UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington D.C. 20549

                                   FORM 10-Q

             Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                 For the Quarterly period ending March 31, 2001

                         Commission File Number 33-45522

                               CNB FINANCIAL CORP.
                               -------------------
             (Exact name of registrant as specified in its charter)

           New York                                            22-3203747
           --------                                            ----------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                            Identification No.)

                    24 Church Street, Canajoharie N.Y. 13317
                    ----------------------------------------
               (Address of principal executive offices - Zip code)

         Registrant's telephone number, include area code (518) 673-3243

Indicated  by  a  check  mark  whether  the registrant (1) has filed all reports
required to be filed  by  section 13 or 15(d)  of the Securities Exchange Act of
1934 during the preceding  12  months  (or for such shorter period that the bank
was required to file such reports), and  (2)  has  been subjected to such filing
requirements for the past 90 days.

           Yes [X]    No [ ]

Indicate the number of shares outstanding of each  of  the  issuer's  classes of
common stock, as of the latest practicable date.

                                          Number of shares outstanding
             Class                             on April 30, 2001
             -----                             -----------------

     Common Stock, $1.25 par value                 7,473,674



<PAGE>


PART I. FINANCIAL INFORMATION                                              Page
                                                                          ------
  Item 1. Consolidated Interim Financial Statements and Notes (Unaudited)

          1. Consolidated Balance Sheets ................................     3

          2. Consolidated Statements of Income ..........................     4

          3. Consolidated Statements of Cash Flows ......................     5

          4. Notes to Unaudited Consolidated Interim Financial Statements  6-10

  Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of Operations ............... 10-27

  Item 3. Quantitative and Qualitative Disclosures About Market Risk .... 27-29


PART II. OTHER INFORMATION

  Item 1. Legal Proceedings .............................................    30

  Item 2. Changes in Securities and Use of Proceeds .....................    30

  Item 3. Defaults Upon Senior Securities ...............................    30

  Item 4. Submission of Matters to a Vote of Security Holders ...........    30

  Item 5. Other Information .............................................    30

  Item 6. Exhibits and Reports on Form 8-K ..............................    30


SIGNATURES ..............................................................    31


                                       2

<PAGE>


                          Part 1. Financial Information

Item 1. Consolidated Financial Statements


                      CNB Financial Corp. and Subsidiaries
                           Consolidated Balance Sheets
                 (In thousands, except share and per share data)


                                                      March 31,    December 31,
                                                        2001           2000
                                                      --------     ------------
Assets                                               (Unaudited)

Cash and due from banks ...........................   $ 15,725       $ 16,528
Federal funds sold ................................      3,700             --
                                                      --------       --------
      Cash and cash equivalents ...................     19,425         16,528
                                                      --------       --------
Trading securities ................................      6,994             --
Securities available for sale, at fair value ......    372,090        365,409
Net loans & leases receivable .....................    523,107        524,967
Accrued interest receivable .......................      6,235          6,661
Premises and equipment, net .......................     12,351         12,661
Other real estate owned and repossessed assets ....      1,102          1,134
Goodwill, net .....................................     17,804         18,135
Other assets ......................................      5,256          5,845
                                                      --------       --------
                                                      $964,364       $951,340
                                                      ========       ========

Liabilities, Guaranteed Preferred Beneficial
Interests in Company's Junior Subordinated
Debentures and Stockholders' Equity

Noninterest-bearing deposits ......................   $ 65,458       $ 69,134
Interest-bearing deposits .........................    764,106        730,804
                                                      --------       --------
      Total deposits ..............................    829,564        799,938
                                                      --------       --------
Short-term borrowings:
  Securities sold under agreements to repurchase ..     23,469         18,356
  Borrowings from the Federal Home Loan Bank
    of New York ...................................      8,560         33,725
  Borrowings from the U.S. Treasury ...............        251            524
                                                      --------       --------
      Total short-term borrowings .................     32,280         52,605
                                                      --------       --------
Long-term borrowings ..............................      5,560          5,658
Other liabilities .................................     13,712         11,993
                                                      --------       --------
      Total liabilities ...........................    881,116        870,194
                                                      --------       --------
Guaranteed preferred beneficial interests in
  Company's junior subordinated debentures
  ("Capital Securities") ..........................     18,000         18,000
                                                      --------       --------
Stockholders' equity:

Common stock, $1.25 par value, 20,000,000 shares
  authorized (7,805,098 issued at March 31, 2001
  and 7,805,107 issued at December 31, 2000) ......      9,756          9,756
Additional paid-in capital ........................      6,202          6,202
Retained earnings .................................     53,576         52,232
Accumulated other comprehensive income ............      1,201            443
Treasury stock, at cost (331,424 shares at March
  31, 2001 and 331,424 at December 31, 2000) ......     (5,487)        (5,487)
                                                      --------       --------
      Total stockholders' equity ..................     65,248         63,146
                                                      --------       --------
        Total liabilities, guaranteed preferred
          beneficial interests in Company's junior
          subordinated debentures and stockholders'
          equity ..................................   $964,364       $951,340
                                                      ========       ========

See accompanying notes to unaudited consolidated interim financial statements.

                                       3

<PAGE>
                      CNB Financial Corp. and Subsidiaries
                        Consolidated Statements of Income
                      (In thousands, except per share data)

                                                     For the three months ended,
                                                     ---------------------------
                                                      March 31,       March 31,
                                                        2001            2000
                                                     -----------     -----------
                                                             (Unaudited)
Interest and dividend income:
  Loans & leases, including fees ..................   $10,933         $ 9,650
  Securities:
    Taxable .......................................     6,125           6,483
    Nontaxable ....................................       197             751
  Federal funds sold and other ....................        20              87
                                                       ------          ------
                                                       17,275          16,971
                                                       ------          ------
Interest expense:
  Deposits ........................................     8,693           7,971
  Short-term borrowings ...........................       561             380
  Long-term borrowings ............................        85              93
                                                       ------          ------
                                                        9,339           8,444
                                                       ------          ------
  Net interest income .............................     7,936           8,527
Provision for loan and lease losses ...............       260             420
                                                       ------          ------
  Net interest income after provision for loan
    and lease losses ..............................     7,676           8,107
                                                       ------          ------
Non-interest income:
  Service charges on deposit accounts .............       633             580
  Net gain on securities transactions .............       640             319
  Other ...........................................       472             502
                                                       ------          ------
                                                        1,745           1,401
                                                       ------          ------
Non-interest expenses:
  Salaries and employee benefits ..................     2,666           2,677
  Occupancy and equipment .........................       811             697
  Data processing .................................       714             651
  Professional fees ...............................       189             212
  Advertising and marketing .......................       104             163
  Postage and courier .............................       170             155
  Office supplies and stationery ..................       174             158
  Other real estate owned and repossessed assets ..        97             233
  Goodwill amortization ...........................       332             332
  Capital securities ..............................       427             415
  Other ...........................................       778             848
                                                       ------          ------
                                                        6,462           6,541
                                                       ------          ------
Income before income tax expense and cumulative
  effect of a change in accounting principle ......     2,959           2,967
Income tax expense ................................       848             783
                                                       ------          ------
Net income before cumulative effect of a change
  in accounting principle .........................     2,111           2,184
Cumulative effect of a change in accounting
  principle due to the adoption of Statement
  of Financial Accounting Standards No. 133
  "Accounting for Derivative Instruments and
  Hedging Activities" .............................       (95)             --
                                                       ------          ------
               Net income .........................    $2,016          $2,184
                                                       ======          ======
Earnings per share:
  Basic - Before cumulative effect of a change
    in accounting principle .......................    $ 0.28          $ 0.29
  Cumulative effect of a change in accounting
    principle .....................................     (0.01)             --
                                                       ------          ------
  Basic ...........................................    $ 0.27          $ 0.29
                                                       ======          ======
  Diluted - Before cumulative effect of a change
    in accounting principle .......................    $ 0.28          $ 0.29
  Cumulative effect of a change in accounting
    principle .....................................     (0.01)             --
                                                       ------          ------
  Diluted .........................................    $ 0.27          $ 0.29
                                                       ======          ======

See accompanying notes to unaudited consolidated interim financial statements.

