SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C. 20549
                             FORM 10-K

     Annual Report Pursuant to Section 13 or Section 15(D) of
     The Securities Exchange Act of 1934

     For the fiscal year ended December 31, 1997

     Commission File Number 2-94863

     CANANDAIGUA NATIONAL CORPORATION
     (Exact name of Registrant as specified in its charter)
               New York                           16-1234823
     (State of Incorporation)        (IRS Employer Identification No.)

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

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

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

Securities registered pursuant to Section 12(g) of the Act:  240,000 shares $50
par common

Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 or 15 (D) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) been subject to such filing
requirements
for the past 90 days. Yes   [X]      No   [ ]

Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(#229.405) is contained in registrant's definitive proxy statement incorporated
herein by reference in Part III of this Form 10-K.

Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of January 31, 1998.

     Common Stock, $50.00 par value - described on page 9 of 1997 Annual
     Report and incorporated herein by reference.

     Number of shares outstanding of the Registrant's shares of common stock
     as of January 31, 1998. 160,566 shares, common stock, $50.00 par value

                                  Page 1
<PAGE>



Certain portions of the documents listed below have been incorporated by
reference into the indicated Part of this Form 10-K.

(1) Portions of the Annual Report to Stockholders
    for the year ended December 31, 1997         Part I, Item 2
(2) Notice of Annual Meeting of Stockholders     Part II, Items 5 & 8
    and Proxy Statement dated February 25, 1998  Part III, Items 10-13
(3) Index of Exhibits                            Part II, Item 5
                                                  Page 31
                                  Page 2
<PAGE>


     CANANDAIGUA NATIONAL CORPORATION
     FORM 10-K
     INDEX
                                                                  Page No.
PART I.
Item 1.  Business                                                   4-17

Item 2.  Properties                                                   18

Item 3.  Legal Proceedings                                            18

Item 4.  Submission of Matters to a Vote of
             Security Holders                                         18

PART II.
Item 5.  Market for the Registrant's Common Stock
              and Related Security Holder Matters                     19

Item 6.  Selected Financial Data                                      19

Item 7.  Management's Discussion and Analysis of
             Financial Condition and Results of Operation          20-26

Item 7A. Management of Market Risk                                 20-26

Item 8.  Financial Statements and Supplementary Data                  26

Item 9.  Changes in Disagreements with Accountants on Accounting
          and Financial Disclosure                                    26

PART III.
Item 10. Directors and Executive Officers of
          the Registrant                                              27

Item 11. Executive Compensation                                    28-30

Item 12. Security Ownership of Certain
              Beneficial Owners and Management                        30

Item 13. Certain Relationships and Related Transactions               31

PART IV.
Item 14. Exhibits, Financial Statement
          Schedules and Reports on Form 8-K                           32

Signatures                                                         32-33

                                  Page 3
<PAGE>

PART I

Item 1.  Business

Canandaigua National Corporation

     The Canandaigua National Corporation, referred to as The Corporation, was
organized on October 31, 1984, and registered under the Bank Holding Company
Act
of 1956, for the purpose of becoming a one-bank holding company.  The formation
of the bank holding company was consummated on May 31, 1985, through the
exchange of 80,000 shares of Canandaigua National Corporation $50 par value
common stock for all of the outstanding shares of The Canandaigua National Bank
and Trust Company.  The one-bank holding company serves as a means of
increasing
the scope of banking and financial services in the market area served by The
Canandaigua National Bank and Trust Company.  The Corporation acquired Greater
Funding of New York, Inc. (GFNYI) d/b/a Greater Funding, the Mortgage Company
during 1996 by purchasing its remaining 66.3% shares not owned by the Company.
GFNYI offers mortgage products that the bank is not licensed to offer,
therefore offering their customer base a larger range of products.  GFNYI is
engaged in underwriting and funding mortgages in western New York State.  GFNYI
typically resells residential mortgages to entities, which service the loans.
The Corporation acquired 100% of Home Town Funding, Inc. (HTF) during 1997.
HTF functions are the same as GFNYI above.  The Bank will remain the principal
source of the Corporation's operating revenue and net income.

The Canandaigua National Bank and Trust Company

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

     As of December 31, 1997, Bank had total assets of approximately
$418,942,000; total stockholders' equity of approximately $40,932,000; and
total
deposits of approximately $324,761,000.  Its deposits are insured through the
Bank Insurance Fund by the Federal Deposit Insurance Corporation.

     Bank engages in a full service commercial and consumer banking and trust
business.  Bank, with its main office at 72 South Main Street, Canandaigua, New
York, provides services to its customers through its network of ten branches
which include drive-in facilities and customer Bank communication terminals as
well as limited banking transaction through the internet.  Bank's full service
offices are located in Ontario County and in the town of Mendon and Village of
Pittsford in Monroe County, New York.

     Bank's services include accepting time, demand and savings deposits, NOW
accounts, regular savings accounts, money market certificates, investment
certificates, fixed rate certificates of deposit and club accounts.  Its
services also include making secured and unsecured commercial and consumer
loans, financing commercial transactions either directly or through regional
industrial development corporations, making construction and mortgage loans
and the renting of safe deposit facilities. Additional services include
making residential mortgage loans, revolving credit loans with overdraft
checking protection, small business loans, and student loans.  Bank's
business loans include seasonal, credit, collateral, and term loans.  Trust
services provided by Bank include services as executor and trustee under

                                  Page 4
<PAGE>

Item 1.  Business

The Canandaigua National Bank and Trust Company - continued

wills and deeds, as guardian and custodian and as trustee and agent for
pension,
profit sharing, individual retirement account and other employee benefit trusts
as well as various investment, pension and estate planning services.  Trust
services also include service as transfer agent and registrar of Canandaigua
National Corporation stock and as paying agent for various bond issues and as
escrow agent.  In 1995 the Bank formed a subsidiary (CNB Operating Subsidiary
No.1, Inc.).  The primary business of this company is to sell life insurance to
individuals.  This company is an agency only.  During 1996 the Bank purchased
the Burlingham Agency, Inc.  The primary business of this company is to sell
life insurance to individuals.  This company is an agency only.  The Bank
purchased Burlingham Agency to gain access to an already established business
with a customer base.  By this purchase the Bank can offer a full line of
products.

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

Territory Served and Competition

    All phases of Bank's business are highly competitive.  Bank's market area
is
generally Ontario County, with concentration in the Canandaigua, New York area.
Bank competes with local commercial banks as well as other commercial banks
with
branches in Bank's market area as well as federal savings and loan associations
and non-bank banks and credit unions.  Bank considers its competition to be
Chase Bank, N.A., Key Bank, National Bank of Geneva, Community Bank,
N.A., and WCTA Federal Credit Union located in Canandaigua, New York and Sears
Financial Network Center and Fleet Bank, M & T Bank located in Rochester, New
York.

