P.M.





form  10-k
A  copy of the Corporation's Form 10-K Annual Report is available without charge
to stockholders upon written request to: Robert G. Sheridan, Secretary; 72 South
Main  Street,  Canandaigua,  New  York  14424.





Canandaigua  National  corporation
72  South  Main  Street,  Canandaigua,  New  York  14424
Phone:  716-394-4260
Fax:  716-396-1355
Internet:  www.cnbank.com
































 (photograph  of  George  W.  Hamlin,  IV)

President's  Message
February  1,  1999
To  Our  Shareholders:
  "Broadening  the base" would aptly describe the year 1998.  As we continue the
implementation  of  our  Plan  for the Year 2010, we have broadened our reach in
terms  of products and markets.  Our mutual fund, Canandaigua Select Equity, has
been  converted  to "retail" form so that customers may purchase units directly,
not  just  for  "qualified" purposes, namely retirement accounts.  The Rochester
Business  Journal  observed  that  Canandaigua  Select  Equity recorded the best
performance  for  1998  of  any fund managed in the region.  Business Choice was
introduced  mid-year  and  is  popular  with  our  business  accounts wishing to
effectively  manage  their  short-term  cash  at  market  rates  while providing
day-to-day  availability  to  meet  operational  requirements.  In  November, we
opened  our  Webster  banking office, serving all points between the Village and
the  Baytowne  area  of the Town of Penfield.  An April date is slated to open a
banking office in Greece on Ridge Road, adjacent to the library and the old Town
Hall.  We  have  an  agreement  in  principle  to  purchase  a  bank building in
Irondequoit  (Columbia, now M&T) on Hudson Avenue across from Irondequoit Plaza.
Judging  from  the reaction to our Webster facility opening celebration recently
held  on  January  28th,  our  presence  as  an  independent,  locally-owned,
full-service,  community  bank  is  a  welcome  addition  to  the  area.
  At  the  close  of  the  first quarter we prevailed in our lawsuit against the
Superintendent  of  Insurance,  gaining  a  permanent  injunction  against  the
enforcement  of  Section  2501  of  the  New York Insurance Law which would have
precluded us from selling property and casualty insurance to our loan customers.
This decision, in connection with the recently passed "wild card" statute of New
York  State  Banking  Law,  has  led  the way now to enfranchise all banks, both
national  and  state  chartered, in New York State to sell property and casualty
insurance.  Currently, we sell or can place all kinds of insurance for customers
on  a  case-by-case  basis and are working on a business plan to develop greater
volumes  in the coming year.  With the  addition of insurance, we now have fully
achieved our goal to be able to offer, from under the same roof, a complete line
of  financial  services  for  individuals.
  Our  subsidiary,  HomeTown  Funding, delivered a banner performance seeing its
first  year  of profitability.  New personnel and processing ability resulted in
growth  and  stability.  Through  HomeTown  Funding,  we  have  added  access to
sub-prime  markets  and  the ability to provide mortgage financing for virtually
every  one  of  our customers no matter how challenged they may be from a credit
standpoint.
  Similarly,  our affiliation with USA Payroll continues to grow as that company
achieved  profitability  for  the  first  time this year.  As a payroll service,
there  are  many  synergies to be availed between and among our various customer
segments.
  The  vehicle  by  which  we  keep  all  of this organized, both internally and
externally,  is through our process of Life Stage Marketing which we continue to
develop.  Simply,  if  we understand our customer's commitments and concerns, we
immediately know the appropriate array and fit of various products and services.
It  is  the  assembly of these products and services wherein we add value to the
customer  relationship.  The  customer  receives  good  value  at  a  fair price
available  in  one  spot,  managed  and  coordinated  by  one  person.
  Earnings  for  1998 are $22.38 per share compared with $23.22 for the previous
year.  As  reported  at  mid-year, we were running behind $2.20 per share due to
one-time  charges  taken  in  the  first and second quarters relating to account
adjustments  connected  with  our  computer conversion at the close of 1997.  We
were able to implement strategies which regained most of the shortfall such that
our  final  earnings  performance was within $.84 of last year's returns.  Asset
growth  of  2.2%  year-over-year disguises a nearly 10% growth in average assets
and  deposits  for the entire year.  Nevertheless, the dividend for the year was
up  strongly  by  10%,  deposit growth up year-over-year 15.9% reflective of our
strong  capital  and promising prospects, respectively, as we position ourselves
for  growth  in  the  future.

                                     Page 2
  In  December  of 1998, M&T announced the acquisition of First National Bank of
Rochester  effective  the  second quarter of 1999.  We greeted this announcement
with  mixed  emotions.  Any time a community bank is absorbed there is cause for
concern  and  sadness  because  the  effect  is  to  remove  from the locale the
management of local financial resources in accord with local priorities.  On the
bright  side,  we  remain as the only locally owned financial institution in the
metropolitan market offering a full compliment of banking, trust, and investment
services.  This  opportunity adds significantly to a key strategy to broaden our
base  in areas of greater population.  In January, we revised our 1999 budget to
invest  in  this  opportunity which, in the short term, will reduce our earnings
but, in the long term, will enhance our prospects for growth toward our Plan for
the  Year  2010.  Recent  activities  have involved taping TV spots (a first for
us),  expanding  our  lending  staff in the Rochester market and identifying new
sales  and  support  staff  as  we  accelerate  our  plans  in  Irondequoit.
  On the legislative side, we participated with the New York Bankers Association
to  eliminate  much  of  the  damaging  provisions which were contained in HR 10
(passed  by  the  House)  by  working with the Senate Banking Staff and teams of
negotiators  from  underwriters,  sales  organizations  and  regulators  of  the
insurance  industry  in  New York and Connecticut.  Of course, Congress has been
consumed  by the impeachment process which has delayed any thought of productive
work  being  accomplished. We remain disappointed that Congress, by legislation,
ratified  the  illegal  expansion  over the last eight years of Credit Unions in
contravention  of  the  "common  bond" prerequisite for membership found to have
been  violated  by the Supreme Court of the United States.  Credit Unions remain
free  from  payment  of  Federal  and  State income taxes, enjoy exemptions from
Community  Reinvestment  Act provisions and are benefited by special  accounting
rules  which  amount  to  an  enormous  subsidy.  This  may contain the seeds of
ultimate  vulnerability  as  in the case of the thrift industry, where it led to
its  ultimate  demise.  These inequities and the loss of an estimated $1 billion
per  year  in  tax  revenues  falls  upon  the  deaf  ears  of  Congress.
  We  are entering our ninth year of economic expansion.  The growth of GDP over
the  last  three  years  averaged  nearly  3.7% per year.  Our State and Federal
governments  experienced  surpluses  for the first time in nearly three decades.
Unemployment,  by  any  measure, is as low as it has ever been, and inflation is
remarkably  well  behaved.  Troubles in Russia and Brazil are serious, yet their
contagion  seems  far  removed.  Accordingly, loan portfolios are healthy in big
and  small  banks,  earnings  and  capital  of  the  industry remain strong, and
prospects  for the future are positive.  Part of this is due to good fortune and
part  is  due  to  good  management  of  monetary policy by the Federal Reserve.
  As  we  invest  in  our  future,  we  are  excited  by the challenges recently
presented  to  us.  Moreover, as experienced and talented people come to us from
other financial institutions, we are bolstered by the confirmation of our vision
and  mission  which their commitment to us implies.  Whether it be at home or at
the  business  site,  whether  it  be  in  person  or through interaction on the
Internet,  we  are  prepared  to  offer  comprehensive  financial  services  to
individuals  and  their  families  and  businesses wherever they may be located.
  These  greetings  would  not  be  complete  without  introducing  our  two new
Directors,  James  Fralick  and  Richard  Miller,  who  bring  to  us  important
experience coupled with a strong commitment to our community as we move into the
new millennium.  Jim has had a career in economics which has spanned the Federal
Reserve  to  Morgan  Stanley  in  London,  and Dick's experiences range from CEO
positions  in  sales and management in industry to his current position as Chief
Operating Officer of the University of Rochester.  Their profiles appear on page
35.  To  this  we  add  our  gratitude  to  our  associates wherever they may be
situated,  especially for their creative efforts applied day by day to bring our
vision  to  a  reality.

Very  truly  yours,

/s/  George  W.  Hamlin,  IV

George  W.  Hamlin,  IV
President
                                     Page 3
CANANDAIGUA  NATIONAL  CORPORATION  BOARD  OF  DIRECTORS

 (photograph  of  the  Board  of  Directors)

Back  Row:  Stephen  D.  Hamlin,  George  W.  Hamlin,  IV,  Robert  G. Sheridan,
David  Hamlin,  Jr.,  Patricia  A.  Boland
Front Row: Frank H. Hamlin, Alan J. Stone, Chairman, Caroline C. Shipley, Daniel
P.  Fuller
Not  pictured:  James  S.  Fralick,  Richard  P.  Miller,  Jr.  (See  page  35)

Patricia  A.  Boland  Retired  Executive  Director,  Granger  Homestead
 James  S.  Fralick  Adjunct  Professor,  University of Rochester's Simon School
  and  Syracuse  University's  Maxwell  School
 Daniel  P.  Fuller  Owner,  Bristol  Mountain
 David  Hamlin,  Jr.  Farmer
 Frank  H.  Hamlin  Investor
 George  W.  Hamlin,  IV  President,  CEO,  Trust  and  CRA  Officer,
  The  Canandaigua  National  Bank  and  Trust  Company
 Stephen  D.  Hamlin  President  and  CEO,  Sonnenberg  Gardens
 Richard  P.  Miller,  Jr.  Senior  Vice  President  and Chief Operating Officer
  University  of  Rochester
 Robert  G.  Sheridan  Retail  Senior  Vice  President  and  Cashier,
  The  Canandaigua  National  Bank  and  Trust  Company
 Caroline C. Shipley Educator, Director New York State School Boards Association
 Alan  J.  Stone  Chairman  of  the  Board  of  Directors,
  The  Canandaigua  National  Bank  and  Trust  Company
  Managing  Partner,  Stone  Properties


 Emeritus  Board  Members
 Arthur  S.  Hamlin  Retired  Banker
 Eldred  M.  Sale  Retired  Banker
 Willis  F.  Weeden,  MD  Retired  Surgeon


 Officers
 George  W.  Hamlin,  IV  President
 Robert  G.  Sheridan,  Secretary
 Gregory  S.  MacKay,  Treasurer

                                     Page 4
About  The  Corporation
-----------------------

Canandaigua  National  Corporation  is  a  one-bank  holding  company  providing
comprehensive  financial  services.  Its  wholly  owned subsidiaries include The
Canandaigua  National  Bank  and  Trust Company and a mortgage company. The Bank
engages  in  full-service  commercial  and  consumer banking, trust business and
insurance  services.  Its  market  area  is generally Western Ontario County and
Eastern  Monroe  County.
<TABLE>