                                       4
<PAGE>

                      CNB Financial Corp. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (In thousands)


                                                     For the three months ended,
                                                     ---------------------------
                                                      March 31,       March 31,
                                                        2001            2000
                                                     -----------     -----------
                                                             (Unaudited)
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
  Net income .......................................   $ 2,016         $ 2,184
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization ................       703             678
      Provision for loan losses ....................       260             420
      Cumuluative effect of a change in accounting
        principle ..................................        95              --
      Net gain on securities transactions ..........      (640)           (319)
      Net loss on sales and writedowns of other
        real estate owned and repossessed assets ...         2              63
      Loans originated and held for sale ...........    (3,234)             --
      Net gain on sales of loans held for sale .....       (67)             --
      Proceeds from sales of loans held for sale ...     3,885              --
      Purchases of trading securities ..............    (2,948)             --
      Proceeds from maturities of trading securities        58              --
      Decrease (increase) in accrued interest
        receivable .................................       426            (592)
      Net change in other assets and other
        liabilities ................................     1,697             225
                                                       -------         -------
        Net cash provided by operating activities ..     2,253           2,659
                                                       -------         -------
Cash flows from investing activities:
  Purchases of securities available for sale .......   (70,812)        (45,613)
  Proceeds from sales of securities available
    for sale .......................................    23,815          19,415
  Proceeds from maturities and calls of securities
    available for sale .............................    38,126           7,733
  Net loans repaid by (made to) customers ..........       410         (19,972)
  Proceeds from sales of other real estate owned and
    repossessed assets .............................       636             669
  Purchases of premises and equipment ..............       (62)           (458)
                                                       -------         -------
        Net cash used in investing activities ......    (7,887)        (38,226)
                                                       -------         -------
Cash flows from financing activities:
  Net increase in deposits .........................    29,626          19,919
  Net (decrease) increase in short-term borrowings .   (20,325)          1,434
  Payments on long-term borrowings .................       (98)            (93)
  Dividends paid ...................................      (672)           (678)
  Purchases of treasury stock ......................        --            (410)
                                                       -------         -------
        Net cash provided by financing activities ..     8,531          20,172
                                                       -------         -------
Net increase (decrease) in cash and cash equivalents     2,897         (15,395)
Cash and cash equivalents at beginning of period ...    16,528          31,201
                                                       -------         -------
Cash and cash equivalents at end of period .........   $19,425         $15,806
                                                       =======         =======

Supplemental non-cash activity:

During the quarter end March 31, 2001, the Company transferred $3.804 million of
securities avialable for sale to trading securities. At the time of transfer,
the securities amortized cost approximated fair value.


See accompanying notes to unaudited consolidated interim financial statements.

                                       5

<PAGE>

                               CNB Financial Corp.
          Notes to Unaudited Consolidated Interim Financial Statements


1.   The accompanying  unaudited  consolidated interim financial statements have
     been prepared in accordance with generally accepted  accounting  principles
     for  interim  financial  information  and with  instructions  to Form 10-Q.
     Accordingly,  they do not  include  all of the  information  and  footnotes
     required by generally accepted accounting principles for complete financial
     statements.  In the  opinion of  management,  all  adjustments  (consisting
     solely  of  normal  recurring  accruals)  considered  necessary  for a fair
     presentation have been included.  The accompanying  unaudited  consolidated
     interim  financial  statements  should  be read  in  conjunction  with  the
     Company's  Annual Report on Form 10-K as of and for the year ended December
     31, 2000. Operating results for the three-month period ended March 31, 2001
     are not necessarily  indicative of the results that may be expected for the
     full year.

2.   Earnings  Per  Share - Basic  EPS  excludes  dilution  and is  computed  by
     dividing income  available to common  stockholders by the weighted  average
     number of common shares  outstanding  for the period.  Diluted EPS reflects
     the potential dilution that could occur if securities or other contracts to
     issue  common  stock were  exercised  or  converted  into  common  stock or
     resulted in the  issuance of common  stock that then shared in the earnings
     of the entity (such as the Company's stock options).

     The following  table provides the  calculation of basic and diluted EPS for
     the three months ended March 31:

<TABLE>
<CAPTION>
                                        Three Months Ended 3/31/01   Three Months Ended 3/31/00
                                        --------------------------   --------------------------
                                                 Weighted     Per             Weighted     Per
                                         Net      Average    Share    Net      Average    Share
(in thousands, except per share data)   Income    Shares    Amount   Income    Shares    Amount
-------------------------------------   ------   --------   ------   ------   --------   ------
<S>                                     <C>        <C>      <C>      <C>        <C>      <C>
Basic EPS:
  Net income available to common
    stockholders before cumulative
    effect of a change in accounting
    principle .......................   $2,111     7,474    $ 0.28   $2,184     7,533    $ 0.29

  Cumulative effect change of a
    accounting principle ............      (95)    7,474    $(0.01)      --        --        --
                                        ------     -----    ------   ------     -----    ------
Basic EPS ...........................   $2,016     7,474    $ 0.27   $2,184     7,533    $ 0.29
                                        ======     =====    ======   ======     =====    ======
</TABLE>


                                       6

<PAGE>

<TABLE>
<CAPTION>
                                        Three Months Ended 3/31/01   Three Months Ended 3/31/00
                                        --------------------------   --------------------------
                                                 Weighted     Per             Weighted     Per
                                         Net      Average    Share    Net      Average    Share
(in thousands, except per share data)   Income    Shares    Amount   Income    Shares    Amount
-------------------------------------   ------   --------   ------   ------   --------   ------
<S>                                     <C>        <C>      <C>      <C>        <C>      <C>
Dilutive EPS:
  Net income available to common
    stockholders before cumulative
    effect of a change in accounting
    principle .......................   $2,111     7,474    $ 0.28   $2,184     7,533    $ 0.29

  Cumulative effect change of a
    accounting principle ............      (95)    7,474    $(0.01)      --        --        --
                                        ------     -----    ------   ------     -----    ------
Net income available to
  common stockholders ...............   $2,016     7,474    $ 0.27   $2,184     7,533    $ 0.29

Effect of dilutive securities:
  Stock options .....................       --        21        --       --        26        --
                                        ------     -----    ------   ------     -----    ------
Diluted EPS .........................   $2,016     7,495    $ 0.27   $2,184     7,559    $ 0.29
                                        ======     =====    ======   ======     =====    ======
</TABLE>

     The  weighted-average  number of options  excluded from the  computation of
     diluted EPS during the quarter  ended March 31, 2001  because the  options'
     exercise  price was  greater  than the average  market  price of the common
     stock  for  the  quarter   ended  March  31,  2001  was  123,156,   with  a
     weighted-average  exercise price of $13.98.  At March 31, 2001,  options to
     purchase  43,500  shares of  common  stock at a  weighted-average  exercise
     price of $16.37 per share were outstanding and anti-dilutive.