   Bank, along with other commercial banks, competes with respect to its
lending
activities as well as in attracting demand deposits, with savings banks,
savings
and loan associations, insurance companies, regulated small loan companies,
non-bank banks and credit unions.   Bank also competes with insurance
companies,
investment counseling firms, mutual funds and other business firms and
individuals in corporate trust and investment management services.

    Bank is generally competitive with all financial institutions in its
service
area with respect to interest rates paid on time and savings deposits and
interest rates charged on loans and service charges on deposit accounts.
Bank employed 248 people as of December 31, 1997.

                                  Page 5
<PAGE>

Supervision and Regulation

    Canandaigua National Corporation is incorporated under the laws of the
State
of New York and is directly supervised by the Federal Reserve Bank under the
laws governing one-bank holding companies.  In addition, the Corporation
reports
to the Securities and Exchange Commission under the laws governing corporations
with registered securities.

     As a national bank and member of the Federal Reserve System, the Bank is
subject to regulations of the Comptroller of the Currency and the Board of
Governors of the Federal Reserve System.  As an insured bank under the Federal
Deposit Insurance Act, Bank is also regulated by the Federal Deposit Insurance
Corporation.  Representatives of the Comptroller of the Currency regularly
conduct examinations of Bank's affairs and records, and Bank must furnish
quarterly reports to the Comptroller.

Government Monetary Policies and Economic Controls

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

    The policies and regulations of the Federal Reserve Board have had, and
will
probably continue to have, a significant effect on Bank's deposits, loans and
investment growth, as well as the rate of interest earned and paid, and are
expected to affect Bank's operations in the future.  The effect of such
policies
and regulations, if any, upon the future business and earnings of Bank cannot
accurately be predicted.

Consolidated Financial and Statistical Data

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

                                  Page 6
<PAGE>

I.  Distribution of Assets, Liabilities and Stockholders' Equity;
    Interest Rates and Interest Differential
<TABLE>

A.  Average Balance Sheet (In Thousands)
<CAPTION>
Average Assets                                    1997      1996        1995
<S>                                           <C>       <C>         <C>
Cash & Due from Banks                         $ 15,567  $ 15,059    $ 13,392
Securities:
    U.S. Government Securities                  31,273    32,180      32,479
    Obligations of States and
    Political Subdivisions:  Tax Exempt         31,037    28,370      28,349
                             Taxable               953       912       1,131
    Other                                       11,014    11,386      12,706
Federal Funds Sold                                  19     7,184      12,023
Loans                                          281,476   227,781     209,280
Allowance for Loan Losses                       (2,936)   (2,388)     (2,213)
Premises & Equipment - net                      11,554     8,764       8,269
Other Assets                                     5,810     5,411       5,354
                                              ________  ________     _______
     Total                                    $385,767  $334,659     320,770
</TABLE>
<TABLE>
<CAPTION>
Average Liabilities & Stockholders' Equity
<S>                                           <C>       <C>         <C>
Deposits:
     Interest Bearing Demand                  $ 34,464  $ 33,695    $ 32,989
     Non-interest Bearing Demand                59,920    50,801      46,967
     Savings                                   110,954   112,494     118,300
     Other Time                                112,661    96,965      84,746
                                               _______   _______     _______
      Total                                    317,999   293,955     283,002
Borrowing from FHLB                             26,942     1,652       1,304
Other Liabilities                                1,443     1,218         477
                                               _______   _______     _______
     Total Liabilities                         346,384   296,825     284,783
Stockholders' Equity                            39,383    37,834      35,987
                                              ________  ________    ________
     Total                                    $385,767  $334,659    $320,770
</TABLE>
                                  Page 7
<PAGE>

<TABLE>
B.  Average Rates and Yields (Dollars In Thousands)

                                   1997                         1996
                                            AVERAGE                 AVERAGE
                          AVERAGE            YIELD/   AVERAGE         YIELD/
                          BALANCE   INT.     RATE     BALANCE   INT.   RATE
<CAPTION>
Interest Earning Assets:
<S>                       <C>      <C>      <C>     <C>      <C>     <C>
  U.S. Gov't. Securities    31,273   1,846   5.90%  $ 32,180 $ 1,968  6.12%
  Obligations of States
    & Political
  Subdivisions-Tax Exempt   31,037   1,440   4.64%    28,370   1,332  4.70%
                  Taxable      953      66   6.93%       912      58  6.36%
Federal Funds Sold              19       1   5.26%     7,184     389  5.42%
 Loans (1)(2)              281,476  25,799   9.17%   227,781  21,046  9.24%
 Other Securities           11,014     691   6.27%    11,386     712  6.25%
                           _______  ______           _______  ______
Total Interest
     Earning Assets       $355,772 $29,843   8.39%  $307,813 $25,505  8.29%
                           _______  ______   ____    _______  ______  ____
Interest Bearing Liabilities:
  Demand Deposits           34,464 $   493   1.43%  $ 33,695 $   457  1.36%
  Savings                  110,954   3,028   2.73%   112,494   3,075  2.73%

  Other Time               112,661   6,212   5.51%    96,965   5,203  5.37%
  Advances from FHLB        26,942   1,506   5.59%     1,652      62  3.75%
                           _______  ______   ____    _______  _____
Total Interest
   Bearing Liabilities    $285,021 $11,239   3.94%  $244,806  $8,797  3.59%
                           _______  ______   ____    _______  ______  ____
Net Interest Income                $18,604                   $16,708
                                    ______                    ______
Net Spread                                   4.45%                    4.70%
                                             ____                     ____
Net Interest Income
  to Earning Assets                          5.23%                    5.43%
                                             ____                     ____
</TABLE>
                                  Page 8
<PAGE>

<TABLE>
Average Rates and Yields-continued (Dollars in Thousands)

                                                          1995


AVERAGE
                                             AVERAGE
YIELD/
                                             BALANCE      INT.            RATE
<CAPTION>
Interest Earning Assets:
<S>                                        <C>         <C>               <C>
  U.S. Gov't. Securities                   $ 32,479    $ 1,865            5.74%
   Obligations of States
    & Political
   Subdivisions-Tax Exempt                   28,349      1,395            4.92%
                  Taxable                     1,131         64            5.66%
Federal Funds Sold                           12,023        697            5.80%
 Loans (1)(2)                               209,280     19,998            9.56%
 Other Securities                            12,706        812            6.39%
                                            _______     ______
Total Interest
     Earning Assets                        $295,968    $24,831            8.39%
                                            _______     ______            ____
Interest Bearing Liabilities:
  Demand Deposits                          $ 32,989    $   601            1.82%
  Savings                                   118,300      3,570            3.02%
   Other Time                                84,746      4,614            5.44%
   Short-term Borrowings and
    Securities Sold Under
    Agreements to
    Repurchase                                    0          0               0%
    Borrowing from FHLB                         477         11            2.31%
                                            _______     ______
Total Interest Bearing Liabilities         $236,512    $ 8,796            3.72%
                                            _______     ______            ____
Net Interest Income                                    $16,035
                                                        ______
Net Yield                                                                 4.67%
                                                                          ____
Net Interest Income to Earning Assets                                     5.42%
                                                                          ____
</TABLE>

(1) Non-accrual loans are included in the average loan balance.
(2) Loan interest includes fees on loans of $811,885, $753,171, and $610,946
     in 1997, 1996, and 1995 respectively.
(3) Yields for securities were calculated based on amortized cost of
securities.