<CAPTION>

                              Financial Highlights
                     Years ended December 31, 1998 and 1997
                  (dollars in thousands, except per share data)


                                        1998   %Change     1997
                                     --------           -------              
<S>                                  <C>        <C>     <C>
Net Income                           $  3,587    (4.0)    3,737 
Cash Dividends                       $  1,766     9.8     1,609 
Basic Earnings Per Share             $  22.38    (3.6)    23.22 
Dividends Per Share                  $  11.00    10.0     10.00 
Book Value Per Share                 $ 265.94     4.3    254.92 
Total Assets                         $428,047     2.2   418,942 
Securities                           $ 72,916     2.2    71,381 
Loans-Net                            $308,486     0.8   305,991 
Deposits                             $376,507    15.9   324,761 
Stockholders' Equity                 $ 42,478     3.8    40,932 
Weighted Average Shares Outstanding   160,254    (0.4)  160,955 
Return on Average Assets                  .86%  (12.2)      .98%
Return on Beginning Equity               8.76%   (8.3)     9.55%
</TABLE>



<TABLE>

<CAPTION>

                 The Canandaigua National Bank and Trust Company
                                Trust Department
                     Years ended December 31, 1998 and 1997
                       (at cost, in thousands of dollars)


                                          1998   %Change     1997
                                       --------            -------
<S>                                    <C>         <C>     <C>
Estate, Trust and Guardianship Assets  $139,211    35.1    103,025
Custodian Account Assets                263,955    12.2    235,212
The Canandaigua Funds' Assets            20,414     5.0     19,449
                                       --------            -------
Total Assets Under Administration      $423,580    18.4    357,686
                                       ========            =======
</TABLE>









                                     Page 5








Graph  1  (depicting  Assets,  Deposits  and  Loans  for the years 1994 to 1998)









Graph  2  (depicting  Stockholders'  Equity  for  the  years  1994  to  1998)





















                                     Page 6

Independent  Auditors'  Report





The  Stockholders  and  Board  of  Directors
Canandaigua  National  Corporation:

We  have  audited  the  accompanying  consolidated balance sheets of Canandaigua
National  Corporation and subsidiaries as of December 31, 1998 and 1997, and the
related  consolidated  statements of income, stockholders' equity and cash flows
for  each  of  the years in the three-year period ended December 31, 1998. These
consolidated  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is to express an opinion on these consolidated
financial  statements  based  on  our  audits.

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

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Canandaigua National
Corporation  and  subsidiaries at December 31, 1998 and 1997, and the results of
their  operations  and  their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles.


/s/KPMG  LLP


January  28,  1999
Rochester,  New  York














                                     Page 7
<TABLE>

<CAPTION>

Canandaigua  National  Corporation  and  Subsidiaries
                             Consolidated Balance Sheets
                              December 31, 1998 and 1997
                   (dollars in thousands, except per share amounts)


Assets                                                              1998       1997
----------------------------------------------------------------  ---------  --------
<S>                                                               <C>        <C>

Cash and due from banks                                           $ 23,892    19,389 
Interest-bearing deposits with other financial institutions            314       258 
Securities:
  - Available for sale, at fair value                                  437       394 
  - Held-to-maturity (fair value of $73,688 in 1998 and
    $71,284 in 1997)                                                72,479    70,987 
Loans - net of allowance of $3,283 in 1998 and $3,153 in           308,486   305,991 
  1997 
Premises and equipment - net                                        11,468    11,184 
Accrued interest receivable                                          2,244     2,372 
Federal Home Loan Bank stock and Federal Reserve Bank stock          3,548     3,118 
Other assets                                                         5,179     5,249 
                                                                  ---------  --------
        Total Assets                                              $428,047   418,942 
                                                                  =========  ========

Liabilities and Stockholders' Equity
----------------------------------------------------------------                     
Deposits:
  Demand
    Non-interest bearing                                          $ 64,368    73,297 
    Interest bearing                                                56,877    37,229 
  Savings and money market                                         109,316   100,647 
  Certificates of deposit                                          145,946   113,588 
                                                                  ---------  --------
        Total deposits                                             376,507   324,761 
FHLB advances                                                        7,142    50,667 
Accrued interest payable and other liabilities                       1,920     2,582 
                                                                  ---------  --------
        Total Liabilities                                         $385,569   378,010 
                                                                  ---------  --------

Commitments and Contingencies (Notes 13 and 14)

Stockholders' Equity:
  Common stock, $50 par value; 240,000 shares authorized;
    162,208 shares issued in 1998 and 1997                           8,110     8,110 
  Additional paid in capital                                         8,489     8,489 
  Retained earnings                                                 26,569    24,742 
  Treasury stock at cost (2,479 shares in 1998 and 1,642 shares
    in 1997)                                                          (835)     (528)
  Accumulated other comprehensive income                               145       119 
                                                                  ---------  --------
        Total Stockholders' Equity                                  42,478    40,932 
                                                                  ---------  --------
        Total Liabilities and Stockholders' Equity                $428,047   418,942 
                                                                  =========  ========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                     Page 8
<PAGE>
<TABLE>

<CAPTION>

Canandaigua  National  Corporation  and  Subsidiaries

                         Consolidated Statements of Income
                    Years ended December 31, 1998, 1997 and 1996
                  (dollars in thousands, except per share amounts)


                                                            1998     1997    1996
                                                           -------  ------  -------
<S>                                                        <C>      <C>     <C>
Interest income:
  Loans, including fees                                    $26,834  25,389  20,681 
  Securities                                                 3,967   4,027   4,070 
  Other                                                         52      17     389 
                                                           -------  ------  -------
        Total interest income                               30,853  29,433  25,140 
                                                           -------  ------  -------
Interest expense:
  Deposits                                                  10,746   9,733   8,735 
  Borrowings                                                 1,687   1,506      62 
                                                           -------  ------  -------
      Total interest expense                                12,433  11,239   8,797 
                                                           -------  ------  -------
      Net interest income                                   18,420  18,194  16,343 
Provision for loan losses                                      641     851   1,490 
                                                           -------  ------  -------
      Net interest income after provision for loan losses   17,779  17,343  14,853 
                                                           -------  ------  -------

Other income:
  Service charges on deposit accounts                        1,810   1,534   1,661 
  Trust income                                               2,249   1,723   1,337 
  Net gain (loss) on sale of mortgages                         125      29     (24)
  Other operating income                                     1,740     502     427 
                                                           -------  ------  -------
      Total other income                                     5,924   3,788   3,401 
                                                           -------  ------  -------

Operating expenses:
  Salaries & employee benefits                              10,557   9,638   8,382 
  Occupancy expense                                          3,007   2,736   2,685 
  FDIC insurance                                                39      38       2 
  Marketing and public relations                               515     399     293 
  Office supplies, printing and postage                        807     712     616 
  Professional                                                 222     223     363 
  Other operating expenses                                   3,283   1,886   1,822 
                                                           -------  ------  -------
      Total operating expenses                              18,430  15,632  14,163 
                                                           -------  ------  -------

      Income before income taxes                             5,273   5,499   4,091 
Income taxes                                                 1,686   1,762   1,144 
                                                           -------  ------  -------
      Net income                                           $ 3,587   3,737   2,947 
                                                           =======  ======  =======

Basic earnings per share                                   $ 22.38   23.22   18.20 
                                                           =======  ======  =======

<FN>


See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                     Page 9
<PAGE>
<TABLE>

<CAPTION>

Canandaigua  National  Corporation  and  Subsidiaries

                         Consolidated Statements of Stockholders' Equity
                           Years ended December 31, 1998, 1997 and 1996
                          (dollars in thousands, except per share data)


                                                                            Accumulated
                                         Additional                           Other
                                Common      Paid in  Retained   Treasury   Comprehensive
                                 Stock      Capital  Earnings     Stock       Income       Total
                              ------------  -------  ---------  ---------  -------------  -------
<S>                           <C>           <C>      <C>        <C>        <C>            <C>
Balance at December 31, 1995  $      8,058    8,203    21,083          -              53  37,397 
  Comprehensive income:
    Change in unrealized
     gain on securities
     available for sale,
     net of taxes of $16                 -        -         -          -              25      25 
    Net income                           -        -     2,947          -               -   2,947 
                              ------------  -------  ---------  ---------  -------------  -------
  Total comprehensive
   income                                -        -     2,947          -              25   2,972 
                              ------------  -------  ---------  ---------  -------------  -------
  Cash dividend - $8.75
   per share                             -        -    (1,414)         -               -  (1,414)
  Issuance of 1,053 shares
   in acquisition                       52      286         -          -               -     338 
  Purchase of 550 shares
   of treasury stock                     -        -         -       (174)              -    (174)
                              ------------  -------  ---------  ---------  -------------  -------
Balance at December 31, 1996         8,110    8,489    22,616       (174)             78  39,119 
                              ------------  -------  ---------  ---------  -------------  -------

  Comprehensive income:
    Change in unrealized
     gain on securities
     available for sale,
     net of taxes of $27                 -        -         -          -              41      41 
    Net income                           -        -     3,737          -               -   3,737 
                              ------------  -------  ---------  ---------  -------------  -------
  Total comprehensive
   income                                -        -     3,737          -              41   3,778 
                              ------------  -------  ---------  ---------  -------------  -------
  Cash dividend - $10.00
   per share                             -        -    (1,609)         -               -  (1,609)
  Sale of 139 shares of
   treasury stock                        -        -        (2)        44               -      42 
Purchase of 1,231 shares
of treasury stock                        -        -         -       (398)              -    (398)
                              ------------  -------  ---------  ---------  -------------  -------
Balance at December 31, 1997         8,110    8,489    24,742       (528)            119  40,932 
                              ------------  -------  ---------  ---------  -------------  -------

Comprehensive income:
Change in unrealized
gain on securities
available for sale,
net of taxes of $17                      -        -         -          -              26      26 
Net income                               -        -     3,587          -               -   3,587 
                              ------------  -------  ---------  ---------  -------------  -------
Total comprehensive
income                                   -        -     3,587          -              26   3,613 
                              ------------  -------  ---------  ---------  -------------  -------
Cash dividend - $11.00
per share                                -        -    (1,766)         -               -  (1,766)
Sale of 135 shares of
treasury stock                           -        -         6         41               -      47 
Purchase of 972 shares
of treasury stock                        -        -         -       (348)              -    (348)
                              ------------  -------  ---------  ---------  -------------  -------
Balance at December 31, 1998  $      8,110    8,489    26,569       (835)            145  42,478 
                              ============  =======  =========  =========  =============  =======