3.   Recent Accounting Pronouncements:

     FASB Statement 133

     The Company  adopted the  provisions  of Statement of Financial  Accounting
     Standards  (SFAS) No.  133,  "Accounting  for  Derivative  Instruments  and
     Hedging Activities,"  effective January 1, 2001. This Statement establishes
     accounting and reporting  standards for derivative  instruments,  including
     certain derivative instruments embedded in other contracts, and for hedging
     activities.  It requires that an entity recognize all derivatives as either
     assets or liabilities in the balance sheet and measure those instruments at
     fair  value.  Changes  in  the  fair  value  of  the  derivative  financial
     instruments  are  reported in either net income or as a component  of other
     comprehensive income, depending on the use of the derivative and whether or
     not it qualifies for hedge accounting. Consequently, there may be increased
     volatility  in net income,  other  comprehensive  income and  stockholders'
     equity on an ongoing basis as a result of  accounting  for  derivatives  in
     accordance with SFAS No. 133.

     Special hedge accounting  treatment is permitted only if specific  criteria
     are met,  including a requirement  that the hedging  relationship be highly
     effective both at inception and on an ongoing basis.  Accounting for hedges
     varies  based on the type of hedge - fair  value or cash  flow.  Results of
     effective  hedges are recognized in current  earnings for fair value hedges
     and in  other  comprehensive  income  for  cash  flow  hedges.  Ineffective
     portions  of hedges are  recognized  immediately  in  earnings  and are not
     deferred.

                                       7

<PAGE>

     As of January 1, 2001,  the  Company  held  certain  debt  securities  with
     embedded derivative instruments.  The purpose of these embedded derivatives
     was to hedge against the exposure  associated with certain of the Company's
     variable rate debt securities that would  experience a decrease in interest
     payments in a falling  interest  rate  environment.  As of January 1, 2001,
     management  determined that these embedded derivatives  qualified for hedge
     accounting  treatment under SFAS No. 133 using the cash flow hedging model.
     Accordingly,  to the extent  that this cash flow hedge was  effective,  the
     embedded  derivatives  were recorded at their estimated fair value with the
     fair value adjustment,  net of tax,  included in stockholders'  equity as a
     component of accumulated other comprehensive  income or loss. However,  any
     ineffectiveness  of this cash flow  hedge  would  result in  recognizing  a
     corresponding  portion of the  estimated  fair value  adjustment in current
     earnings.  In  addition,  if the cash  flows  resulting  from the  embedded
     derivatives changed by less than 80% or more than 125% of the change in the
     cash flows from the hedged  items,  the hedge would no longer be considered
     effective  and the entire  fair value  adjustment  related to the  embedded
     derivatives would be recorded as an adjustment to current  earnings.  As of
     January 1, 2001,  the amortized  cost and estimated  fair value of the debt
     securities with the embedded  derivatives  amounted to approximately $3.833
     million and $3.410 million,  respectively.  At January 1, 2001,  management
     considered  the  embedded  derivatives  to be highly  effective  in hedging
     changes  in  the  cash  flows   associated   with  the  hedged  items  and,
     accordingly,  there was no effect on the  Company's  results of  operations
     from  the  adoption  of  SFAS  No.  133  with  respect  to  these  embedded
     derivatives.

     During the three months ended March 31, 2001, the Company  discontinued the
     cash flow hedge noted above. The cash flow hedge was discontinued at a time
     when  the  amortized  cost  of  the  debt   securities  with  the  embedded
     derivatives  approximated fair value ($3.804 million).  The debt securities
     with the embedded derivatives were concurrently transferred from securities
     available for sale to trading  securities,  with subsequent  changes in the
     fair  value  of the debt  securities  recorded  in net  gain on  securities
     transactions in the  consolidated  statement of income for the three months
     ended March 31, 2001.  During the three  months  ended March 31, 2001,  the
     Company  purchased an additional  $2.948  million of debt  securities  with
     similar embedded  derivatives,  which were classified as trading securities
     at purchase.  As a result of the  decreasing  rate  environment  during the
     three months ended March 31, 2001, the Company recognized  $241,000 in fair
     value  appreciation from these trading securities in net gain on securities
     transactions.  Management  provides  reports  regarding the debt securities
     with embedded  derivatives to the Company's Board of Directors on a monthly
     basis.

     The Company also has certain other embedded derivative  instruments related
     to a deposit  product and two debt  securities  that have costs and returns
     linked  to  the  performance  of  the  NASDAQ  100  index.  Management  has
     determined  that  these  debt  securities  and the  deposit  product do not
     qualify for hedge accounting  under SFAS No. 133. The embedded  derivatives
     have been  separated  from the underlying  host  instruments  for financial
     reporting  purposes and accounted for at fair value. In connection with the
     adoption  of SFAS No. 133 as of January 1,  2001,  the  Company  recorded a
     charge to  earnings  for a  transition  adjustment  of  $159,000  ($95,000,
     after-tax) for the net impact of recording  these  embedded  derivatives on
     the consolidated  balance sheet at fair value.  This transition  adjustment
     (net of tax) is reflected in the  consolidated  statement of income for the
     three months ended March 31, 2001 as the  cumulative  effect of a change in
     accounting principle.


                                       8

<PAGE>

     As of March 31, 2001, the total  amortized cost and estimated fair value of
     these two debt securities  (including the embedded  derivatives,  which are
     classified  in the  consolidated  balance  sheet with the  underlying  host
     instrument)  is  $7.000  million  and  $6.598  million,  respectively.  The
     securities'  rate of return is based on an original NASDAQ 100 index value,
     with the index value resetting  annually over a five-year period.  The rate
     of return is capped on these debt  securities  as follows:  $3.000  million
     have a 35% annual rate of return cap and $4.000  million  have a 25% annual
     rate of return cap. The $4.000  million  security has a guaranteed  rate of
     return of 2% regardless of the performance of the NASDAQ 100 index over its
     five-year  period.  The  securities are scheduled to mature in 2005 and the
     Company is  guaranteed  to  receive  the face  value of the  securities  at
     maturity. These two debt securities are valued similar to zero coupon bonds
     coupled with the value of NASDAQ 100 futures contracts. The primary purpose
     of these debt  securities is to provide a certain level of hedging  related
     to a  deposit  product  the  Company  offered  in  2000  that  has  similar
     characteristics to the bonds.