                                  Page 9
<PAGE>

<TABLE>
C.  Rate/Volume Analysis (Dollars In Thousands)

<CAPTION>
                               1997 vs. 1996                  1996 vs. 1995
Increase (Decrease)     Average  Average  Average     Average  Average  Average
Due to Change In:       Volume    Rate     Total      Volume    Rate     Total

Interest Income:
<S>                    <C>      <C>      <C>          <C>       <C>      <C>
Loans                  $4,978  $  (298) $ 4,680       $1,725      (677)   1,048
Federal Funds Sold       (377)       0     (377)        (265)      (43)
(308)
Investment Securities:
U.S. Gov't Securities     (55)     (67)    (122)         (17)      120      103
Obligations of State
    and Political
    Subdivision-Exempt    125      (17)     108            1       (64)
(63)
              -Taxable      3        5        8          (13)        7
(6)
Other                     (32)      73       41          (42)      (58)
(100)
                        ______ _______  _______        _____      ____     ____
     Total Interest
      Income            4,642     (304)   4,338        1,389      (715)     674

Interest Expense:
Deposits:
  Interest Bearing
  Demand                    9       27       36           13      (157)
(144)
  Savings                 (42)      (5)     (47)        (170)     (325)
(495)
  Other Time              862      147    1,009          657       (68)     589
  Borrowing from FHLB   1,400       44    1,444           50         1       51
                        _____     ____    _____         ____      ____     ____
Total Interest
       Expense          2,229      213    2,442          550      (549)       1
                        _____    _____    _____          ___       ___      ___
Net Interest Income    $2,413   $ (517)  $1,896        $ 839     $(166)   $ 673
</TABLE>

Note: Volume changes are computed by multiplying the volume difference by
      the prior year's rate.  Rate changes are computed by multiplying the rate
      difference by the prior year's balance.  The change in interest due to
      both rate and volume has been allocated to rate and volume changes in
      proportion to the relationship of the absolute dollar amounts of the
      change in each.
                                  Page 10
<PAGE>

<TABLE>
I. Securities Portfolio

<CAPTION>
A.  Securities Portfolio, (at carrying value) including FHLB and FRB stock
(Dollars In Thousands)
                                                 ------December 31--------
                                                    1997        1996
1995
<S>                                              <C>         <C>         <C>
U.S. Government Obligations and Agencies         $31,413     $30,671
$31,955
Mortgage backed Securities                           334         325
310
Obligations of States and Political
  Subdivisions:  Exempt                           33,320      29,365
26,321
                Taxable                              953         955
839
Other Securities                                   8,479      10,455
12,495
                                                 _______     _______
_______
Total                                            $74,499     $71,771
$71,920
</TABLE>
<TABLE>
Securities Portfolio, including FHLB and FRB stock by Maturity with Weighted
Average Yield (Dollars In Thousands)
<CAPTION>
                                       December 31, 1997
                         Within      One Through    Six Through     Over
                        One Year     Five Years      Ten Years     Ten Years
                     Amount Yield   Amount Yield   Amount Yield   Amount Yield
<S>                <C>     <C>      <C>     <C>    <C>             <C>
U.S. Treasury
  Obligations      $16,179  5.78%   $14,234  5.98%      0  0.00%       0
0.00%
Mortgage backed
Securities               9  8.44%        34  8.37%     42  8.19%      249  8.0%
US Gov't Agencies    1,000  5.37%         0  0.0%       0  0.0%         0  0.0%
Obligations of State
  and Political
  Subdivisions
       Taxable:        266  5.60%       687  6.49%      0  0.00%        0  0.0%
        Exempt:      6,946  4.06%    16,577  4.42%  9,490  4.57%      307
5.77%
Other Securities     1,499  5.92%     3,468  6.68%      0  0.00%    3,512
6.36%
                   _______          _______        ______          ______
Total              $25,899          $35,000        $9,532          $4,068
</TABLE>

Note:  (a)  Securities with no stated maturity are included in the "Over Ten
            Years" category.

       (b)  Yield on "States and Political Subdivisions" (non-taxable
            investments) are not reflected on a tax equivalent basis.

                                  Page 11
<PAGE>

III.  Loan Portfolio

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

A.  Types of Loans
<CAPTION>
                                            December 31,
                              1997     1996     1995     1994     1993
                                         (Dollars In Thousands)
<S>                       <C>      <C>      <C>      <C>     <C>
Commercial, financial
  and agricultural        $ 37,610   27,503   28,326   32,442   30,367
Consumer
     Auto                   71,317   44,784   15,123   12,379   10,796
     Other                  15,245    9,925    9,146   14,511   12,501
Residential mortgage        94,593  101,349   86,641   83,018   78,315
Commercial mortgage         74,228   62,513   62,038   60,278   59,036
Other                       14,257   11,437    8,770    8,121    7,288
                          ________ ________ ________ ________ ________
        Total              307,250  257,511  210,044  210,749  198,303
Less: Allowance for
        loan losses          3,153    2,675    2,258    2,202    2,277
                          ________  _______  _______  _______  _______
Loans, Net                $304,097  254,836  207,786  208,547  196,026
</TABLE>
B.  Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table sets forth the maturities and sensitivity to changes in
interest rates of the loan portfolio exclusive of real estate mortgage and
installment loans as of December 31, 1997.

                                     Remaining Maturity
                              Within    One Through    Over
                               One Year  Five Years   Five Years   Total
                                     (Dollars In Thousands)

Commercial, financial
  and agricultural               $11,091     $ 16,793    $9,725     $37,610
Loans maturing after one year:
With a predetermined interest
 rate                                                               $14,957
With a floating or adjustable rate                                  $11,561

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

                                  Page 12
<PAGE>

B.  Maturities and Sensitivities of Loans to Changes
    In Interest Rates - continued

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

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

The Bank extends lines of credit under which a customer may borrow for
various purposes such as letters of credit.  The extension of these
commitments and lines of credit have been in the normal course of business.
In the opinion of Management, at December 31, 1997, there are no material
commitments to extend credit which represent unusual risks.