<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>



                                     Page 10
<PAGE>
<TABLE>

<CAPTION>

Canandaigua  National  Corporation  and  Subsidiaries

                          Consolidated Statements of Cash Flows
                      Years ended December 31, 1998, 1997 and 1996
                                 (dollars in thousands)



                                                             1998       1997      1996
                                                          ----------  --------  --------
<S>                                                       <C>         <C>       <C>
Cash flow from operating activities:
  Net income                                              $   3,587     3,737     2,947 
  Adjustments to reconcile net income to
   net cash from operating activities:
  Depreciation and amortization                               1,793     1,415     1,012 
  Provision for loan losses                                     641       851     1,490 
  Writedown of other real estate owned                           50       274       205 
  Deferred income taxes                                        (256)     (210)     (338)
  Originations of loans held for sale                      (116,551)  (28,481)   (7,391)
  Proceeds from sale of loans held for sale                 115,702    27,033     7,675 
  Increase) decrease in accrued interest receivable
   (and other assets                                            149      (312)     (168)
  Increase (decrease) in accrued interest payable and
   Other liabilities                                           (662)      634       290 
                                                          ----------  --------  --------
      Net cash provided by operating activities               4,453     4,941     5,722 
                                                          ----------  --------  --------

Cash flows from investing activities:
  Proceeds from call of FHLB stock                                -         -        18 
  Purchase of FHLB and FRB stock                               (430)   (1,354)     (376)
  Securities held to maturity:
   Proceeds from maturities and calls of securities          32,740    37,219    37,328 
   Purchases of securities                                  (34,025)  (38,319)  (36,639)
  Loans made net of principal payments                       (2,663)  (52,133)  (48,618)
  Fixed asset purchases - net                                (2,104)   (3,469)   (1,894)
  Acquisition of subsidiary                                       -      (196)     (102)
  Investment in minority owned subsidiary                      (762)   (1,014)        - 
  Proceeds from sale of other real estate                     1,196       892       372 
                                                          ----------  --------  --------
      Net cash used by investing activities                  (6,048)  (58,374)  (49,911)
                                                          ----------  --------  --------

Cash flows from financing activities:
  Net increase (decrease) in demand, savings and short-
   term deposits                                             19,388    14,880     9,511 
  Proceeds from issuance of certificates of deposit net
   of payments on maturing certificates                      32,358     1,915    21,404 
  Proceeds from long term FHLB advances                           -    39,100    10,600 
  Principal repayments on FHLB advances                     (43,525)      (23)      (23)
  Proceeds from sale of common stock                             47        42         - 
  Purchase of treasury stock                                   (348)     (398)     (174)
  Dividends paid                                             (1,766)   (1,609)   (1,414)
                                                          ----------  --------  --------
      Net cash provided by financing activities               6,154    53,907    39,904 
                                                          ----------  --------  --------

      Net (decrease) increase in cash & cash equivalents      4,559       474    (4,285)
  Cash & cash equivalents - beginning of year                19,647    19,173    23,458 
                                                          ----------  --------  --------
  Cash & cash equivalents-end of year                     $  24,206    19,647    19,173 
                                                          ==========  ========  ========

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest                                              $  12,312    11,128     8,784 
                                                          ==========  ========  ========
    Income taxes                                          $   2,142     1,409     1,341 
                                                          ==========  ========  ========
Supplemental disclosure of non-cash investing
 activity:
  Additions to other real estate acquired through
   foreclosure, net of loans to facilitate sales          $     376     2,538      (423)
                                                          ==========  ========  ========
  Acquisition of subsidiary for 1,053 shares of common
   stock                                                  $       -         -       338 
                                                          ==========  ========  ========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                     Page 11
<PAGE>

Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements
                        December 31, 1998, 1997 and 1996

(1)  Summary  of  Significant  Accounting  Policies

Business

Canandaigua  National  Corporation  (the  Company)  provides  a  full  range  of
financial  services,  including  banking,  trust,  and  insurance  services  to
individual,  corporate,  and  municipal  customers.  The  Company  is subject to
competition  from other financial institutions. The Company and its subsidiaries
are subject to the regulations of certain federal and state agencies and undergo
periodic  examinations  by  those  regulatory  authorities.

Basis  of  Presentation

The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned subsidiaries, The Canandaigua National Bank and Trust Company
(the Bank), Greater Funding of New York, Inc., and HomeTown Funding, Inc. (HTF).
All  significant  intercompany accounts and transactions have been eliminated in
consolidation.  The  Company  accounts  for  investments  in  minority  owned
subsidiaries  under  the  equity  method.  The  financial  statements  have been
prepared in conformity with generally accepted accounting principles and conform
with  predominant  practices  within  the  banking  industry.

In  preparing  the  consolidated financial statements, management made estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  Actual  results  could  differ  from  those  estimates.

Amounts  in  prior  years'  consolidated  financial  statements are reclassified
whenever  necessary  to  conform  with  the  current  year's  presentation.

Securities

The  Company classifies its debt securities as either available for sale or held
to  maturity  as  the  Company  does  not  hold  any securities considered to be
trading.  Held to maturity securities are those that the Company has the ability
and  intent  to hold until maturity. Held to maturity securities are recorded at
amortized  cost.  All  other  securities  not  included  as held to maturity are
classified  as  available  for  sale.

Available  for  sale  securities  are recorded at fair value. Unrealized holding
gains  and  losses,  net  of  the  related  tax  effect,  on  available for sale
securities  are  excluded  from  earnings  and  are  reported  as a component of
accumulated other comprehensive income in stockholders' equity until realized. A
decline  in  fair  value  of any available for sale or held to maturity security
below  cost that is deemed other than temporary is charged to earnings resulting
in  the  establishment  of  a  new  cost  basis  for  the  security.

Premiums  and  discounts  are amortized or accreted over the life of the related
security  as  an  adjustment  to  yield  using the interest method. Dividend and
interest  income  are  recognized  when  earned.  Realized  gains and losses are
included  in  earnings  and  are  determined  using  the specific identification
method.

Loans

Loans are stated at the principal amount outstanding net of deferred origination
costs. Interest and costs on loans are credited to income based on the effective
interest  method.

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.




                                     Page 12
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes  to  Consolidated  Financial  Statements

(1)  Summary  of  Significant  Accounting  Policies  (continued)

Loans  held-for-sale  are  carried  at  the  lower of cost or market value on an
aggregate  basis.  Market  value  is  estimated  based  on  outstanding investor
commitments,  or  in  the  absence  of  such commitments, based on current yield
requirements  or  quoted  market  prices.

The  Company  services  residential  mortgage  loans  for  the Federal Home Loan
Mortgage  Corporation  (Freddie  Mac)  and  earns  servicing  fees,  which  are
recognized  when  payments  are  received,  based upon the outstanding principal
balance  of  the loans. The cost of originating these loans is attributed to the
loans  and  is  considered in the calculation of the gain or loss on the sale of
the  loans.  Due  to immateriality the right to service the loans is assigned no
financial  statement  value.

Allowance  for  Loan  Losses

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.

While management uses available information to recognize losses on loans, future
additions  to  the  allowance  may  be  necessary  based  on changes in economic
conditions.  In  addition,  various  regulatory agencies, as an integral part of
their  examination process, periodically review the Company's allowance for loan
losses.  Such  agencies  may  require  the Company to recognize additions to the
allowance  based  on  their judgments about information available to them at the
time  of  their  examination.

Management,  considering current information and events regarding the borrowers'
ability  to  repay their obligations, considers a loan to be impaired when it is
probable that the Company will be unable to collect all amounts due according to
the  contractual  terms  of  the loan agreement. When a loan is considered to be
impaired, the amount of the impairment is measured based on the present value of
expected  future cash flows discounted at the loan's effective interest rate, or
as  a  practical  expedient,  at  the loan's observable market price or the fair
value  of  collateral if the loan is collateral dependent. Impairment losses are
included  in the allowance for loan losses through a charge to the provision for
loan losses. Cash receipts on impaired loans are applied to reduce the principal
balance  outstanding  and  accrued but unpaid interest. In considering loans for
evaluation  of  impairment,  management  generally  excludes  smaller  balance,
homogeneous  loans  -  residential  mortgage  loans,  home  equity loans and all
consumer  loans.  These  loans  are  collectively  evaluated  for  impairment as
discussed  above.

Premises  and  Equipment

Land  is  carried  at cost. Buildings, equipment, and leasehold improvements are
carried at cost, less accumulated depreciation and amortization. Depreciation is
computed  using  straight-line and accelerated methods over the estimated useful
lives  of  the  assets,  3-25  years.  Amortization of leasehold improvements is
provided  over the lesser of the term of the lease or the estimated useful lives
of  the  assets.

Intangible  Assets

Goodwill,  which represents the excess of the purchase price over the fair value
of  identifiable  assets acquired in 1997, is being amortized over five years on
the  straight-line method. The amortization period is reviewed at least annually
to  determine  if  events and circumstances require the period to be reduced. At
December  31,  1998  and  1997  the  unamortized balance of goodwill amounted to
$348,000  and  $476,000,  respectively.  Insurance  expirations (customer list),
acquired  through  acquisition  in  1996,  are  amortized  over  five years, the
expected  period  over  which  commission  income  will  be received. The amount
remaining  to  be  amortized  at  December  31,  1998  and 1997 was $158,000 and
$225,000,  respectively.







                                     Page 13
Canandaigua  National  Corporation  and  Subsidiaries

                 Notes  to  Consolidated  Financial  Statements

(1)  Summary  of  Significant  Accounting  Policies  (continued)

Other  Real  Estate

Real  estate  acquired through foreclosure or deed in lieu of foreclosure (other
real estate) is recorded at the lower of the unpaid loan balance on the property
at  the  date  of  transfer,  or  fair  value.  Adjustments made to the value at
transfer  are  charged  to  the  allowance  for loan losses. After transfer, the
property  is carried at the lower of cost or estimated fair value less estimated
costs to sell. Adjustments to the carrying values of such properties that result
from  subsequent  declines  in  value are charged to operations in the period in
which  the  declines  occur.  Operating  earnings  and costs associated with the
properties  are  charged to expense as incurred. Gains on the sale of other real
estate  are included in results of operations when title has passed and the sale
has  met the minimum down payment and other requirements prescribed by generally
accepted  accounting  principles.

Income  Taxes

The  Company and its subsidiaries file a consolidated federal income tax return.
Deferred  income  tax  assets  and liabilities are recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences  are expected to be recovered or settled. The effect on deferred tax
assets  and  liabilities of a change in tax rates is recognized in income in the
period  that  includes  the  enactment  date.