     As of March 31, 2001, the face value of the NASDAQ 100 deposit  product was
     $1.402  million,  with an  estimated  fair value  (including  the  embedded
     derivative,  which is classified in the consolidated balance sheet with the
     underlying  host  instrument  ) of $1.189  million.  The NASDAQ 100 deposit
     product is a five year  certificate of deposit with a maturity date in July
     2005. The deposit's  interest rate is based on an original NASDAQ 100 index
     value, with the index value resetting annually over a five-year period. The
     maximum  annual  interest rate is 20%, and the Company has  guaranteed  the
     return of the original  deposit  balance to the customer  (i.e. the minimum
     rate  for the  five  period  cannot  be  negative).  The  Company  does not
     currently offer the NASDAQ 100 deposit product. However, it may again offer
     this product if market conditions warrant.

     During the three  months  ended  March 31,  2001,  the  Company  recorded a
     $92,000 net loss related to the  adjustment of the embedded  derivatives to
     estimated  fair  value,  which  was  recorded  in net  gain  on  securities
     transactions on the consolidated statement of income. As of March 31, 2001,
     the estimated  fair value of the embedded  derivatives  related to the debt
     securities  and time  deposit  product  linked to the  NASDAQ 100 index was
     $691,000 and $143,000,  respectively.  As of January 1, 2001, the estimated
     fair value of the embedded  derivatives  related to the debt securities and
     time  deposit  product  linked to the  NASDAQ  100 index was  $800,000  and
     $160,000,  respectively. These embedded derivatives may result in increased
     volatility  in net income on an ongoing  basis  based on  movements  in the
     NASDAQ  100 index.  Management  provides  reports  regarding  the  embedded
     derivatives  related  to the  NASDAQ  100 index to the  Company's  Board of
     Directors on a monthly basis.


                                       9

<PAGE>

4.   Comprehensive  Income  -  Comprehensive  income  represents  the sum of net
     income and items of other comprehensive  income or loss, which are reported
     directly in stockholders' equity, net of tax, such as the change in the net
     unrealized gain or loss on securities available for sale. Accumulated other
     comprehensive  income or loss, which is included in  stockholders'  equity,
     net of tax,  represents  the  net  unrealized  gain  or loss on  securities
     available for sale.

     Total  comprehensive  income for the three  months ended March 31, 2001 and
     2000 was $2.774 million and $1.300 million, respectively.


     Item 2: Management's Discussion and Analysis of Financial Condition and
                              Results of Operations

General
-------

CNB Financial  Corp.  (the Company) is a one-bank  holding  company,  registered
under the Bank Holding  Company Act of 1956, as amended.  It was organized under
the laws of the State of New York and became a bank  holding  company on January
5, 1993 through the consummation of a reorganization  plan with Central National
Bank,  Canajoharie,  (the Bank) which became the wholly owned  subsidiary of the
Company.  The Company  maintains its headquarters in Canajoharie,  New York. The
principal business of the Company is to provide, through the Bank, comprehensive
banking  services  through its network of twenty nine branches and two financial
services  centers  located in Central New York in the  counties  of  Montgomery,
Fulton, Chenango, Herkimer, Oneida, Otsego, Schoharie, Saratoga and Schenectady.
In 1996, Central Asset Management,  Inc. (CAM) was formed as a second subsidiary
of the  Company.  The  main  business  activity  of CAM is to  offer  investment
management  services  for a fee to a  focused  customer  base of high net  worth
individuals and businesses.

The Company's  principal  business is attracting  deposits from customers within
its market area and investing those funds primarily in mortgage loans,  consumer
loans  and  leases,  commercial  and  agricultural  loans,  and  government  and
corporate debt securities.  The financial condition and operating results of the
Company are dependent on its net interest income which is the difference between
the interest  and  dividend  income  earned on its assets,  primarily  loans and
investments,  and  the  interest  expense  paid  on its  liabilities,  primarily
deposits and borrowings.  Net income is also affected by other operating income,
such as fees on deposit related services,  loan servicing income,  and fiduciary
activities;  other operating expenses, such as salaries and benefits,  occupancy
expenses,  and data processing expense; the provision for loan and lease losses;
and federal and state income taxes.


                                       10

<PAGE>

The  Company's  results of  operations  are  significantly  affected  by general
economic and  competitive  conditions  (particularly  changes in market interest
rates),  government  polices,  changes in  accounting  standards  and actions of
regulatory  agencies.   Future  changes  in  applicable  laws,   regulations  or
government  policies may have a material  impact on the Company.  The demand for
and supply of real  estate,  competition  among  lenders,  the level of interest
rates and the availability of funds substantially  influence lending activities.
The  ability  to  gather  deposits  and the  cost of  funds  are  influenced  by
prevailing market interest rates, fees and terms on deposit products, as well as
the availability of alternative investments, including mutual funds and stocks.

Forward Looking Statements

The  Company  may  from  time  to time  make  written  or oral  "forward-looking
statements",  including  statements contained in its filings with the Securities
and Exchange  Commission (SEC) (including this quarterly report on Form 10-Q and
the Exhibits hereto), in its reports to shareholders and in other communications
by the  Company,  which are made in good faith by the  Company  pursuant  to the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.

These  forward-looking   statements  include  statements  with  respect  to  the
Company's  beliefs,  plans,  objectives,  goals,  expectations,   anticipations,
estimates  and   intentions,   that  are  subject  to   significant   risks  and
uncertainties,  and are subject to change based on various factors some of which
are beyond the Company's control. The words "may", "could",  "should",  "would",
"believe",  "anticipate",  "estimate",  "expect",  "intend",  "plan" and similar
expressions are intended to identify forward-looking  statements.  The important
factors  we  discuss  below and  elsewhere  in this  document,  as well as other
factors discussed and identified in our filings with the SEC and those presented
elsewhere by our  management  from time to time,  could cause actual  results to
differ materially from those indicated by the forward-looking statements made in
this report:

     o    the strength of the United States  economy in general and the strength
          of the local economies in which the Company conducts operations;

     o    the effects of, and changes in,  trade,  monetary and fiscal  policies
          and laws,  including  interest  rate  policies of the Federal  Reserve
          Board;

     o    inflation, interest rate, market and monetary fluctuations;

     o    the timely  development of and acceptance of new products and services
          of the Company and the perceived  overall value of these  products and
          services  by  users,  including  the  features,  pricing  and  quality
          compared to competitors' products and services;

     o    the  willingness  of users to  substitute  competitors'  products  and
          services for the Company's products and services;


                                       11

<PAGE>

     o    the  success  of the  Company in gaining  regulatory  approval  of its
          products and services, when required;

     o    the impact of  changes in  financial  services'  laws and  regulations
          (including laws concerning taxes, banking, securities, agriculture and
          insurance);

     o    technological changes;

     o    acquisitions;

     o    changes in consumer spending and saving habits; and

     o    the  success of the  Company at  managing  the risks  involved  in the
          foregoing.

The Company wishes to caution readers that such forward-looking statements speak
only as of the  date  made.  The  Company  does  not  undertake,  and  expressly
disclaims any intent or  obligation,  to update any  forward-looking  statement,
whether  written or oral,  that may be made from time to time by or on behalf of
the Company.