<TABLE>
C.  Risk Elements

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

The risk elements in the loan portfolio are disclosed in the following
schedule.
<CAPTION>
                                                December 31,
Non-Performing Assets            1997     1996    1995     1994    1993
                                             (Dollars In Thousands)
<S>                           <C>      <C>      <C>      <C>     <C>
Commercial, financial &
agricultural                  $ 1,210  $ 2,285  $1,640   $2,350  $1,151

Real-estate                     1,811    8,919   9,307    8,912   4,866

Consumer loans                     53       75       0        0       0
                               ______   ______   _____    _____   _____
Total non-performing loans      3,074   11,279  10,947   11,262   6,017

Other real estate owned         2,512    1,141   2,158      723     721
                              _______  _______  ______   ______  ______

Total non-performing assets   $ 5,586  $12,420 $13,105  $11,985  $6,738

Non-performing loans to year
end loans                        1.00%    4.38%   5.21%    5.35%   3.03%

Non-performing assets to year end
loans & other real estate owned  1.82%    4.82%   6.24%    5.68%   3.40%
</TABLE>
                                  Page 13
<PAGE>

<TABLE>
Item III. C. (continued)

<CAPTION>
Past Due 90 Days or More
   and accruing               1997     1996     1995     1994     1993
<S>                         <C>        <C>    <C>.     <C>      <C>
Commercial, financial &
agricultural                 $ 347     $  0   $   12   $    4   $  381

Real estate                  1,118       48      101      254      889
Consumer                       501       28       55       44       69
                              ____     ____   ______   ______   ______

Total past due 90 days
or more and accruing        $1,966     $ 76   $  168   $  302   $1,339


                              1997     1996     1995     1994     1993

Restructured Loans              $0       $0       $0       $0     $393
</TABLE>

     The accrual of interest on commercial and real estate loans is generally
discontinued 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 non-accrual loans does not resume until management
considers principal and interest collectible.  Installment loans are generally
charged off upon becoming 120 days past due.

     Additional gross income of $636,000, $841,000, and $739,000 would have
been reported during 1997, 1996, and 1995, respectively, if the loans reported
above as non-accrual and restructured loans had been current in accordance with
the original terms.

(2)  Potential Problem Loans

Loans which are not disclosed pursuant to Item III C. (1), but where known
information about credit problems of borrowers causes Management to have
serious doubts as to the ability of such borrowers to comply with present
loan repayment terms which may result in disclosure in Item III C. (1) above.
There were no potential problem loans as of December 31, 1997 and 1996.

                                  Page 14
<PAGE>

<TABLE>
IV.  Summary of Loan Loss Experience

An analysis of the Allowance for Loan Losses and statistics
relating to the relationship of the Allowance and Charge-offs to Loans is
presented in the following summary.
<CAPTION>
                                               Year Ended
                                               December 31,
                               1997      1996      1995      1994      1993
                                             (Dollars In Thousands)
<S>                        <C>       <C>       <C>       <C>       <C>
Total loans outstanding
  at end of year (1)       $307,250  $257,511  $210,044  $210,749  $198,303
Average loans outstanding
  during year (1)          $281,476  $227,781  $209,280  $202,622  $197,168
Allowance for loan losses:
Balance at beginning
  of year                  $  2,675   $ 2,258   $ 2,202  $  2,277  $  2,152
Charge-offs
  Commercial, financial
    and agricultural            257     1,356       810       712       481
  Installment                   430       126       191       145       245
  Real Estate Mortgage (2)       40        60       151        65       100
  Credit Cards                   68        95        77        89        69
                              _____     _____       ___       ___       ___
Total                           795     1,637     1,229     1,011       895

Recoveries:   (2)
  Commercial, financial and
    agricultural                190       216        90        82       218
  Installment                   189       253       118       143       132
  Real Estate Mortgage           19        72        20         0        53
  Credit Cards                   24        23        26        12        17
                               ____      ____      ____      ____      ____
       Total                    422       564       254       237       420
                               ____      ____      ____      ____      ____
Net charge-offs               ( 373)   (1,073)     (975)     (774)     (475)
Provision charged
  to expense                    851     1,490     1,031       699       600
                             ______    ______    ______    ______    ______
Balance at end of year       $3,153    $2,675    $2,258    $2,202    $2,277
Ratio of net charge-offs
  to average loans
  outstanding                   .13%     .47%       .47%      .38%      .24%
</TABLE>

(1) Loans are shown net of unearned discount.
(2)Includes Residential and Commercial Mortgages.

                                  Page 15
<PAGE>

<TABLE>
IV.  Summary of loan loss experience - continued

Allocation of allowance for loan losses
<CAPTION>
                                             December 31
                                        (Dollars in Thousands)
                                1997               1996                 1995
                                % of               % of                 % of
                                Loans to          Loans to             Loans to
                                  Total             Total                Total
                          Amount    Loans    Amount    Loans    Amount    Loans
<S>                       <C>       <C>      <C>       <C>      <C>      <C>
Commercial, financial
  and agricultural (1)    $1,594      36%    $1,873      35%    $1,809     43%
Real Estate Mortgage          90      31%       115      40%        81     41%
Consumer                     862      28%       540      21%       230     12%
Other                          0       0%         0       0%         0      4%
Unallocated                  607       5%       147       4%       138    N/A
                           _____     ___      _____     ___      _____    ___
     Total                $3,153     100%    $2,675     100%    $2,258    100%
</TABLE>
<TABLE>
<CAPTION>
                                          December 31
                                     (Dollars in Thousands)
                                 1994                         1993
                                % of                         % of
                              Loans to                      Loans to
                               Total                          Total
                         Amount     Loans                Amount     Loans
<S>                      <C>       <C>                   <C>        <C>
Commercial, financial
  and agricultural (1)   $1,534      44%                 $1,560       45%
Real Estate Mortgage        160      40%                    125       40%
Consumer                    360      13%                    421       12%
Other                         0       3%                      0        3%
Unallocated                 148      N/A                    171       N/A
                          _____     ___                   _____      ___
     Total               $2,202     100%                 $2,277      100%
</TABLE>

The determination of the allowance for loan losses is based on an analysis of
the loan portfolio and reflects an amount which, in management's judgment, is
adequate to provide for loan losses.  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.  The allowance for loan losses is
applicable for any loan losses despite the allocation provided above.  In
addition, future allocations may change due to circumstances inherent in the
loan portfolio

(1)Includes Commercial Mortgages.

                                  Page 16
<PAGE>

<TABLE>
V.  Deposits

The following summary sets forth the average amounts of the various types of
deposits for December 31, 1997, 1996 and 1995, and the average rate paid on
each.
<CAPTION>
                              1997                1996                1995
                        Amount     Rate     Amount     Rate     Amount     Rate
                                        (Dollars In Thousands)
<S>                   <C>        <C>      <C>        <C>      <C>        <C>
Non-interest bearing
   demand             $ 59,920       --   $ 50,801       --   $ 46,967       --
Interest bearing demand 34,464    1.43%     33,695    1.36%     32,989    1.82%
Savings                110,954    2.73%    112,494    2.73%    118,300    3.02%
Other time             112,661    5.51%     96,965    5.37%     84,746    5.45%
                      ________            ________            ________
Total                 $317,999    3.06%   $293,955    2.97%   $283,002    3.11%
</TABLE>
<TABLE>
The following table sets forth the time certificate of deposits of $100,000 or
greater, classified by the time remaining until maturity, which were on deposit
as of December 31, 1997.
<CAPTION>
                                             1997
                                        (In Thousands)
<S>                                        <C>
Three months or less                       $32,952
Over three through six months                1,124
Over six through twelve months                 914
Over twelve months                           1,433
                                           _______
Total                                      $36,423
</TABLE>
<TABLE>
VI.  Return on Equity and Assets