Accumulated  Other  Comprehensive  Income

On  January  1,  1998,  the  Company  adopted  the  provisions  of SFAS No. 130,
Reporting  Comprehensive  Income.  This  statement  establishes  standards  for
reporting  and display of comprehensive income and its components. The Company's
comprehensive  income consists of only net income and the net unrealized holding
gains  and  losses  of  securities  available  for  sale, net of the related tax
effect. Accumulated other comprehensive income on the consolidated statements of
stockholders'  equity  is  presented  net  of  taxes.

Trust  Department  Income

Assets,  at  cost, held in fiduciary or agency capacity for customers, amounting
to  $424,000,000  and  $358,000,000 at December 31, 1998 and 1997, respectively,
are  not  included  in  the accompanying consolidated balance sheets, since such
assets  are  not  assets of the Company. Fee income is recognized on the accrual
method.

Cash  Equivalents

For  the purpose of reporting cash flows, cash and cash equivalents include cash
on hand, interest bearing deposits with other financial institutions and Federal
funds  sold.

Financial  Instruments  With  Off-Balance-Sheet  Risk

The  Company does not engage in the use of derivative financial instruments. The
Company's  only financial instruments with off-balance-sheet risk are commercial
letters  of  credit  and  committed  mortgages  and  lines  of  credit.  These
off-balance-sheet  items  are shown on the Company's balance sheet upon funding.

Treasury  Stock

Treasury  stock is shown on the consolidated balance sheet at cost as a separate
component  of  stockholders'  equity,  and  is  a  reduction thereto. Shares are
released  from treasury at fair value, with any gain on the sale reflected as an
adjustment  to  additional  paid-in  capital  or  retained  earnings. Losses are
reflected  as an adjustment to additional paid-in capital to the extent of gains
previously  recognized,  otherwise  as  an  adjustment  to  retained  earnings.





                                     Page 14
Canandaigua  National  Corporation  and  Subsidiaries

Notes  to  Consolidated  Financial  Statements

(1)  Summary  of  Significant  Accounting  Policies  (continued)

Per  Share  Data

Basic  earnings  per  share  was  computed  on the basis of the weighted average
number  of  common  shares outstanding. On December 31, 1997 the Company adopted
the  provisions of Statement of Financial Accounting Standard No. 128, "Earnings
Per Share." Adoption of this statement had no effect on the Company as it had no
potentially  dilutive  securities  in 1997. As discussed in note 12, the Company
adopted  an  incentive stock plan in 1998, however, no options have been granted
under  the  plan.  The  weighted average number of common shares outstanding for
each  of  the  years  in  the  three-year  period ended December 31, 1998 are as
follows:  1998 - 160,254; 1997 - 160,955; and 1996 - 161,855. Net income used in
the  calculation  of  basic  earnings  per  share  is  net  income  shown on the
consolidation  statement  of  income.

Other  Recently  Issued  Accounting  Standards

Effective  January 1, 1998, the Company adopted the remaining provisions of SFAS
No.  125,  "Accounting  for  Transfers  and  Servicing  of  Financial Assets and
Extinguishments  of  Liabilities", which relate to the accounting for securities
lending,  repurchase  agreements,  and other secured financing activities. These
provisions,  which were delayed for implementation by SFAS No. 127, did not have
a  material  impact  on  the  Company.

During 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise  and  Related  Information",  which  revised  its  requirements  for
disclosing  segment data. The new standard did not result in significant changes
in  the  Company's  reporting.

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.

(2)  Acquisitions

     In  October 1997, the Company acquired all of the outstanding shares of the
mortgage  banking  company HomeTown Funding, Inc. In May 1996, the Bank acquired
the  Burlingham Agency (BA), a life insurance agency. In April 1996, the Company
acquired  all  of the outstanding shares of the mortgage banking company Greater
Funding  of  New York, Inc. Up to that date, the Company had owned 33% of GFNYI.
The  pro  forma  effect  of  these  acquisitions  was  not  material.













                                     Page 15

Canandaigua  National  Corporation  and  Subsidiaries

Notes  to  Consolidated  Financial  Statements

(3)  Federal  Funds  Sold

     Income from Federal funds sold for the years ended December 31, 1998, 1997,
and  1996  was  $33,000,  $1,000,  and  $374,000,  respectively.

(4)  Securities

<TABLE>

<CAPTION>

The aggregate amortized cost and fair value of Securities Available for Sale and
Securities Held to Maturity at December 31, 1998 and 1997 follow (in thousands):


                                              1998                 1997
                                    Amortized     Fair     Amortized   Fair
                                         Cost     Value         Cost   Value
                                      -------     ------      ------    ------
<S>                                   <C>         <C>         <C>       <C>
Securities Available for Sale:
  Common Stock                        $   195        437         195       394
                                      =======     ======      ======    ======

Securities Held to Maturity:
  U.S Treasury obligations            $29,936     30,126      30,413    30,506
  U.S. Government agencies                  -          -       1,000       996
  Mortgage-backed securities              308        309         334       352
  Obligations of state and municipal
   Subdivisions                        39,253     40,224      34,273    34,406
  Other securities                      2,982      3,029       4,967     5,024
                                      -------     ------      ------    ------
      Total                           $72,479     73,688      70,987    71,284
                                      =======     ======      ======    ======
</TABLE>



<TABLE>

<CAPTION>

Gross  unrealized  gains and gross unrealized losses on Securities Available for
Sale  and  Securities  Held to Maturity at December 31, 1998 and 1997 follow (in
thousands):


                                             1998               1997
                                          Unrealized         Unrealized
                                        Gains   Losses     Gains   Losses
<S>                                   <C>        <C>         <C>    <C>
Securities Available for Sale:
  Common Stock                        $   242      -         199       - 
                                      =======    ====        ===    =====

Securities Held to Maturity:
  U.S Treasury obligations            $   201    (11)        159     (66)
  U.S. Government agencies                  -      -           -      (4)
  Mortgage-backed securities                1      -          18       - 
  Obligations of state and municipal
   Subdivisions                           985    (14)        258    (125)
  Other securities                         47      -          59      (2)
                                      -------    ----        ---    -----
      Total                           $ 1,234    (25)        494    (197)
                                      =======    ====        ===    =====
</TABLE>
















                                     Page 16
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                     Notes  to  Consolidated  Financial  Statements

(4)  Securities  (continued)
<TABLE>

<CAPTION>

The  amortized  cost  and  fair value of securities Held to Maturity by years to
maturity     as  of  December  31,  1998  follow  (in  thousands):


Amortized Cost:                               Obligations of
                                    Mortgage-      state and
                  U.S. Treasury        backed      municipal      Other
                   obligations     securities   subdivisions  securities
                 ---------------  ------------  ------------  ----------
<S>              <C>              <C>           <C>           <C>
Years
  Under 1        $        17,444             9         7,648       1,000
  1 to 5                  12,492            34        26,480       1,982
  5 to 10                      -            42         5,072           -
  10 and over                  -           223            53           -
                 ---------------  ------------  ------------  ----------
      Total      $        29,936           308        39,253       2,982
                 ===============  ============  ============  ==========

Fair Value:                                   Obligations of
                                     Mortgage-     state and
                   U.S. Treasury        backed     municipal     Other
                     obligations    securities  subdivisions  securities
                 ---------------  ------------  ------------  -----------
Years
  Under 1        $        17,517             9         7,731       1,006
  1 to 5                  12,609            34        27,224       2,023
  5 to 10                      -            42         5,206           -
  10 and over                  -           224            63           -
                 ---------------  ------------  ------------  ----------
      Total      $        30,126           309        40,224       3,029
                 ===============  ============  ============  ==========
</TABLE>


Maturities  of  mortgage-backed securities are classified in accordance with the
contractual repayment schedules. Expected maturities will differ from contracted
maturities  since  issuers  may  have  the  right  to call or prepay obligations
without  penalties.

Securities  Held to Maturity with carrying values of $66,432,000 were pledged as
collateral  against  municipal  deposits  at  December  31,  1998.

<TABLE>

<CAPTION>

Interest  on  securities  segregated  between  taxable  interest  and tax-exempt
interest  for  the  years  ended  December  31, 1998, 1997, and 1996 follows (in
thousands):


              1998   1997   1996
             ------  -----  -----
<S>          <C>     <C>    <C>
Taxable      $2,400  2,587  2,728
Tax-exempt    1,567  1,440  1,342
             ------  -----  -----
      Total  $3,967  4,027  4,070
             ======  =====  =====
</TABLE>


     The  Bank's  required investment in stock of the Federal Home Loan Bank and
the  Federal  Reserve Bank amounted to $3,548,000 and $3,118,000 at December 31,
1998  and  1997,  respectively,  which  equals  the  Company's  cost  basis.















                                     Page 17
<PAGE>

Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(5)  Loans

<TABLE>

<CAPTION>

The  major  classifications  of  loans  at December 31, 1998 and 1997 follow (in
thousands):


                                          1998     1997
                                        --------  -------
<S>                                     <C>       <C>
Commercial, financial and agricultural  $ 43,260   37,610
Mortgages:
  Residential                             76,130   94,593
  Commercial                              83,771   74,228
Consumer:
  Auto - Indirect                         84,370   73,211
  Other                                   17,753   15,245
Other                                      3,516   12,138
Loans held for sale                        2,969    2,119
                                        --------  -------
    Total                                311,769  309,144
Less - allowance for loan losses           3,283    3,153
                                        --------  -------
Loans - net                             $308,486  305,991
                                        ========  =======
</TABLE>


<TABLE>

<CAPTION>

Interest and fees on loans for the years ended December 31, 1998, 1997, and 1996
follow  (in
 thousands):


                     1998     1997    1996
                    -------  ------  ------
<S>                 <C>      <C>     <C>
Commercial          $ 3,319   3,575   3,048
Mortgage             15,270  15,445  14,229
Consumer and other    8,245   6,369   3,404
                    -------  ------  ------
    Total           $26,834  25,389  20,681
                    =======  ======  ======
</TABLE>


<TABLE>

<CAPTION>

A  summary  of  the  changes  in  the  allowance  for  loan  losses  follows (in
thousands):


                                  Years Ended December 31,
                                 --------------------------
                                    1998     1997    1996
                                 --------  ------  -------
<S>                              <C>       <C>      <C>
Balance at beginning of year     $ 3,153   2,675    2,258 
Provision charged to operations      641     851    1,490 
Loans charged off                 (1,053)   (795)  (1,637)
Recoveries of loans charged off      542     422      564 
                                 --------  ------  -------
Balance at end of year           $ 3,283   3,153    2,675 
                                 ========  ======  =======
</TABLE>


The  principal  balance  of  loans  not accruing interest totaled $2,113,000 and
$3,176,000 at December 31, 1998 and 1997, respectively. The effect of nonaccrual
loans  on  interest income for the years ended December 31, 1998, 1997, and 1996
was  approximately  $239,000,  $636,000,  and $841,000, respectively. Other real
estate  owned  amounted  to  $1,642,000  and $2,512,000 at December 31, 1998 and
1997,  respectively, and is included in other assets in the consolidated balance
sheets.