Results of Operations
---------------------

The following  table shows selected  ratios for the period ended or at the dates
indicated:

                                          Three months              Three months
                                              ended     Year ended,     ended
                                            March 31,  December 31,   March 31,
                                            2001 (1)       2000       2000 (1)
                                          ------------ ------------ ------------
Return on average assets .................    0.86%        0.74%        0.95%
Return on average assets - core cash (2) .    0.98%        0.96%        1.03%
Return on average equity .................   12.66%       12.52%       15.86%
Return on average equity - core cash (2) .   14.51%       16.17%       17.30%
Non-interest expenses to average assets ..    2.74%        2.72%        2.83%
Efficiency ratio (3) .....................   67.26%       63.47%       62.98%

(1)  Where appropriate, ratios have been annualized

(2)  - Core  cash  earnings,  as  reported  by the  Company,  excludes  goodwill
     amortization,  write-downs taken for the other-than-temporary impairment on
     corporate debt securities, and the transition adjustment for the cumulative
     effect change in accounting principle.

(3)  Equals non-interest  expense less goodwill  amortization expense divided by
     net interest income (FTE) plus other income  (excluding net gains or losses
     on securities transactions).

Core cash  earnings,  which excludes the  amortization  of goodwill and a charge
taken for changes in accounting standards,  for the quarter ended March 31, 2001
decreased 3% to $0.31 diluted earnings per share, or $2.311 million,  from $0.32
diluted  earnings  per share,  or $2.383  million  for the same  period in 2000.
Diluted  earnings  per share  before a charge  taken for  changes in  accounting
standards,  stated in accordance with generally accepted accounting  principles,
which includes the effect of goodwill  amortization,  decreased to $0.28 diluted
earnings per share, or $2.111 million for the quarter ended March 31, 2001, from
$0.29 diluted earnings per share, or $2.184 million for the same period in 2000.
Diluted earnings per share after a $95,000 after-tax charge taken for changes in
accounting  standards  were $0.27,  or $2.016  million,  down from $0.29 diluted
earnings per share, or $2.184 million for the same period in 2000.


                                       12

<PAGE>

Net interest income on a fully tax-equivalent (FTE) basis was $8.009 million for
the quarter ended March 31, 2001,  down $768,000 from the $8.777 million for the
same period in 2001. The Company's net interest margin declined 41 basis points,
from 4.01% for the quarter  ended March 31, 2000 to 3.60% for the same period in
2001. Interest rates rose rapidly in the first six months of 2000 decreasing the
Company's net interest  margin.  However,  due to the decrease in interest rates
that occurred in the first quarter of 2001, the Company  anticipates an increase
in its net interest margin. The Company's net interest margin increased 17 basis
points  from 3.43% for the  quarter  ended  December  31,  2000 to 3.60% for the
quarter ended March 31, 2001. For more  information  regarding the Company's net
interest  income,  refer to the section in Management's  Discussion and Analysis
highlighted  as "Net  Interest  Income" and the table of  "Average  Balances/Net
Interest Margin".

The provision for loan and lease losses was $260,000 for the quarter ended March
31, 2001,  down $160,000 from the $420,000  provided in the same period in 2000.
The  decrease  in  the  provision  resulted  primarily  from a  decrease  in net
charge-offs,  from $334,000 for the quarter ended March 31, 2000 to $128,000 for
the same period in 2001. In addition,  non-performing  loans decreased slightly,
from $4.664  million at December  31, 2000 to $4.561  million at March 31, 2001.
Lastly,  net loans and leases  decreased  from $533.112  million at December 31,
2000 to $531.384 million at March 31, 2001.

Total  non-interest  income  increased  $344,000,  from  $1.401  million for the
quarter ended March 31, 2000 to $1.745  million for the same period in 2001. Net
gains on  securities  transactions  increased  $321,000,  from  $319,000 for the
quarter  ended March 31, 2000 to $640,000 for the same period in 2001.  Included
in net gain on securities  transactions  is $241,000 in net unrealized  gains on
trading  securities.  During the first quarter of 2001, the Company  transferred
$3.804 million in debt securities  with embedded  derivative  instruments  whose
amortized cost approximated  fair value from available for sale to trading.  The
purpose of these debt securities with embedded  derivatives was to hedge against
the  exposure  associated  with  certain  of the  Company's  variable  rate debt
securities  that would  experience a decrease in interest  payments in a falling
interest  rate   environment.   During  the  first  quarter  2001,  the  Company
discontinued  this cash flow hedge which was  established as of January 1, 2001.
The  Company   elected  to  transfer  these  debt   securities  to  trading  and
subsequently record the fair value market change of these securities through net
gain on securities  transactions in the consolidated statement of income. During
the quarter ended March 31, 2001,  the Company  purchased an  additional  $2.948
million in similar type securities, which were classified as trading as well. As
a result of the  decreasing  rate  environment  for the quarter  ended March 31,
2001, the Company  recognized  $241,000 in unrealized market value  appreciation
from these trading securities.  The Company wishes to caution readers that these
trading securities are sensitive to changes in short-term  interest rates. Rapid
changes in short term-interest rates will result in increased  volatility in the
market value change of these  securities which will have an impact on net income
and  stockholders'  equity on an ongoing basis. See also Note 3 to the Unaudited
Consolidated Interim Financial Statements.


                                       13

<PAGE>

Also included in the $640,000 net gain on securities  transactions  is a $92,000
loss from  embedded  derivatives  related to a time deposit  product and certain
debt  securities  that have costs and  returns  linked to an equity  index.  The
embedded  derivatives  have been separated from the underlying host  instruments
for financial  reporting purposes and accounted for at fair value. In connection
with the  adoption  of SFAS No. 133,  the  Company  recorded a charge to current
earnings for a transition  adjustment of $159,000  ($95,000,  after-tax) for the
net impact of recording these embedded  derivatives on the consolidated  balance
sheet at their  respective  estimated  fair  values on  January  1,  2001.  This
reduction in net income is reflected in the Company's  consolidated statement of
income  as the  cumulative  effect  of a change  in  accounting  principle.  The
equity-linked  indexed  securities and related time deposit  product returns are
based on the performance of the NASDAQ 100 index,  which may result in increased
volatility in the market value change of these equity-linked  indexed securities
and related time deposit product. See also Note 3 to the Unaudited  Consolidated
Interim Financial  Statements.  Lastly, the Company  recognized  $491,000 in net
gains on securities  transactions that resulted from the sale of $23.815 million
in securities available for sale.

Service  charges on deposit  accounts  increased  9.1%,  from  $580,000  for the
quarter  ended  March 31,  2000 to  $633,000  for the same  period in 2001.  The
increase in service  charges on deposit  accounts  was due to an increase in the
number of ATMs the  Company  operates  and an  increase  in the number of demand
deposit accounts the Company services due to its recent market expansion.  Other
income decreased $30,000,  from $502,000 for the quarter ended March 31, 2000 to
$472,000  for the same period in 2001.  The  decrease in other  income  resulted
primarily from the sale of the Company's merchant processing business during the
quarter ended June 30, 2000.  Merchant processing revenues for the quarter ended
March  31,  2000 were  $75,000.  In  addition,  fiduciary  and asset  management
revenues decreased $39,000 for the quarter ended March 31, 2001 when compared to
the same period in 2000.  Offsetting  these other income items were increases in
title insurance commissions (the Company began offering this service to mortgage
customers in the first quarter of 2000) of $24,000,  and an increase in mortgage
banking activities of $40,000.