The following table sets forth certain ratios used in evaluating financial
position and results of operations.
<CAPTION>
                                                    December 31,
                                     1997               1996              1995
<S>                               <C>                <C>                <C>
Return on average total assets       .97%               .88%              1.22%
Return on average equity            9.49%              7.79%             10.88%
Dividend payout ratio              43.06%             47.98%             28.78%
Average equity to total
  average assets                   10.21%             11.31%             11.22%
</TABLE>
                                  Page 17
<PAGE>

Item 2.  Properties

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

The Bank's operations are conducted from nine offices located in Ontario
County, New York and two offices located in Monroe County, New York.  The main
office of the Bank is a three-story structure located at 72 South Main Street,
Canandaigua, New York.  The administrative, operational and electronic data
processing offices of the Bank are located in this facility.  The Bank owns
branch offices which are located on the main street in Victor, New York;
Bloomfield, New York; and Honeoye, New York. The Bank subleases space for
branch offices in Farmington, New York, at Wade's Supermarket located on Route
96; in Canandaigua, New York at 709 South Main Street; in Shortsville-
Manchester in the Bliss Shurfine Foodmart; in the Town of Mendon, Monroe
County, New York in the Hitching Post Plaza in the Big-M Food Market; in
Victor, New York in the Eastview Mall and in Pittsford, New York at State
Street.  There are drive-in facilities located at all offices except for the
Eastview Mall and Pittsford offices.

The Bank provides 24-hour banking services to Bank customers through  automatic
teller facilities located at each office and through remote  Automatic Teller
Machines located at the Finger Lakes Community College on Lincoln Hill in the
Town of Hopewell, New York, and at F.F. Thompson Hospital located on North
Parrish Street, Canandaigua, New York.

The carrying value of the properties as of December 31, 1997, which is required
to be included herein pursuant to Item 102 of Regulation S-K, is included under
the caption "Notes to Consolidated Financial Statements" set forth on pages 12
through 29 of the 1997 Annual Report to Stockholders and is incorporated herein
by reference.

Item 3.  Legal Proceedings

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

Item 4.  Submission of Matters to a Vote of Security Holders
         NONE

                                  Page 18
<PAGE>

                              PART II

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

The information required to be included herein, pursuant to Item 201 of
Regulation S-K, is incorporated herein by reference from the pages of the 1997
Annual Report to Stockholders and proxy statement set forth below:

Required Information      Annual Report Caption
   Market information      "Common Stock Data"

   Dividends                "Common Stock Data"
                            "Stockholders' Equity"

     Holdings:  (At December 31, 1997, the Corporation had approximately 756
shareholders.)  Information regarding beneficial ownership of the Corporation's
stock is set forth in the Corporation's proxy statement and incorporated herein
by reference.

Item 6.  Selected Financial Data
<TABLE>
This table represents a summary of selected components of the Corporation's
consolidated financial statements for the five years ended December 31, 1997.
All information concerning the Corporation should be read in conjunction with
the consolidated financial statements and related notes.
<CAPTION>
                                    Selected Financial Data
                           (Dollars in Thousands except per share data)
                              1997    1996     1995      1994      1993
<S>                       <C>     <C>      <C>       <C>       <C>
Net Interest Income       $ 18,604  16,708   16,035    14,760    14,018
Provision for Loan Losses $    851   1,490    1,031       699       600
Non-Interest Income       $  4,317   3,914    3,393     3,268     3,469
Non-Interest Expense      $ 16,657  15,147   12,684    12,022    12,195
Applicable Income Taxes   $  1,676   1,038    1,797     1,604     1,265
Net Income                $  3,737   2,947    3,916     3,703     3,427

Per Share Data:
Net Income                $  23.22   18.20    24.31     23.01     21.32
Cash Dividends            $  10.00    8.75     7.00      6.00      5.50

Balance Sheet Data:
Total Assets              $418,942 360,623 $317,209  $310,541  $314,640
Total Equity              $ 40,932  39,119   37,397    34,538    31,744
Average Assets            $385,767 334,659  320,770   315,312   321,546
Average Equity            $ 39,383  37,834   35,987    33,035    30,464
</TABLE>

                                  Page 19
<PAGE>

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

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

Liquidity and Interest Rate Sensitivity Management

Liquidity is defined as the ability to generate adequate amounts of cash to
meet the demand for cash from depositors who wish to withdraw funds, borrowers
who require funds to meet their credit needs, and the need for operating funds
and capital expansion.

Asset liquidity is found in cash, federal funds sold, deposits with other
financial institutions, short term security holdings, and loan repayments.  On
average for 1997, federal funds sold, cash and due from banks, and interest
bearing deposits with other banks totaled $15.6 million.  The securities
portfolio is also an important source of liquidity.  As of December 31, 1997,
approximately $25.9 million amortized cost of the portfolio will be mature in
one year or less.  Combining these two major sources of liquidity, the
Corporation had $41.5 million of readily available assets, which is 10.8% of
average assets for 1997.  Management believes that liquidity needs are
adequately addressed, but also has short term and long term borrowings
available from the Federal Reserve Bank and the Federal Home Loan Bank.

An objective of the Company's asset/liability management policy is to maximize
current and future net interest income within acceptable levels of interest
rate risk while satisfying liquidity and capital requirements.  The
Asset/Liability management Committee is responsible for managing interest rate
risk.

The Company uses a variety of methods to manage its interest rate risk and does
not rely solely on one method.  One such method used to manage interest rate
risk involves the measurement of interest rate gap.  Interest rate gap is the
amount by which a bank's rate sensitive assets differ from its rate sensitive
liabilities.  A positive gap exists when rate sensitive assets exceed rate
sensitive liabilities, indicating that a greater volume of assets than
liabilities will reprice during a given period.  Theoretically, this mismatch
will enhance earnings in a rising rate environment and inhibit earnings when
rates decline.  Conversely, when rate sensitive liabilities exceed rate
sensitive assets, the gap is negative, indicating that greater volume of
liabilities than assets will reprice during the period.  Theoretically, in this
case, a rising rate environment will inhibit earnings and declining rates will
enhance earnings.  The Rate Sensitivity Schedule that follows illustrates the
measurement of interest rate gap at December 31, 1997.