     The recorded investment in loans that are considered to be impaired totaled
$2,113,000  and $3,176,000 at December 31, 1998 and 1997, respectively. Included
in  this amount was $38,000 and $917,000 of impaired loans for which the related
allowance  for  loan  losses  is  $18,000,  and  $100,000.  The average recorded
investment  in  impaired  loans  during  1998,  1997,  and  1996 was $2,728,000,
$6,245,000,  and  $11,113,000,  respectively.  The effect on interest income for
impaired loans was approximately $239,000 in 1998, $636,000 in 1997 and $841,000
in  1996.  Income  earned  on  impaired  loans  during  1998, 1997, and 1996 was
approximately  $281,000,  $259,000,  and  $149,000,  respectively.








                                     Page 18
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(5)  Loans  (continued)

At  December  31,  1998  residential  mortgage  loans  with  a carrying value of
approximately $7,900,000 were pledged as collateral for the Bank's advances from
the  Federal  Home  Loan  Bank,  and an additional $38,600,000 was available for
pledging.

Loans  serviced for others, amounting to $73,007,000 and $64,979,000 at December
31,  1998 and 1997, respectively, are not included in the consolidated financial
statements.

The Company's market area is generally Western Ontario County and Eastern Monroe
County  of  New  York  State.  Virtually  all loans are made in its market area.
Accordingly,  the  ultimate  collectibility  of  a  substantial  portion  of the
Company's  loan  portfolio  is  susceptible to changes in the conditions in this
area.

The  Company's concentrations of credit risk are as disclosed in the schedule of
loan  classifications. The concentrations of credit risk in loan commitments and
letters  of  credit  parallel  the  loan  classifications  reflected. Other than
general  economic  risks, management is not aware of any material concentrations
of  credit  risk  to  any  industry  or  individual  borrower.

(6)  Premises  and  Equipment

<TABLE>

<CAPTION>

A  summary  of  premises and equipment at December 31, 1998 and 1997 follows (in
thousands):


                                                 1998     1997
                                                -------  ------
<S>                                             <C>      <C>
Land and land improvements                      $   979     979
Buildings and leasehold improvements             13,280  12,525
Furniture, fixtures, equipment, and vehicles     10,113   9,737
                                                -------  ------
                                                 24,372  23,241
Less accumulated depreciation and amortization   12,904  12,057
                                                -------  ------
Premises and equipment - net                    $11,468  11,184
                                                =======  ======
</TABLE>



Depreciation  and  amortization  expense amounted to $1,820,000, $1,499,000, and
$1,239,000  for the years ended December 31, 1998, 1997, and 1996, respectively.


























                                     Page 19
<PAGE>

Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(7)Certificates  of  Deposit

Certificates  of deposit of $100,000 or more amounted to $59,329,000 at December
31,  1998  and  $36,423,000  at  December  31,  1997.  Interest expense on these
certificates  of deposit was as follows: $2,211,000 in 1998; $1,930,000 in 1997;
and  $1,437,000  in  1996.

<TABLE>

<CAPTION>

At  December  31,  1998, the scheduled maturity of these certificates of deposit
was  as  follows  (in  thousands):


<S>      <C>
1999     $45,797
2000       5,186
2001       8,346
         -------
          59,329
         =======         
</TABLE>



(8)Borrowing  from  FHLB

The  Company  maintains  a $21,000,000 overnight line of credit with the FHLB of
New  York of which $2,300,000 was outstanding at December 31, 1998. Advances are
payable  on  demand  and  generally bear interest at the federal funds rate plus
1/8%.  The  Company  also  has  access to the FHLB's Term Advance Program, which
allows  the  bank  to borrow up to $21,000,000 at various terms and rates. Under
the  terms  of  a  blanket collateral agreement with the FHLB, these outstanding
balances  are  collateralized  by  the  Company's  investment  in FHLB stock and
certain  other qualifying assets not otherwise pledged (primarily first mortgage
loans).

In 1995, the Bank borrowed $1,023,000 from the FHLB at an effective rate of 2.5%
to  fund  low-income  housing  projects.

<TABLE>

<CAPTION>

Scheduled  maturity  of  the  Company's borrowings from the FHLB at December 31,
1998  follows  (in  thousands):


                                                  Weighted Average
                                  Amount          Interest Rate
                               ---------          --------------    
<S>                            <C>                 <C> 
1999 overnight line of credit  $   2,300           5.13%
1999 other                         1,524           6.09 
2000                               1,324           6.16
2001                               1,124           6.12
2002                                  24           2.50
2003                                  24           2.50
After 2003                           822           2.50 
                               ---------                      
    Total                      $   7,142           5.36%
                               =========                      
</TABLE>

















                                     Page 20
<PAGE>Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(9)Income  Taxes

<TABLE>

<CAPTION>

Total  income  taxes  for the years ended December 31, 1998, 1997, and 1996 were
allocated  as  follows  (dollars  in  thousands):


                                                1998   1997   1996
                                               ------  -----  -----
<S>                                            <C>     <C>    <C>
Income before taxes                            $1,686  1,762  1,144
Change in stockholders' equity for unrealized
Gain on securities available for sale              17     27     16
                                               ------  -----  -----
                                               $1,703  1,789  1,160
                                               ======  =====  =====
</TABLE>


<TABLE>

<CAPTION>

The  components  of  income  tax  expense  are  as  follows  (in  thousands):


            Years Ended December 31,
           --------------------------             
                1998    1997    1996
           ---------  ------  ------
<S>        <C>         <C>     <C>
Current:
  Federal  $   1,465   1,503   1,066 
  State          477     469     416 
           ---------  ------  ------
               1,942   1,972   1,482 
Deferred        (256)   (210)   (338)
           ---------  ------  ------
    Total  $   1,686   1,762   1,144 
           =========  ======  ======
</TABLE>


<TABLE>

<CAPTION>

Income  tax  expense  was  $1,686,000,  $1,762,000, and $1,144,000 for the years
ended  December  31,  1998,  1997, and 1996, respectively, and differed from the
amounts  computed by applying the applicable U.S. Federal corporate tax rates to
pretax  income  from  operations  as  follows  (in  thousands):


                                       Years Ended December 31,
                                      --------------------------
                                           1998    1997    1996
                                      ---------  ------  ------
<S>                                   <C>         <C>     <C>
Tax expense at statutory rate of 34%  $   1,790   1,870   1,391 
Tax-exempt interest                        (551)   (489)   (453)
Nondeductible interest expense               61      62      50 
State taxes, net of federal benefit         292     310     206 
Valuation allowance                          45      12      12 
Other                                        49      (3)    (62)
                                      ---------  ------  ------
Total                                 $   1,686   1,762   1,144 
                                      =========  ======  ======

Effective tax rate                         32.0%   32.0%   28.0%
                                      =========  ======  ======
</TABLE>





















                                     Page 21
<PAGE>Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(9)Income  Taxes  (continued)

<TABLE>

<CAPTION>

The  tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1998 and
1997  are  presented  below:


                                                        1998     1997
                                                       -------  ------
<S>                                                    <C>      <C>
Deferred tax assets:
Allowance for loan losses                               $ 983     931
Incentive stock plan                                      412     377
Excess servicing                                           60      76
NOL credits from subsidiaries                             256     192
State NOL arising from nonconsolidation for state tax
purposes only                                              53      71
Interest on non-accrual loans                             143      -
Other                                                      55      23
                                                       -------  ------
Total gross deferred tax assets before allowance        1,962   1,670
Valuation allowance                                       (87)    (42)
Total gross deferred tax asset                          1,875   1,628
                                                       -------  ------

Deferred tax liabilities:
Depreciation                                              472     462
Net unrealized gains on available for sale securities      97      80
Accretion on bonds                                         21      40
                                                       -------  ------
Total gross deferred liabilities                          590     582
                                                       -------  ------
Net deferred tax asset                                 $1,285   1,046
                                                       =======  ======
</TABLE>


Realization  of  deferred  tax assets is dependent upon the generation of future
taxable  income  or  the  existence  of  sufficient  taxable  income  within the
carryback  period. A valuation allowance is provided when it is more likely than
not  that  some  portion  of  the  deferred  tax assets will not be realized. In
assessing the need for a valuation allowance, management considers the scheduled
reversal  of  deferred  tax liabilities, the level of historical taxable income,
and  projected  future  taxable  income  over  the  periods  which the temporary
differences  comprising  the  deferred  tax  assets are deductible. Based on its
assessment,  management determined that a valuation allowance of $87,000 against
its non-bank subsidiary's Net Operating Loss (NOL) was necessary. As of December
31,  1998 there were approximately $111,000 of mortgage tax credits available to
offset  future  state  tax liabilities of GFNYI. The Company acquired a deferred
tax  asset  of  $112,000  from  its  acquisition  of  GFNYI.

(10)  Stockholders'  Equity

Payment  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 (OCC) is required for the declaration
of  dividends  in any year in which dividends exceed the total of net income for
that  year  plus  retained  income  for the preceding two years. At December 31,
1998,  approximately  $921,000  was  available  for  payment of dividends to the
Company  without  the  approval  of  the  OCC.

(11)  Employee  Benefits

Profit  Sharing  Plan

The  Company has a profit sharing plan covering substantially all Bank employees
upon  completion  of 1,000 hours of service with respect to full-time employees,
and  870 hours of service for part-time employees. Contributions to the plan are
determined  by  a  mathematical  formula  which  takes  into  account  average







                                     Page 22
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(11)  Employee  Benefits  (continued)

net  income  of  the  Bank  for the current and prior year, and the level of the
Bank's stockholders' equity. It is the Company's policy to fund current costs as
they  accrue.  Profit  sharing  plan expense amounted to $835,000, $763,000, and
$658,000  for  the  years ended December 31, 1998, 1997, and 1996, respectively.

Employee  Stock  Ownership  Plan

The  Company  has  an  employee stock ownership plan (ESOP) for employees of the
Company.  Annual  contributions  are  made  at  the  discretion  of the Board of
Directors.  ESOP expense amounted to $63,000, $62,000, and $52,000 for the years
ended  December  31, 1998, 1997, and 1996, respectively. Shares distributed to a
participant  upon termination of service are subject to a put option whereby the
participant  may  cause  the  Company  to  purchase the shares at fair value. At
December  31,  1998  and  1997  the plan held 1,560 and 1,435 shares with a fair
value  at  the  respective  dates  of  $566,280  and  $439,110.