Non-interest  expenses  decreased  $79,000,  from $6.541 million for the quarter
ended March 31, 2000 to $6.462 million for the same period in 2001. Salaries and
employee  benefits  totaled $2.666 million for the quarter ended March 31, 2001,
down $11,000 from the same period in 2000. The decrease in salaries and benefits
can be primarily  attributed  to an increase in loan  origination  activity,  as
salaries  and  benefits  deferrals  associated  with loan  origination  activity
increased  $183,000  for the quarter  ended March 31, 2001 when  compared to the
same period in 2000.  Partially offsetting this decrease was a $126,000 increase
in salaries  and a $75,000  increase in pension  expense  due  primarily  to the
branch  expansion  activity in 2000 and the hiring of key officers in the fourth
quarter of 2000 and first quarter of 2001.  Occupancy  and  equipment  increased
from  $697,000  for the quarter  ended  March 31, 2000 to $811,000  for the same
period in 2001. The increase in occupancy and equipment is primarily  attributed
to the opening of two new branches that occurred in February and August of 2000.
Advertising and marketing  decreased $59,000 in the quarter ended March 31, 2001
when  compared to the same period in 2000 due  primarily to marketing  campaigns
the Company deployed in newly entered markets in the first quarter of 2000.


                                       14

<PAGE>

Other real estate owned and repossessed  assets expense  decreased  $136,000 for
the quarter ended March 31, 2001 when  compared to the same period in 2000,  due
primarily to a $61,000  decrease in net losses on sales and write-downs of other
real estate owned and repossessed  assets and a $48,000 decrease in repossession
expenses for manufactured homes.

Other  expenses  decreased from $848,000 for the quarter ended March 31, 2000 to
$778,000  for the same period in 2001.  The  decrease  in other  expenses is due
primarily  to a decrease in  residual  losses on the sale of  terminated  leased
vehicles  amounting  to $47,000.  A charge of $595,000 was taken to increase the
reserve for residual  losses on auto leases in the fourth  quarter of 2000.  The
provision  for residual  losses on auto leases in the fourth  quarter  reflected
weak business conditions in the used automobile market which management believes
has  resulted  in a decline in  residual  values  that is  other-than-temporary.
Management  believes that as of March 31, 2001, the reserve for residual  losses
on auto leases is adequate, and the estimated other-than-temporary impairment of
lease residual values has been  appropriately  recorded.  While  management uses
available information with respect to estimating the necessary level of reserve,
changes in economic  conditions and other factors may occur that would result in
additional estimated other-than-temporary impairment on lease residual values.

The Company is currently  in  negotiations  to acquire an  insurance  agency and
financial  services company located in its market area. The Company  anticipates
too close on the  acquisition  in June or July of 2001.  The  acquisition of the
insurance agency and financial services company should increase other income and
non-interest expenses in subsequent periods.

Net Interest Income

(The  accompanying  schedule entitled  "Average  Balances/Net  Interest Margin -
Fully  Taxable  Equivalent  Basis  (FTE)" is the basis of and  should be read in
conjunction with this discussion).

Net Interest Income FTE Basis

Net  interest  income on a FTE basis was $8.009  million for the  quarter  ended
March 31, 2001,  down  $768,000 from the $8.777  million  recognized in the same
period in 2000. The Company's net interest  margin  decreased from 4.01% for the
quarter  ended March 31, 2000 to 3.60% for the same period in 2001.  The decline
in net interest  margin can be primarily  attributed to the Company's  liability
sensitivity,  which  means  interest-bearing  liabilities  re-price  faster than
interest  earning assets.  In a rising rate  environment,  the Company's cost of
funds will increase faster than its yield on interest  earning assets.  Interest
rates rose rapidly in the first six months of 2000  decreasing the Company's net
interest margin. However, due to the decrease in interest rates that occurred in
the first  quarter of 2001,  the  Company  anticipates  an  increase  in its net
interest  margin.  The Company's net interest  margin  increased 17 basis points
from 3.43% for the  quarter  ended  December  31,  2000 to 3.60% for the quarter
ended March 31, 2001.


                                       15

<PAGE>

Earning Assets

Total average earning assets increased  $14.658  million,  from $875.949 million
for the quarter ended March 31, 2000 to $890.607  million for the same period in
2001. Average loan and leases receivable increased $66.323 million (14.2%), from
$466.888  million for the quarter  ended March 31, 2000 to $533.211  million for
the same period in 2001.  Offsetting  this  increase in average  loan and leases
receivable  were decreases in average  tax-exempt  securities of $38.074 million
and average taxable  securities of $8.998 million during the quarter ended March
31, 2001 when compared to the same period in 2000. The yield on average  earning
assets decreased 7 basis points (bp), from 7.86% for the quarter ended March 31,
2000 to 7.79% for the same  period in 2001.  The  decrease  in yield on  average
earning assets  resulted  primarily from a decrease in yield on average  taxable
securities of 23 bp and average other loans of 17 bp which represent 38% and 31%
of average earning assets for the quarter ended March 31, 2001, respectively.

Loans and leases receivable

Average loans and leases  receivable  increased  $66.323 million  (14.2%),  from
$466.888  million for the quarter  ended March 31, 2000 to $533.211  million for
the same period in 2000. The yield earned on average loans and lease decreased 6
bp, from 8.28% for the quarter ended March 31, 2000 to 8.22% for the same period
in 2001. Average loans secured by real estate increased $45.315 million (21.4%),
from $212.099  million for the quarter ended March 31, 2000 to $257.414  million
for the same period in 2001.  The yield on average  loans secured by real estate
increased 4 bp, from 8.33% for the quarter ended March 31, 2000 to 8.37% for the
same period in 2001.  Average  loans secured by  one-to-four  family real estate
increased  $20.388 million  (23.8%),  from $85.601 million for the quarter ended
March 31, 2000 to $105.989  million for the same period in 2001. The increase in
average one-to-four family real estate loans can be primarily  attributed to the
Company's  market  expansion and efforts to grow the product through an increase
in mortgage  originators.  An additional factor  contributing to the increase in
average  one-to-four family real estate loans was a new adjustable rate mortgage
product the Company  offered in 2000 which is competitive  in a rising  interest
rate environment. The Company maintains adjustable rate mortgage products in its
loan portfolio.  The Company  anticipates an increase in its one-to-four  family
real  estate  loan  origination  volume in the near  term.  However,  due to the
current low interest rate environment, the Company anticipates a majority of the
volume will be fixed rate  mortgage  products that will be sold on the secondary
market limiting growth in average one-to-four family real estate loans.