                                  Page 20
<PAGE>

<TABLE>
     The following chart indicates rate sensitivity at December 31, 1997:
<CAPTION>
                               INTEREST RATE SENSITIVITY GAPS
                                  As of December 31, 1997
                                       (In Thousands)
                                          MATURITIES
                            0 - 3           4 - 12        1 - 5         Over 5
                            MONTHS          MONTHS        YEARS          YEARS
<S>                       <C>              <C>         <C>             <C>
Loans                     $ 81,570           4,193      152,620         62,538
Securities                  10,460          15,439       35,000         13,405
                          ________          ______      _______         ______
Interest-earning
  assets                  $ 92,030          19,632      187,620         75,493
                          ________          ______      _______         ______
Certificate of Deposits     57,578          26,566       29,444              0

Savings                     60,468

Royal Blue Money Market     16,914

Now & Super Now             25,642

Money Market                23,264

Advances from FHLB          45,824                        4,020            823
                           _______          ______       ______         ______
Interest-bearing
  liabilities              229,690          26,566       33,464            823
                           _______          ______       ______         ______
Interest sensitivity
   gap                   $(137,660)         (6,934)     154,156         74,670

Rate Sensitive Assets
divided by Rate Sensitive
Liabilities                   0.40             .74         5.61          91.73

Cummulative gap as a % of
 Total assets               (32.86)%         (1.66)%      36.80%         17.82%
</TABLE>

                                  Page 21
<PAGE>

The chart indicates that the Corporation was repricing $137.7 million more of
interest earning liabilities than interest bearing assets in the 0-3 month
range.  This gap is not considered to be a problem, as a good portion of the
savings balances are not considered sensitive to rate change.  However, the
Corporation will be challenged in a rising interest rate environment to
maintain its interest margins.  For the 4-12 month period, the Corporation is
modestly liability sensitive, as $6.9 million more of interest bearing
liabilities are being repriced than interest earning assets.  For the entire
one year range, the Corporation is repricing $144.6 million more interest
bearing liabilities than assets, or 43.6% of earning assets.  This liability
sensitivity has increased  $35 million and 10.9% of earning assets over last
year.  The imbalance was due to the increase in advances from FHLB to fund
loans with a longer maturity.  The Corporation is asset sensitive at $154.2
million for the one to five year range, as interest earning assets increased
$39.5 million from last year's amounts, along with an interest bearing
liabilities increase of $2.7 million.

For the entire portfolio range, the Corporation is asset sensitive at $84.2
million versus asset sensitivity of $66.9 million last year.  With interest
rate forecasts continuing to suggest declines, our earnings should be favorably
impacted if we can continue to cut liability rates at the same pace as earning
assets.  We will have some difficulty, however, as short term liability rates
are at or near historic lows.  Continued declines could lead to deposit
outflows, as investors seek higher returns in other available products. We may
have to limit our liability rate decreases in order to continue to fund the
bank, and that may have a slightly negative impact on historic spreads.
Hopefully increasing lending will offset some of the decline.

During 1997, increased consumer lending which was not supported by deposit
growth but by short-term borrowings.  This led to a decline in the Rate
Sensitive Assets/Rate Sensitive Liabilities equation. The Corporation believes
this mismatch will continue for sometime and is aware of its challenge to
interest rate risk.

On a quarterly basis, sensitivity to change in interest rates is also measured
using simulation model.  The model estimates changes in net interest income and
net income under a variety of possible interest rate scenarios.  By performing
these simulations and comparing them to established policy limits, management
has an opportunity to plan for changes in the asset/liability mix or to take
other steps that may be necessary to lessen interest rate risk.  Based on
management's assumptions built into the simulation model and the current mix of
the Company's assets and liabilities, management's assessment is that its
negative gap position will not have a material adverse effect on its operating
results or liquidity in the event of reasonably foreseeable changes in interest
rates during 1998.  These simulations are based on numerous assumptions
regarding the timing and the extent of repricing characteristics.  Actual
results may differ significantly.

                                  Page 22
<PAGE>
The following table shows the Company's estimated earnings sensitivity profile
as of December 31, 1997.

          Changes in Interest Rates      Percent Change in Net Income
              (basis points)                12 Months     24 Months
           +200 over one year                -73.65%        6.63 %
           +100 over one year                -36.83         3.32
           -100 over one year                 36.83        -3.32
           +200 over one year                 73.65        -6.63

Capital Resources
     Total Stockholders' equity at December 31, 1997, was $40,932,000,
representing an increase of $1,813,000 (or 4.6%) over 1996.  Primary capital,
defined as shareholders equity plus loan loss reserve, was $44,085,000 at
December 31, 1997, or 11.43% of average assets versus $41,794,000 or 12.49% of
average assets at December 31, 1996.

     The Federal Reserve Board standards require banks and bank holding
companies to maintain capital based on "risk adjusted" assets so that
categories of assets with potentially higher credit risk will require more
capital backing than assets with lower risk.  In addition, banks and bank
holding companies are required to maintain capital to support, on a risk-
adjusted basis, certain off balance sheet activities such as loan commitments
and interest rate swaps.  Capital is classified into two tiers.  Tier 1 capital
consists of common shareholders' equity, non-cumulative and cumulative
perpetual preferred stock, and minority interests less goodwill and less net
unrealized gain on securities available for sale.  Tier 2 capital consists of
allowances for loan and lease losses, hybrid capital instruments, term
subordinated debt, and intermediate-term preferred stock.  All banks are
required to meet a minimum ratio of 8% of qualifying total capital to risk
adjusted total assets with at least 4% Tier 1 capital.

                                  Page 23
<PAGE>

<TABLE>
     The table below illustrates the Corporation's regulatory capital ratio
at December 31, 1997 and December 31, 1996:
<CAPTION>
                                    1997                 1996
                                     (dollars in thousands)
<S>                             <C>                  <C>
Tier 1 Capital                  $ 40,567             $ 39,119
Tier 2 Capital                  $  3,153             $  2,675
Total Qualifying Capital         $43,720             $ 41,794

Risk Adjusted Total Assets      $303,110             $247,846

Tier 1 Risk Based Capital Ratio    13.38%               15.78%
Total Risk Based Capital Ratio     14.42%               16.86%
Leverage Ratio                      9.69%               11.11%
</TABLE>
     As shown in the table, the Corporation's Tier 1 Risk Based Capital has
grown 3.7%, and Total Risk Based Capital has increased 4.6% from year end 1996
levels.

     The leverage ratio (Tier 1 Capital divided by total assets less goodwill)
must be at least 3%.  The Corporation's leverage ratio was 9.69% as of December
31, 1997.

     The capital ratios of the Corporation are strongly in excess of minimum
regulatory requirements, indicating an ability to meet customer demand and
market competition, while providing sufficient earnings to strengthen the
capital base annually.  The Corporation believes that its strong capital base
will allow it to continue a reasonable dividend payment.

Dividends
     Payments of dividends by the Bank to the Company is limited or restricted
in certain circumstances.  According to federal banking law, the approval of
the Office of the Comptroller of the Currency is required for the declaration
of dividends in any year which dividends exceed the total of net income for
that year plus retained income for the preceding two years.  At December 31,
1997, approximately $5,444,000 was available for payment of dividends to the
Company.