(12)  Incentive  Stock  Plans

In  March  1998, the shareholders approved an incentive stock option program for
employees, which authorizes grants of options to purchase up to 16,000 shares of
its  authorized  common  stock.  As of December 31, 1998 no options were granted
under  the  plan.  The  Company  also  has  an  incentive  stock plan for senior
management of the Company which allows for the issuance of Phantom Stock Options
(PSA)  and  Stock  Appreciation  Rights  (SAR)  to  key  employees  based  upon
performance factors established by the Board of Directors, and is generally tied
to  increases  in  the  value  of the Company's common stock. PSAs represent the
right  to  receive,  for  each phantom share of common stock covered by the PSA,
payment  equal  to  the  higher  of  the book value or market value per share of
common stock on the date of exercise. Payment can be made in cash, shares of the
Company,  or  both  at  the  discretion  of  the  Board  of  Directors. PSAs are
exercisable at the later of age 55 or 15 years of continuous employment with the
Company  or  at  normal retirement age (65). SARs represent the right to receive
payment  equal  to  the amount, if any, by which the higher of the book value or
market  value per share of common stock on the date of exercise exceeds the SARs
grant value. SARs are exercisable five years from the date of grant. At December
31,  1998, 3,052 PSAs were outstanding and 2,508 SARs were outstanding at prices
ranging  from  $114  to  $242.

Prior to January 1, 1996, the Company accounted for its plans in accordance with
the  provisions  of Accounting Principles Board (APB) Opinion No. 25, Accounting
for  Stock  Issued  to  Employees,  and  related  interpretations.  As  such,
compensation  expense would be recorded on the date of grant only if the current
value  of the underlying stock exceeded the exercise price. Compensation cost is
recognized  annually  to  the  extent the Company's stock increases in value. On
January  1, 1996, the Company adopted Statement of Financial Accounting Standard
(SFAS)  No. 123, Accounting for Stock-Based Compensation, which permits entities
to  recognize  as  expense,  over  the  vesting  period,  the  fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows
entities  to  continue to apply the provisions of APB Opinion No. 25 and provide
pro  forma  net income and pro forma earnings per share disclosures for employee
stock  option  grants  made  in 1995 and future years as if the fair-value-based
method  defined  in  SFAS  No.  123 had been applied. The Company has elected to
continue  to  apply the provisions of APB Opinion No. 25. There is no difference
between the Company's previous method of accounting for its incentive stock plan
and  the  provision  of  SFAS  No.  123,  therefore  no pro forma information is
provided.

The  Company  has  accrued  a  liability  of  $1,033,000 as of December 31, 1998
representing  its  obligation under the plans. Expenses of the plans amounted to
$137,000,  $110,000,  and  $371,000 for the years ended December 31, 1998, 1997,
and  1996,  respectively.







                                     Page 23

Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(13)  Leases

The  Company  leases  certain  buildings  and office space under operating lease
arrangements.  Rent  expense  under  these  arrangements amounted to $284,000 in
1998,  $238,000 in 1997, and $386,000 in 1996. Included in rent expense for 1996
is $145,000 for the buyout of a lease commitment by Greater Funding of New York,
Inc.  Real  estate  taxes,  insurance, maintenance, and other operating expenses
associated  with  leased  buildings  and  office space are generally paid by the
Company.

<TABLE>

<CAPTION>

A summary of noncancellable long-term operating lease commitments as of December
31,  1998  follows  (in  thousands):


Years ending
December 31,    Amount
--------------  -------
<S>             <C>
1999            $   369
2000                366
2001                292
2002                241
2003                201
2004 and after      358
                -------
  Total         $ 1,827
                =======
</TABLE>


(14)  Commitments  and  Contingencies

In  the  normal  course of business there are various outstanding commitments to
extend credit which are not reflected in the accompanying consolidated financial
statements.  Because  many  commitments  and almost all letters of credit expire
without being funded in whole or in part, the contract amounts are not estimates
of  future  cash  flows.  Loan  commitments  have  off-balance-sheet credit risk
because  only  origination  fees  are  recognized  in  the  balance  sheet until
commitments  are  fulfilled  or expire. The credit risk amounts are equal to the
contractual amounts, assuming that the amounts are fully advanced and collateral
or  other  security  is  of  no  value.  The Company's policy generally requires
customers  to  provide  collateral,  usually in the form of customers' operating
assets  or  property,  prior to the disbursement of approved loans. The contract
amounts  of  these  commitments at December 31, 1998 were: Commercial letters of
credit  $3,462,000  and  unused commitments $39,842,000. The contract amounts of
these  commitments  at  December  31,  1997  were:  Commercial letters of credit
$1,796,000 and unused commitments $34,766,000. The majority of these commitments
have  terms  up  to  one  year  at  fixed  interest rates current at the date of
origination.  Commitments  to  fund  residential  mortgage  loans  amounted  to
$6,200,000  at  December  31,  1998.

The  Company  committed  $1,980,000 to fund a 20% limited partnership investment
interest  in  Cephas  Capital  Partnership,  LP.  This small business investment
company  was  established  for  the  purpose  of  providing  financing  to small
businesses  in  conjunction with programs established by the U.S. Small Business
Administration.  At December 31, 1998, the Company had funded $1,406,000 of this
commitment  and  carries the investment under the equity method in other assets.

The  Bank  is  required  to  maintain  average reserve balances with the Federal
Reserve  Bank.  The  average  amount of such reserve balances for the year ended
December  31,  1998  was  approximately  $6,000,000.

In the normal course of business, the Company has various contingent liabilities
outstanding  that  are  not  included  in the consolidated financial statements.
Management  does  not  anticipate  any  material  losses  as  a  result of these
contingent  liabilities.







                                     Page 24
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(15)  Regulatory  Matters

The  Bank  is 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
Bank's  financial  statements.  Under  capital  adequacy  guidelines  and  the
regulatory  framework  for prompt corrective action, the Bank must meet specific
capital  guidelines  that  involve  quantitative  measures of the Bank's assets,
liabilities,  and  certain  off-balance-sheet  items calculated under regulatory
accounting  practices.  The  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  Bank  to  maintain minimum amounts and ratios (as set forth in the
table  below)  of  total  and  Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, that the Bank
meets  all  capital  adequacy  requirements  to  which  it  is  subject.

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 table. There are no
conditions  or  events  since  that  notification  that management believes have
changed  the  Bank's  category.
<TABLE>

<CAPTION>



                                                                                              To Be Well-
                                                                                              Capitalized
                                                                                              Under Prompt
                                                                            For Capital       Corrective
                                                                             Adequacy           Action
                                                       Actual                 Purposes        Provisions
(dollars in thousands)                         Amount         Ratio       Amount     Ratio   Amount   Ratio
                                            -------------  -----------  -----------  ------  -------  ------
<S>                                         <C>            <C>          <C>          <C>     <C>      <C>
As of December 31, 1998
  Total Capital (to risk weighted assets)   $      39,956        13.0%  $    24,620    8.0%  $30,776   10.0%
  Tier 1 Capital (to risk weighted assets)  $      36,564        11.9%  $    12,310    4.0%  $18,465    6.0%
  Tier 1 Capital (to average assets)        $      36,564         8.6%  $    16,977    4.0%  $21,221    5.0%

As of December 31, 1997
  Total Capital (to risk weighted assets)   $      41,279        13.7%  $    24,105    8.0%  $30,131   10.0%
  Tier 1 Capital (to risk weighted assets)  $      38,126        12.7%  $    12,008    4.0%  $18,012    6.0%
  Tier 1 Capital (to average assets)        $      38,126         9.5%  $    16,053    4.0%  $20,066    5.0%
</TABLE>
















                                     Page 25
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(16)     Loans  to  Directors  and  Officers

Certain  executive  officers,  directors,  and  their  business  interests  are
customers  of  the  Company.  Transactions  with  these  parties  are  based  on
substantially  the  same  terms  as  similar transactions with others and do not
carry  more  than  normal  credit risk. At December 31, 1998 and 1997, loans and
unused  commitments  to  these  related  parties  amounted  to  $4,311,000  and
$4,221,000,  respectively.

(17)  Condensed  Financial  Information  -  Parent  Company  Only

<TABLE>

<CAPTION>

The  following  are  the  condensed  balance  sheets,  statements of income, and
statements  of  cash  flows  for  Canandaigua  National Corporation, (dollars in
thousands).


Balance Sheets
--------------                     
                                                       December 31,
                                                   --------------------     
                                                     1998        1997
                                                   -----------  -------
<S>                                                <C>          <C>
Assets:
  Cash                                             $      114      106 
  Securities available for sale                           185      185 
  Premises and equipment - net                            730      743 
  Investment in subsidiaries                           41,328   39,777 
  Other assets                                            122      122 
                                                   -----------  -------
      Total Assets                                 $   42,479   40,933 
                                                   ===========  =======

Liabilities:
  Other liabilities                                $        1        1 
Stockholders' equity:
  Common stock                                          8,110    8,110 
  Additional paid in capital                            8,489    8,489 
  Retained earnings                                    26,569   24,742 
  Treasury stock at cost (2,479 shares in
   1998 and 1,642 shares in 1997)                        (835)    (528)
  Accumulated other comprehensive income                  145      119 
                                                   -----------  -------
      Total stockholders' equity                       42,478   40,932 
                                                   -----------  -------
      Total liabilities and stockholders' equity   $   42,479   40,933 
                                                   ===========  =======
</TABLE>



<TABLE>

<CAPTION>



Statements of Income
----------------------                                         
                                            Years Ended December 31,
                                           --------------------------
                                                1998    1997    1996
                                           ----------  ------  ------
<S>                                        <C>         <C>     <C>
Income - Dividends from the Canandaigua
 National Bank and Trust Company           $   5,122   2,975   1,750 
Other income                                      11       7      12 
Other expense                                    (34)    (66)    (77)
                                           ----------  ------  ------
    Income before undistributed income of
     subsidiaries                              5,099   2,916   1,685 
Undistributed (distributions in excess
 of)current year income of subsidiaries       (1,512)    821   1,262 
                                           ----------  ------  ------
    Net income                             $   3,587   3,737   2,947 
                                           ==========  ======  ======
</TABLE>









                                     Page 26
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(17)     Condensed  Financial  Information  -  Parent  Company  Only (continued)
<TABLE>