                                       16

<PAGE>

Average  commercial real estate loans increased  $17.596  million,  from $82.531
million  for the quarter  ended March 31, 2000 to $100.127  million for the same
period in 2001. The yield on commercial  real estate loans increased 10 bp, from
8.79% for the quarter ended March 31, 2000 to 8.89% for the same period in 2001.
Other loans increased  $21.008  million,  from $254.789  million for the quarter
ended March 31, 2000 to $275.797  million for the same period in 2001. The yield
on other loans  decreased 17 bp, from 8.25% for the quarter ended March 31, 2000
to 8.08%  for the same  period  in  2001.  Average  consumer  loans,  which  are
comprised  mainly  of leases  and new and used  automobiles,  increased  $17.656
million,  from $61.959  million for the quarter  ended March 31, 2000 to $79.615
million for the same period in 2001.  The yield on consumer  loans  decreased 42
basis  points,  from 8.59% for the quarter ended March 31, 2000 to 8.17% for the
same  period  in  2001.  Average  lease  receivables,  which  are  comprised  of
automobile loans, increased $8.892 million, from $70.207 million for the quarter
ended March 31, 2000 to $79.099  million for the same period in 2001.  The yield
on lease receivables decreased 33 basis points, from 7.01% for the quarter ended
March 31,  2000 to 6.68% for the same period in 2001.  The  decrease in yield on
consumer loans and lease  receivables is due primarily to the Company's focus on
limiting  its credit risk and  originating  consumer  loans with  higher  credit
quality,  which results in lower rates.  The primary  reason for the increase in
the average  balances of  commercial  real  estate,  consumer  loans,  and lease
receivables is the Company's market  expansion  activities that occurred in late
1999 through 2000.

Securities

Average taxable securities  decreased $8.998 million,  from $347.795 million for
the quarter  ended  March 31,  2000 to  $338.797  million for the same period in
2001.  The decrease in average  taxable  securities  resulted  primarily from US
agency  securities,  decreasing  $8.277  million,  from $65.055  million for the
quarter ended March 31, 2000 to $56.778 million for the same period in 2001. The
yield on taxable securities decreased from 7.46% for the quarter ended March 31,
2000 to 7.23% for the same  period in 2001.  The  decrease  in yield  during the
periods resulted primarily from US agency securities and collateralized mortgage
obligations  (CMOs).  The yield on US agency  securities and CMOs decreased from
7.53%  and 7.78%  for the  quarter  ended  March  31,  2000 to 7.35% and  7.54%,
respectively,  for the same period in 2001.  The  decrease in yield on US agency
securities  resulted  primarily  from  callable US agency  securities  that were
called in the first quarter of 2001 due to falling  interest rates. The decrease
in yield from CMOs resulted  primarily from $44.198  million in adjustable  rate
CMOs that are tied to a short-term  interest rate index,  which decreased during
the first quarter due to falling interest rates.

Average tax-exempt  securities  decreased $38.074 million,  from $55.266 million
for the quarter  ended March 31, 2000 to $17.192  million for the same period in
2001.  The yield on tax-exempt  securities  decreased from 7.10% for the quarter
ended  March 31,  2000 to 5.74% for the same  period in 2001.  The  decrease  in
tax-exempt  securities was due to tax planning strategies.  Current tax planning
analysis  performed by the Company indicates that a significant  increase in the
amount of  tax-exempt  securities  is needed to maintain  the  Company'  current
effective tax rate. These tax-exempt  securities will likely be purchased during
the second and third quarter of 2001.


                                       17

<PAGE>

Funding Sources

The Company utilizes deposit  products such as time,  savings,  N.O.W. and money
market  deposits  as its  primary  source for  funding.  Other  sources  such as
short-term  and  long-term  borrowings  are utilized as necessary to support the
Company's growth in assets and to achieve interest rate sensitivity  objectives.
The  average  balance of  interest-bearing  liabilities  increased  slightly  to
$783.344  million for the quarter ended March 31, 2001 from $778.939 million for
the same period in 2000. The average rate paid on  interest-bearing  liabilities
increased  43 bp, from 4.34% for the  quarter  ended March 31, 2000 to 4.77% for
the same  period in 2001.  The  increase  in the rate paid for  interest-bearing
liabilities  can be attributed to an increase in  short-term  interest  rates in
2000. Due to the Federal  Reserve  Board's recent action  decreasing  short-term
interest rates,  the Company  anticipates a decrease in its cost of funds in the
near-term.  This  can be  seen  in the  decrease  in the  average  rate  paid on
interest-bearing liabilities, from 5.00% for the quarter ended December 31, 2000
to 4.77% for the quarter ended March 31, 2001.

Deposits

The average  balance of time  deposits less than  $100,000  remained  relatively
unchanged from the quarter ended March 31, 2000 when compared to the same period
in 2001. The rate paid on time deposits less than $100,000  increased 100 bp, to
5.94% for the  quarter  ended  March 31,  2001 from 4.94% for the same period in
2000. The increase in the rate paid on time deposits less than $100,000 resulted
from  time  deposits,  which  typically  have  terms  of 6  months  to 2  years,
originating or renewing in a rising rate  environment  in 2000.  Asset/liability
analysis  performed  by the  Company  indicates  segments  of the  time  deposit
portfolio  will mature in future  periods at lower  rates,  resulting in a lower
cost of  funds.  Time  deposits  greater  than  $100,000,  which  are  primarily
comprised  of  deposits  from  municipalities  and school  districts,  decreased
slightly  during the  quarter  ended  March 31,  2001 when  compared to the same
period in 2000. The rate paid on time deposits  greater than $100,000  increased
24 bp,  from 5.81% for the  quarter  ended  March 31, 2000 to 6.05% for the same
period in 2001.  Time  deposits  greater  than  $100,000  are very  sensitive to
changes  in  short-term  interest  rates  as the  terms on  these  deposits  are
generally less than six months.  The Company  experienced a decrease in its rate
paid on these  deposits when compared to the quarter ended  December 31, 2000 of
approximately  60bp,  due to the decrease in  short-term  interest  rates in the
first quarter of 2001.

The average balance of non-interest bearing deposits was $66.454 million for the
quarter  ended March 31, 2001,  up from  $62.614  million for the same period in
2000. Due to the Company's recent market expansion, the Company will continue to
focus its  efforts  in  strengthening  its core  deposit  base to  facilitate  a
decrease in its cost of funds and increase the Company's net interest margin.


                                       18

<PAGE>

Short-Term Borrowings

The average balance of short-term borrowings was $39.901 million for the quarter
ended March 31, 2001, up from $28.760  million for the same period in 2000.  The
rate paid on short-term  borrowings increased 33 basis points during the quarter
ended March 31, 2001 when  compared to the same period in 2000.  The increase in
short-term  borrowings  is  primarily  the result of a decrease in average  time
deposits greater than $100,000.

Average Balances/Net Interest Margin - Fully Taxable Equivalent (FTE) Basis
---------------------------------------------------------------------------

The following  table sets forth average  balance and interest rate  information.
The average  balances  used for these tables and other  statistical  disclosures
were calculated  using daily averages.  Tax exempt income has been adjusted to a
tax  equivalent  basis by tax  effecting  such  income at the  Federal tax rate.
Non-accruing  loans have been included in loans with interest earned  recognized
on a  cash  basis  only.  Securities  include  securities  available  for  sale,
investment securities held to maturity,  and trading securities,  if any, all at
amortized cost.