     Cash dividends for 1997 amounted to $1,609,000, an increase of $195,000 or
13.79% over the $1,414,000 paid in 1996.  Dividends paid were 43.1% and 48.0%
of 1997 and 1996 earnings respectively.

Results of Operations
     Net interest income is the difference between interest received from
earning assets and interest paid on interest bearing liabilities.  It is
affected by both the volume and rates applied to both earnings assets and
liabilities, and therefore, is an effective measurement of how well management
has balanced and reacted to the Corporation's interest rate sensitive assets
and liabilities.

                                  Page 24
<PAGE>

     For the year ended December 31, 1997, the Corporation had $355.6 million
average earning assets, up $47.8 million or 15.5% from the year earlier.
Average interest bearing liabilities were $285.0 million for 1997, up $40.2
million or 16.4% from 1996.  The increase in earning assets reflects the
expansion of our indirect loan product into the Rochester, NY area.  Liability
growth has begun, due to the Company borrowing from the Federal Home Loan Bank
to fund the asset growth.  While being mindful of the Corporation's customers'
needs, management was able to increase net interest income for 1997 to $18.6
million, up from $16.7 million for 1996, reflecting an increase of 11.35% for
1997.

     The yield on interest earning assets was 8.39% in 1997, up from 8.29% in
1996.  Cost of funds increased to 3.94% from 3.59% in 1996.  Management
continued to stress the cost and size control of liabilities during 1997, and
therefore the net spread decreased to 4.45% from 4.70% in 1996.  Net interest
income as a percentage of earning assets (net interest rate margin) decreased
to 5.23%, as the $1,896,000 increase in net interest income was derived from
successfully managing the changing interest rate environment during the year,
in conjunction with the previously mentioned increase in total earning assets.
Management believes these results are an indication that its interest rate
sensitivity planning is functioning well.

     The provision for loan losses in 1997 was $851,000, down $639,000 from
1996.  The allowance for loan loss as of December 31, 1997 was $3.2 million, or
1.03% of loans outstanding at year end 1997.  This ratio is slightly lower than
that of 1996 (1.04%).

     The Corporation's investment portfolio book value increased to $71.4
million at December 31, 1997 from $70.0 million at December 31, 1996,
reflecting an increase of 2%.

     Other income for 1997 increased to $4.3 million from $3.9 million,
reflecting an increase of $403,000 or 10.3%.  Service charges on deposit
accounts were down $127,000 to $1,534,000.  Other operating income for 1997
rose to $1,031,000 from $940,000 reflecting an increase of $91,000.  Strong
demand for our trust services in our traditional markets as well as in our new
Pittsford location led to an increase of Trust Income to $1,723,000 up from
$1,337,000 in 1996.

                                  Page 25
<PAGE>
     Operating expenses totaled $16.7 million, up 10.0% from $15.1 million in
1996.  Salaries and employee benefits rose $1.3 million as the Corporation
expanded several product areas and purchased two non-traditional financial
service providers.

     The rate of return on average assets (ROA) and the rate of return on
average equity are a good measure of the Corporation's results.  For the year
1997, return on average assets increased to .98% from .84%.  Return on average
equity was 9.6% in 1997 compared to 7.9% in 1996. Management believes the
Corporation remains quite healthy.

Accounting Standards

In June 1996, the Financial Accounting Standards Board issued Statement of
Accounting Standards (SFAS) No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities.  SFAS No. 125 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996 and is to be applied
prospectively.  This Statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
based on consistent application of a financial-components approach that focuses
on control.  It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings.  Management of the Company does not
expect the adoption of SFAS No. 125 will have a material impact on the
Company's financial position, results of operations, or liquidity.

In June 1997, FASB issued Statement No. 130 entitled "Reporting Comprehensive
Income".  Comprehensive Income is defined as "the change in equity(net assets)
of a business enterprise during a period from transactions and other events and
circumstances from nonowner sources.  It includes all changes in equity during
a period except those resulting from investments by owners and distributions to
owners."  The Statement is effective for fiscal years beginning after December
15, 1997 and requires that items that meet the definition of components of
comprehensive income be reported in a financial statement that is displayed as
prominently as other financial statements.  While this Statement will increase
the Company's financial disclosures, it will have no impact on operating
results.

FASB Statement No. 131 entitled "Disclosures about Segments of an Enterprise
and Related Information" was also issiued in June 1997.  This Statement is
effective for fiscal years beginning after December 15, 1997.  This Statement
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders.  It also
establishes standards for related disclosures about disclosures but will have
no impact on operating results.

Item 8.  Financial Statements and Supplementary Data
         (Supplementary data has been omitted because it is not applicable)

Financial statements, together with a report thereon of KPMG Peat Marwick LLP
dated January 30, 1998 appearing on Page 7-29 of the 1997 Annual Report to
Stockholders are incorporated herein by reference.  A reference index to the
consolidated financial statements and accompanying notes presented in the
Annual Report to Stockholders is shown in Item 14 of this filing.

Item 9.  Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
         NONE

                                  Page 26
<PAGE>

     PART III

Item 10.  Directors and Executive Officers

     (a)  Directors

     The information with respect to the directors of the Corporation, which is
required to be included herein pursuant to Item 401 of Regulation S-K, is
included under the caption "Election of Directors" on the Proxy Statement,
dated February 25, 1998, and is incorporated herein from the Proxy Statement by
reference.  There are no arrangements or understandings between any director
and any other person pursuant to which the director was selected.

     (b)  Executive Officers

     The name, age and position of the executive officer of the Corporation as
of December 31, 1997, is set forth on page 6 of the Proxy Statement dated
February 25, 1998 under the caption "Principal Officers" and is incorporated
herein by reference.  Officers are generally elected annually by the Board of
Directors at the meeting of directors immediately following the annual meeting
of stockholders.  The disclosure of family relationships between the executive
officer and directors of the Corporation is set forth on page 4 of the Proxy
Statement dated February 25, 1998 and is incorporated herein by reference.
There are no arrangements or understandings between the executive officer and
any other person pursuant to which the executive officer was selected.

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

     The executive officer of the Corporation has been an officer of the Bank
for five years or more.

     Directors and the executive officer as a group beneficially owned 14,956
shares or 9.31% of the shares outstanding.  Shares owned directly total 13,243
and shares held by directors, executive officer, or their spouses in a
fiduciary capacity or by their spouses individually total 1,713.

(c)  Significant Employees

     Not applicable
(d)  Family Relationship

     Disclosed in Item 10 (a) - Directors

(e)  Business Experience
     Disclosed in Item 10 (a) and 10 (b)

(f)  None

(g)  None

                                  Page 27
<PAGE>

Item 11. Executive Compensation

(a)  Cash Compensation

The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.

During the year ended December 31, 1997, officers of the Corporation did not
receive any compensation from the Corporation for services rendered in such
capacity.  All of the above compensation was paid by the Bank for services
rendered in the course of their employment with the bank.