<CAPTION>



Statements of Cash Flows
------------------------                              
                                              Years Ended December 31,
                                             --------------------------
                                               1998      1997     1996
                                             --------  -------  -------
<S>                                          <C>       <C>      <C>
Cash flows from operating activities:
  Net income                                 $ 3,587    3,737    2,947 
  Adjustments to reconcile net income to
   net cash from operating activities:
    Depreciation and amortization                 30       10        - 
    Undistributed (distributions in excess
     of)current year income of subsidiaries    1,512     (821)  (1,262)
    Other                                          -       (7)      29 
                                             --------  -------  -------
      Net cash provided by operating
       activities                              5,129    2,919    1,714 
                                             --------  -------  -------

Cash flows from investing activities:
  Sale of securities                               -        -        5 
  Purchase of subsidiaries                         -     (718)    (102)
  Loans disbursed net of principal payments
   received                                        -        -       11 
  Decrease in other real estate                    -      450      796 
  Additional capital investments in
   subsidiaries                               (3,037)    (202)    (625)
  Fixed assets purchased, net                    (17)    (743)       - 
                                             --------  -------  -------
      Net cash provided by investing
       activities                             (3,054)  (1,213)      85 
                                             --------  -------  -------

Cash flows from financing activities:
  Proceeds from sale of treasury stock            47       42        - 
  Purchase of treasury stock                    (348)    (398)    (174)
  Dividends paid                              (1,766)  (1,609)  (1,414)
      Net cash used by financing
       activities                             (2,067)  (1,965)  (1,588)
                                             --------  -------  -------

      Net increase in cash                         8     (259)     211 
      Cash at beginning of year                  106      365      154 
                                             --------  -------  -------
      Cash at end of year                    $   114      106      365 
                                             ========  =======  =======
</TABLE>



In  1996, the Company acquired a subsidiary for stock in the amount of $338,000.




















                                     Page 27
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(18)  Fair  Values  of  Financial  Instruments

The  following  methods  and assumptions were used to estimate the fair value of
each  class  of  financial  instrument:

Cash  and  Cash  Equivalents

For  these  short-term  instruments  that  generally mature 90 days or less, the
carrying  value  approximates  fair  value.

Securities

Fair  values  for securities are based on quoted market prices or dealer quotes,
where  available.  Where quoted market prices are not available, fair values are
based  on  quoted  market  prices  of  comparable  instruments.

Loans

Fair  values  are  estimated  for  portfolios  of  loans  with similar financial
characteristics. Loans are segregated by type such as loans adjustable by prime,
commercial,  mortgages,  installment,  and other consumer. Each loan category is
further  segmented  into  categories  based  on  collateral,  for purpose of the
calculations.

The  fair  value of performing loans is calculated by discounting scheduled cash
flows  through the estimated maturity using estimated market discount rates that
reflect  the  credit  and  interest rate risk inherent in the loan category. The
estimate  of  maturity  is  based  on  the  average  maturity  for  each  loan
classification.

Delinquent  loans  (not in foreclosure) are valued using the method noted above.
While  credit  risk  is  a  component  of the discount rate used to value loans,
delinquent  loans  are  presumed  to  possess  additional  risk.  Therefore, the
calculated  fair  value  of  loans delinquent more than 30 days but less than 91
days  delinquent,  is  reduced  by an allocated amount of the allowance for loan
losses.  The  fair  value  of  loans  currently  in  foreclosure is estimated to
approximate  carrying  value, as such loans are generally carried at fair value.

Deposits

The  fair  value  of demand deposits, savings accounts, and certain money market
accounts  is  the amount payable on demand at the reporting date. The fair value
of  fixed  maturity certificates of deposit is estimated using a discounted cash
flow  approach  that  applies  current  market  rates (prevailing CD rates) to a
schedule  of  aggregated  expected  monthly  maturities  on  time  deposits.




















                                     Page 28
<PAGE>
Canandaigua  National  Corporation  and  Subsidiaries

                   Notes to Consolidated Financial Statements

(18)  Fair  Values  of  Financial  Instruments  (continued)

Advances  from  FHLB:

The  fair  value  of  advances is calculated by discounting scheduled cash flows
through  the  estimated  maturity using market rates presently available for new
borrowings.

<TABLE>

<CAPTION>

The  estimated  fair values of the Company's financial instruments are as follows (dollars
in  thousands):


                                December 31, 1998    December 31, 1997
                                ------------------   ------------------
                                Carrying   Fair      Carrying  Fair
                                Amount     Value(1)  Amount    Value(1)
                                ---------  --------  --------  --------
<S>                             <C>         <C>       <C>       <C>
Financial Assets:
  Cash and equivalents          $ 24,206     24,206    19,647    19,647
  Securities                      76,464     77,673    74,499    74,796
  Loans, net                     308,486    318,735   305,991   311,295

Financial Liabilities:
  Deposits:
  Demand accounts, savings and
   money market accounts        $ 230,561   230,561   211,173   211,173
  Certificates of deposit         145,946   147,109   113,588   113,987
  Advances from FHLB                7,142     6,863    50,667    49,728

Off-balance-sheet commitments:
  Commercial letters of credit  $       -        35         -        40
  Unused lines of credit                -         -         -         -
</TABLE>



(1)Fair  value estimates are made at a specific point in time, based on relevant
market  information  and  information  about  the  financial  instrument.  These
estimates  are  subjective  in  nature  and involve uncertainties and matters of
significant  judgment and therefore cannot be determined with precision. Changes
in  assumptions  could  significantly  affect  the  estimates.

     Fair  value of commitments to extend credit approximates the fee charged to
make  the  commitments.


(19)  Industry  Segment  Information

     The  Company's operations are solely in the financial services industry and
include  the  provision  of  traditional  commercial  banking services and other
financial  services  (mortgage  banking  and  insurance  brokering.) The Company
operates in the geographical region of Western Ontario County and Eastern Monroe
County  of  New  York  State.  The  Company  has  identified operating segments,
however,  these  segments  did not meet the quantitative thresholds for separate
disclosure.















                                     Page 29
<PAGE>
Common  Stock  Data

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  may  not  be  indicative of the actual market value of the
Company's  stock.  The  following  table  sets  forth  a summary of the weighted
average  sale  price, book value, and semi-annual dividends paid per share since
the  first  quarter  of  1993.
<TABLE>

<CAPTION>



             Average       Dividend
             Sale Price   Book Value   Paid
             -----------  -----------  -----
<S>          <C>          <C>          <C>
1998
-----------                    
4th quarter    no sales   $    265.94
3rd quarter  $   360.52   $    261.09  $5.50
2nd quarter    no sales   $    260.72
1st quarter  $   351.16   $    255.68  $5.50

1997
-----------                    
4th quarter    no sales   $    254.92
3rd quarter  $   335.87   $    252.57  $5.25
2nd quarter  $   320.59   $    251.25
1st quarter  $   326.61   $    243.32  $4.75

1996
-----------                    
4th quarter  $   320.31   $    240.69
3rd quarter  $   326.74   $    236.63  $4.50
2nd quarter  $   324.86   $    237.41
1st quarter    no sales   $    232.52  $4.25

1995
-----------                    
4th quarter    no sales   $    232.06
3rd quarter  $   307.09   $    226.65  $3.50
2nd quarter  $   293.15   $    223.46
1st quarter  $   288.71   $    216.94  $3.50

1994
-----------                    
4th quarter  $   259.87   $    214.55
3rd quarter  $   256.64   $    208.23  $3.00
2nd quarter  $   240.34   $    205.25
1st quarter    no sales   $    199.09  $3.00

1993
-----------                    
4th quarter    no sales   $    197.47
3rd quarter    no sales   $    194.08  $2.75
2nd quarter  $   206.47   $    189.68
1st quarter  $   203.42   $    183.72  $2.75


</TABLE>



As  stated  above,  the  stock  of  the  Company  is  not listed with a national
securities  exchange;  therefore,  no  formal  bid  and asked for quotations are
available.

All per share amounts have been adjusted to reflect a two-for-one stock split in
1993.












                                     Page 30
<PAGE>

Community  Advisory  Committees



(photograph  of  committee)
Bloomfield  Bank  Office

Joseph  Ferris,  DVM,  David  Hamlin,  Jr.,
Frank  J.  Marianacci,
Judith  S.  Smith,  Barbara  A.  Thorpe


(photograph  of  committee)
Farmington  Bank  Office

Lawrence  E.  Potter,  Henry  A.  Trickey,  Jr.
Mary  Catherine  VanBortel,  Anne  P.  Fessler,  DVM


(photograph  of  committee)
Honeoye  Bank  Office

Ralph  C.  Annechino,  George  A.  Ward,
Earl  L.  Mastin,
Herbert  E.  Treble,  Barbara  B.  Overfield


(photograph  of  committee)
Manchester-Shortsville  Bank  Office

Mary  C.  Record,  Gary  H.  Bliss,
Charles  D.  Zonneville,  Diane  C.  Mordue


(photograph  of  committee)
Mendon  Bank  Office

A.  Jack  Leckie,  Charles  H.  Meisenzahl,
Clayton  G.  Zuber,  Christopher  M.  Keys,
Marvin  E.  Hogan


(photograph  of  committee)
Victor  Bank  Office

John  W.  VanVechten,  Gary  L.  Bennett,
William  H.  Turner,
Eldred  M.  Sale,  L.  Kenneth  Bliss