(b)  Compensation Pursuant to Plans

The Bank has a non-contributory, profit sharing plan covering substantially all
full-time employees who have completed one year of service, subject to a
minimum number of hours of service with the Bank.  Contributions to the profit
sharing plan by the Bank are allocated among eligible participants in the
proportion that each participant's "points" for the calendar year bear to the
total "points" awarded for the calendar year.  Participants are awarded one
point for each full calendar year of employment and one point for each $100 of
compensation paid such participant during that year.  Voluntary contributions
may be made and invested in a separate "Voluntary  Account" in which the
participant is always fully vested.  Participants become fully-vested with non-
contributory allocations upon:  reaching the  age of 65, disability, death, or
7 years of service as defined by the plan. If employment is otherwise
terminated, partial vesting will be accorded depending upon the participant's
years of service.  Retirement and death benefits may be distributed in a cash
lump sum or a series of equal installments, payable at least annually, over a
period selected by the Profit Sharing Plan Committee.  The amounts contributed
to the profit sharing plan by the Bank in 1997, 1996, and 1995 were $763,000,
$658,000, and $639,000, respectively.

The Corporation has an Employee Stock Ownership Plan (ESOP) for employees of
its wholly-owned subsidiary, and executive officers are members of the plan.
Contributions to the ESOP are allocated among eligible participants in the
proportion that each participant's gross compensation bears to total
compensation of all participants.  Contributions to the plan for 1997, 1996,
and 1995 were $52,000, $52,000, and $46,000 respectively.

                                  Page 28
<PAGE>

The Corporation has an incentive stock plan for senior management of the
Corporation. Annual contributions are made based on performance factors
established by the board of directors.  The Corporation has accrued a liability
of $909,000 as of December 31, 1997 representing its obligation under the plan.
Expenses of the plan amounted to $110,000, $371,000, and  $155,000 for the
years ended December 31, 1997, 1996 and 1995 and were paid by the Bank.

The following table sets forth the amount of profit sharing benefits set aside
or accrued by the Bank, directly or indirectly, under the Profit Sharing Plan
for the year ended December 31, 1997 for all executive officers of the Bank.
                         Amount Set Aside
                          or Accrued for             Cumulative
     Name of              the Year Ended              Accrued
   Individual             December 31, 1997           Benefit
------------------------------------------------------------------------
George W. Hamlin, IV          $21,532                  $0000000
Robert G. Sheridan            $13,385

The following table sets forth the amount of ESOP benefits set aside or accrued
by the Bank, directly or indirectly, under the ESOP for the year ended December
31, 1997 for all executive officers of the Bank.
                         Amount Set Aside
                          or Accrued for             Cumulative
     Name of              the Year Ended              Accrued
   Individual             December 31, 1997           Benefit
--------------------------------------------------------------------------
George W. Hamlin, IV          $ 1,606                  $ 16,921
Robert G. Sheridan            $   984

(c)  Other Compensation - Option/SAR Grants Table

The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 7 and is
incorporated herein by reference.

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

The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.

(e)     Long-Term Incentive Plan Awards Table

NONE

(f)     Defined Benefit or Actuarial Plan Disclosure

NONE

                                  Page 29
<PAGE>
(g)  Compensation of Directors

For the years 1997, and 1996, no compensation was paid to members of the Board
of Directors of Canandaigua National Corporation.  For the years of 1996
members of the Board of Directors of The Canandaigua National Bank and Trust
Company were compensated at the rate of $300 per meeting.  For the year 1997,
the Chairman of the Board of Directors was compensated at the rate of $450 per
meeting attended and the remaining members were compensated at the rate of $425
per meeting attended.

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

NONE

(i)     Report on Repricing of Options/SARS

NONE

(j)     Compensation Committee Interlocks

NONE

(k)     Board Compensation Committee Report on Executive Compensation

The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 7 and incorporated herein by
reference.

(l)     Performance Graph

The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 8 and incorporated herein by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

(a), (b) The information required by Item 403 (a) and (b) of Regulation S-K  is
included with the information given on pages 1 through 3 of the Proxy
Statement and is incorporated herein by reference.

(c)  Changes in Control

NONE

                                  Page 30
<PAGE>

Item 13.  Certain Relationships and Related Transactions

(a)  Transactions with Management and Others

     NONE

 (b)  Certain Business Relationships

     NONE

(c)  Indebtedness of Management

Certain directors and executive officers of the Corporation and the Bank and
their associates were customers of and had transactions with the Bank in the
ordinary course of the Bank's business during 1997.  All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others, and in the opinion of the Bank, did
not involve more than a normal risk of collectibility or present other
unfavorable features.

(d)  Transactions with Promoters

     Not applicable

                                  Page 31
<PAGE>

PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1.  Financial Statements

The following consolidated financial statements of Canandaigua National
Corporation and subsidiary have been incorporated by reference in Item 8 on
Page 26:                                                             Pages*
Independent Auditors' Report                                             7
Consolidated Balance Sheets As of December 31, 1997 and 1996             8
Consolidated Statements of Income For Each of the Years in the 3-Year
      Period ended December 31, 1997                                     9
Consolidated Statements of Changes In Stockholders' Equity for Each
      of the Years in the 3-Year Period ended December 31, 1997         10
Consolidated Statements of Cash Flows For Each of the Years in the
      3-Year Period ended December 31, 1997  ...........................11
Notes to Consolidated Financial Statements.........................  12-29
* 1997 Annual Report to Stockholders

(a) 2.  Financial Statement Schedules

Schedules are omitted since the required information is either not applicable,
not deemed material, or is shown elsewhere in the financial statements or notes
thereto.

(a) 3.  Exhibits Table

(11) The information required by Item 601(a)(3)(11) of Regulation S-K is set
forth on page 7 and 13 of the 1997 Annual Report to the Stockholders and is
incorporated herein by reference.

(13) A copy of the 1997 Annual Report to Stockholders is attached hereto as
Exhibit A.

(19) A copy of the definitive proxy statement mailed to Stockholders is
attached hereto as Exhibit B.

(22)The Canandaigua National Bank and Trust Company is wholly owned by the
 Registrant.  The Bank is incorporated under the laws of The United States of
 America.  Registrant also owns all outstanding stock in Greater Funding of New
 York, Inc. a New York State licensed mortgage company.

                                  Page 32
<PAGE>

SIGNATURES

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

 CANANDAIGUA NATIONAL CORPORATION

By:
George W. Hamlin, IV
President

Date:      3/30/98
<PAGE>


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

Signature                      Title                      Date

                               President/Director
George W. Hamlin, IV

                               Secretary/Director
Robert G. Sheridan

                               Treasurer
Gregory S. MacKay

                                   Director
Patricia Boland

                                   Director
Frank H. Hamlin

                                   Director
Stephen D. Hamlin

                                   Director
Paul R. Kellogg

                                   Director
Eldred M. Sale

                                   Director
Caroline C. Shipley

                                   Director
Alan J. Stone

                                   Director
David Hamlin, Jr.

                                   Director
Daniel P. Fuller

                                  Page 33