                                     Page 31
<PAGE>
The  Canandaigua  National  Bank  and  Trust  Company

Officers

Office  of  the  President
 George  W.  Hamlin,  IV,  President,  CEO,  Trust  and  CRA  Officer
  Jean  M.  Baldick,  Assistant  Vice  President,  Executive  Assistant  to  the
President
  Lawrence  A.  Heilbronner,  Vice  President  -  Finance
  Robert  L.  Simpson,  Assistant  Vice  President  -  Finance
Retail  Services
 Robert  G.  Sheridan,  Senior  Vice  President  and  Cashier
  Judith  M.  Stewart,  Vice President - Training, Community Office Operations &
Security  Officer
  Richard  T.  Wade,  Assistant  Vice  President  -  Consumer  Loans
  J.  Thomas  Lenda,  Assistant  Vice  President  -  Mortgage  Origination
  Lori  R.  Ellis,  Assistant  Vice  President
  Jane  R.  Hamlin,  Assistant  Vice  President
  Richard  J.  Ertel,  Assistant  Vice  President
  Denise  J.  Salvatore,  Assistant  Branch  Administrator
Commercial  Services
 James  C.  Minges,  Senior  Vice  President
  Wesley  L.  Talbett,  Vice  President
  William  E.  Pearce,  Vice  President
  Steven  W.  Robertson,  Vice  President
  Carl  A.  Mabie,  Vice  President  -  Resource  Recovery  and  Credit Services
  Teresa  P.  Iula,  Assistant  Vice  President
  William  J.  Van  Damme,  Assistant  Vice  President
  A.  Rosamond  Zatyko,  Assistant  Vice  President  -  Credit  Administration
  Dorothy  A.  Ducatte,  Project  Manager  -  Assets  and  Assistant CRA Officer
  Bernard  E.  Belcher,  Assistant  Vice  President
Investment  Services
 Gregory  S.  MacKay,  Senior  Vice  President
  James  M.  Exton,  Vice  President  -  Investment  Officer
  Scott  B.  Trumbower,  Vice  President  -  Employee  Benefit  Programs
  Robert  J.  Swartout,  Vice  President  -  Investment  Officer
  Anthony  D.  Figueiredo,  Vice  President  -  Trust  Investment  Officer
  Mary  Kay  Bashaw,  Assistant  Vice  President  -  Investment  Officer
  Patricia  A.  McAuley,  Assistant  Vice  President  -  Investment  IRA's
  Francis  P.  Lupiani,  Investment  Officer
Trust  Services
 Richard  H.  Hawks,  Jr.,  Senior  Vice  President  and  Trust  Officer
  Beth  Uhlen,  Assistant  Vice  President  -  Manager  Trust  Operations
  Joseph  P.  Coonan,  Trust  Development  Officer
Operations
 David  R.  Morrow,  Senior  Vice  President
  Kathleen  G.  Corry,  Vice  President  -  Bank  Operations
  Sandra  U.  Roberts,  Vice  President  -  Manager  Data  Processing
  Susan  H.  Foose,  Vice  President  -  Retail  Operations
  Gerald  E.  Terragnoli,  Assistant  Vice  President  -  Senior Systems Analyst
  Michael  A. Mandrino, Assistant Vice President - Information Systems Architect
  Dawn  C.  Phelps,  Assistant  Vice  President
  Gilberta  C.  Elliott  -  Assistant  Vice  President
Audit
 Linda  M.  Rogers,  CFSA,  CBA,  Vice  President  and  Corporate  Audit Manager
  Gretchen  A.  Alles,  Senior  Auditor
  Diane  B.  Savage,  Audit  Officer
Marketing
 Stephen  R.  Martin,  Vice  President  -  Marketing
  Tamra  A.B.  O'Donnell,  Marketing  Information  Officer
Administrative
 Mary  Ann  M.  Ridley,  Vice  President  -  Human  Resources
  Marie  E.  Dastin,  Bank  Officer
 Vicki  B.  Mandrino,  Compliance  Officer




                                     Page 32
<PAGE>
The  Canandaigua  National  Bank  and  Trust  Company

Community  Banking  Offices


Bloomfield  Bank  Office
  Barbara  A.  Thorpe,  Assistant  Vice  President  -  Community  Office Manager

Canandaigua  Bank  Office
  Michael  D.  O'Donnell,  Assistant  Vice  President - Community Office Manager
  Roy  M.  Beecher,  Assistant  Vice  President
  Marcia  M.  Minges,  Assistant  Vice  President
  Linda  M.  Keyes,  Consumer  Services  Officer

Customer  Call  Center
  Patrick  J.  Kelly,  Assistant  Vice  President  -  Call  Center  Manager

Eastview  Mall  Bank  Office
  Robin  A.-Erb,  Community  Office  Manager

Farmington  Bank  Office
  Henry  A.  Trickey  Jr.,  Assistant  Vice President - Community Office Manager
  Timi  L.  Wright,  Bank  Officer

Honeoye  Bank  Office
  Barbara  B.  Overfield,  Assistant  Vice  President - Community Office Manager
  Sandra  L.  D'Angelo,  Bank  Officer

Lakeshore  Bank  Office
  Dolores  J.  Reynolds,  Assistant  Vice  President  - Community Office Manager
  Jason  A.  Ingalls,  Bank  Officer

Manchester-Shortsville  Bank  Office
  Diane  C.  Mordue,  Assistant  Vice  President  -  Community  Office  Manager

Mendon  Bank  Office
  Christopher  M.  Keys,  Bank  Officer  -  Community  Office  Manager
  Mary  Ellen  McMurry,  Bank  Officer

Pittsford  Bank  Office
  Karen  C.  Serinis,  Assistant  Vice  President  -  Community  Office  Manager
  Commercial  Services
   Robert  L.  Lowenthal,  Vice  President  -  Commercial  Lending
   Gary  L.  Babbitt,  Vice  President  -  Commercial  Lending
  Trust  and  Investment  Services
   Paul  R.  Callaway,  Vice  President  and  Trust  Officer
   Sharon  E.  Greisberger,  Assistant  Vice  President

Victor  Bank  Office
  John  W.  Van  Vechten,  Vice  President  -  Community  Office  Manager
  Leslie  C.  O'Malley,  Bank  Officer

Webster  Bank  Office
  Kathleen  Vasile,  Assistant  Vice  President  -  Community  Office  Manager
  Kathleen  A.  Rice,  Bank  Officer
  Keith  J.  Goebel,  Assistant  Vice  President  -  Commercial  Lending










                                     Page 33

<PAGE>
Arthur  S.  Hamlin
1997  Recipient

(photograph  of  the  award)
(photograph  of  Kathy  Lafler)

"Arthur  S.  Hamlin's  commitment  to  CNB  and  the  many
organizations  throughout  the  community  is  continual.
We  can  be  proud  to  work  for  the  financial  institution  that  he
is  so  much  a  part  of  and  has  remained  very  active  in.
I  was  honored  to  be  recognized  by  my  fellow  employees  and
receive  an  award  named  after  such  an  outstanding  man."

Kathy  Lafler


      (photographs  of  all  the  1998  nominees)

1998  Nominees
Gretchen  A.  Alles
Lynn  E.  Colyer
Donna  J.  DeVries
Barbara  A.  Finch
Amy  L.  Force
Loren  l.  Garlock
Kristi  M.  Hamann
Jennifer  B.  Housel
Rebecca  A.  Long
Kelly  J.  Masline
Judy  A.  Reader
Jan  C.  Schrader
Robert  L.  Simpson
Tamera  M.  Straight
Corene  M.  Trickey
Mary  Beth  Uhlen

Past  Recipients

Linda  Keyes  -  1989
Jerry  Drake  -  1990
Michael  O'Donnell  -  1991
James  Roth  -  1992
Kathleen  Corry  -  1993
Susan  Foose  -  1994
Amy  Eagley  and  Regina  Kesel  -  1995
Jeannie  Baldick  -  1996







                                     Page 34

<PAGE>
Welcome  Our  New  Directors

(photograph  of  James  S.  Fralick)

James  S.  Fralick

James  S.  Fralick,  B.S.,  M.A.,  Phd.,  joined  the  Board of Directors of The
Canandaigua National Bank and Trust Company and Canandaigua National Corporation
in  September  of 1998.  Currently, he is an Adjunct Professor at the University
of  Rochester's  Simon School and Syracuse University's Maxwell School, teaching
Public  Policy  Toward  Financial  Markets,  International  Finance, Banking and
Financial  Markets,  and Macro-economic Theory.  For 15 years prior, Mr. Fralick
was  Principal  and  Director  of European Economic Research at Morgan Stanley &
Co.,  managing a department of nine professional economists in London and Paris,
as  well as advising senior risk takers and investors of global and Pan European
economic  trends  and  policy  developments.  Earlier  positions  included  Vice
President  of  Morgan  Guaranty Trust Co. and Senior Economist with the Board of
Governors  of  the  Federal  Reserve  System in Washington, DC.  He was selected
LeMoyne  College's  "Businessman  of  the  Year"  in  1988 and was also named to
"Institutional  Investor's"  All  American  Fixed  Income  Team  and  All Europe
Research Team.  Mr. Fralick lives in Canandaigua with his wife, Ellie.  They are
the  parents  of  three  children;  Jimmy Fralick, Ann Fuell, and Molly Fralick.




(photograph  of  Richard  P.  Miller,  Jr.)

Richard  P.  Miller,  Jr.

Richard  P.  Miller,  Jr., B.A. Middlebury, joined the Board of Directors of The
Canandaigua National Bank and Trust Company and Canandaigua National Corporation
in  December  of  1998.  Currently,  he  is  the Senior Vice President and Chief
Operations  Officer  at  the  University  of  Rochester.  Prior  to  joining the
University of Rochester, Mr. Miller was associated with Case-Hoyt, starting as a
sales  representative  in  1967,  holding  numerous  positions  culminating  as
President  and  CEO  in 1982.  He served in the U.S. Army from 1965 through 1967
receiving  the  Bronze Star, Air Medal Valor Device, and Army Commendation Valor
Device  for  his  service  in Vietnam.  Mr. Miller has been actively involved in
community  activities  for  a number of years and currently serves as a Director
for  the Genesee Corporation, Frontier Telephone of Rochester, and the Rochester
Area  Community  Foundation.  Mr.  Miller  lives in the town of South Bristol on
Canandaigua  Lake  with  his  wife,  Barbara.  They are the parents of two sons,
Matthew  and  Jason.















                                     Page 35

<PAGE>
 (photograph  of  Webster  Office)

On  November  17,  1998,  Canandaigua  National  Bank and Trust opened its third
Monroe  County  location  in  Webster  at  1998  Empire Boulevard. The strategic
identification  of  this  location  supports  an existing customer base obtained
through  our  indirect  lending initiatives. This location is also positioned in
the fastest growing town in Monroe County and will provide us the opportunity to
offer  our  personal  approach  to  financial  services  in  this  new  market.
     Designed  with  the  influence  and  success of the "Pittsford Model," this
office  features  a  customer-friendly  banking  environment.  As  you enter the
office,  you  are  welcomed  with  an information desk where you are greeted and
directed  to  the area you need. Tellers and customers conduct transactions at a
sit-down  counter,  while  children play with books and toys or watch a movie on
the  television in pint-sized furniture. The foyer offers self-serve safekeeping
boxes  and  traditional  safe  deposit boxes are in the vault. Soon to come is a
computer  to  be  set up in the lobby to allow customers access to their account
through  the  internet.
The  staff  of  this  office includes experienced banking professionals, many of
whom  are  from  the  Rochester  Area.
In  addition  to the traditional members of a branch team, there is a Commercial
Lender  to  provide  local businesses with the services they desire. The Webster
office  offers  extended  banking  hours of 8:30 a.m. - 5:00 p.m. Monday through
Wednesday,  8:30  a.m.  - 6:00 p.m. on Thursday and Friday, and 9:00 a.m. - 1:00
p.m.  on  Saturday.
Each  of  the  initiatives at this location is intended to increase the level of
value-added  service  to  the customer and to continue our commitment to provide
our  customers  with  the  most  comprehensive  array  of  financial  services.




















                                     Page 36