                                       19

<PAGE>

<TABLE>
<CAPTION>
Three months ended March 31,                     2001                           2000
                                     ----------------------------   ----------------------------
(Dollars in thousands)                Average              Yield/    Average              Yield/
                                      Balance   Interest    Rate     Balance   Interest    Rate
                                     --------   --------   ------   --------   --------   ------
<S>                                  <C>         <C>        <C>     <C>         <C>        <C>
Earning assets:
Loans secured by real estate
  One-to-four-family ..............  $105,989    $ 2,027    7.65%   $ 85,601    $ 1,659    7.75%
  Commercial ......................   100,127      2,226    8.89%     82,532      1,813    8.79%
  Agricultural ....................    17,464        418    9.57%     16,733        359    8.57%
  Home equity .....................    31,052        665    8.58%     24,967        546    8.75%
  Construction ....................     2,782         47    6.69%      2,266         38    6.71%
                                     --------    -------   -----    --------    -------   -----
                                      257,414      5,383    8.37%    212,099      4,415    8.33%
                                     --------    -------   -----    --------    -------   -----
Other loans
  Leases receivables ..............    79,099      1,321    6.68%     70,207      1,231    7.01%
  Commercial ......................    43,580        953    8.75%     42,686        972    9.11%
  Agricultural ....................    16,734        434   10.36%     17,121        438   10.22%
  Manufactured housing ............    49,068      1,126    9.18%     56,373      1,196    8.49%
  Consumer ........................    79,615      1,625    8.17%     61,959      1,331    8.59%
  Tax-exempt ......................     7,701        114    5.90%      6,443         87    5.38%
                                     --------    -------   -----    --------    -------   -----
                                      275,797      5,573    8.08%    254,789      5,255    8.25%
                                     --------    -------   -----    --------    -------   -----
Loans .............................   533,211     10,956    8.22%    466,888      9,670    8.28%
                                     --------    -------   -----    --------    -------   -----
Taxable securities ................   338,797      6,125    7.23%    347,795      6,483    7.46%
Tax-exempt securities .............    17,192        247    5.74%     55,266        981    7.10%
Federal funds sold ................     1,407         20    5.74%      6,000         87    5.80%
                                     --------    -------   -----    --------    -------   -----
Total earning assets ..............   890,607     17,348    7.79%    875,949     17,221    7.86%
                                     --------    -------   -----    --------    -------   -----
Other assets ......................    51,580                         47,034
                                     --------                       --------
Total assets ......................  $942,187                       $922,983
                                     ========                       ========
Interest-bearing liabilities:
Deposits
NOW ...............................    96,400        398    1.65%     93,318        417    1.79%
Savings ...........................   128,559        901    2.80%    134,310        949    2.83%
Money Market ......................    75,226        857    4.56%     68,283        729    4.27%
Time deposits greater than $100,000   147,245      2,226    6.05%    157,481      2,287    5.81%
Time deposits .....................   290,419      4,311    5.94%    290,742      3,589    4.94%
                                     --------    -------   -----    --------    -------   -----
Total interest bearing deposits ...   737,849      8,693    4.71%    744,134      7,971    4.28%

Short-term borrowings .............    39,901        561    5.62%     28,760        380    5.29%
Long-term borrowings ..............     5,594         85    6.08%      6,045         93    6.15%
                                     --------    -------   -----    --------    -------   -----
Total interest-bearing
  liabilities .....................   783,344      9,339    4.77%    778,939      8,444    4.34%
                                     --------    -------   -----    --------    -------   -----
Non-interest-bearing deposits .....    66,454                         62,614
Stockholders' equity ..............    63,704                         55,087
                                     --------                       --------
Total liabilities and stockholders'
  Equity ..........................  $942,187                       $922,983
                                     ========                       ========
Interest Rate Spread ..............              $ 8,009    3.02%               $ 8,777    3.52%
                                                 =======                        =======
  Net Interest Margin .............                         3.60%                          4.01%
</TABLE>

                                       20

<PAGE>

Financial Condition and Liquidity

The Company's total assets at March 31, 2001 were $964.364 million,  an increase
of $13.024  million (5.5% annual rate of increase) when compared to December 31,
2000.  The increase was  primarily in  securities  available  for sale of $6.681
million,  and trading  securities of $6.994  million.  Total deposits  increased
$29.626   million  and  short-term   borrowings   decreased   $20.325   million.
Stockholders'  equity  increased  $2.102 million,  due to earnings  retention of
$1.344 million,  and an increase in accumulated  other  comprehensive  income of
$758,000.

Securities

The Company's  investment policy focuses  investment  decisions on maintaining a
balance of high  quality,  diversified  investments.  In making  its  investment
decisions,  the Company  also  considers  liquidity,  collateral  to be used for
pledging  purposes,  tax  position,  and  maximum  overall  returns.  Under  the
Company's  investment  policy,  securities  eligible for the Company to purchase
include: U.S. Government  securities,  U.S. Agency securities,  mortgaged-backed
securities,  collateralized  mortgage obligations (CMO),  municipal  securities,
corporate  debt  obligations  (including  equity-linked   securities),   bankers
acceptances,   certificates  of  deposit,  commercial  paper,  and  asset-backed
securities.

The following  table  represents  the  composition  of the Company's  securities
available  for sale  portfolio in dollar  amounts and  percentages  at the dates
indicated:

                                                          March 31, 2001
                                                      ---------------------
                                                      Carrying   Percent of
                                                        Value       Total
                                                      --------   ----------
     CMO & asset-backed securities .................  $170,504      45.8%
     Mortgaged-backed securities ...................    43,045      11.6%
     Corporate and taxable municipal debt securities    69,267      18.5%
     Equity-indexed linked securities (1) ..........     6,598       1.8%
     U.S. government agency securities .............    52,725      14.2%
     State and municipal obligations ...............    18,498       5.0%
     U.S. treasury securities ......................     2,588       0.7%
                                                      --------     -----
         Total debt securities .....................   363,225      97.6%
     Non-marketable equity securities ..............     4,552       1.2%
     Mutual funds and preferred stock ..............     4,313       1.2%
                                                      --------     -----
                                                      $372,090     100.0%
                                                      ========     =====


                                       21

<PAGE>

                                                        December 31, 2000
                                                      ---------------------
                                                      Carrying   Percent of
                                                        Value       Total
                                                      --------   ----------
     CMO & asset-backed securities (1)..............  $149,650      41.0%
     Mortgaged backed securities ...................    37,791      10.3%
     Corporate and taxable municipal debt securities    69,277      19.0%
     Equity-index linked securities (1).............     6,650       1.8%
     U.S. government agency securities .............    70,328      19.2%
     State and municipal obligations ...............    16,838       4.6%
     U.S. treasury securities ......................     6,002       1.6%
                                                      --------     -----
         Total debt securities .....................   356,536      97.5%
     Non-marketable equity securities ..............     4,552       1.3%
     Mutual funds and preferred stock ..............     4,321       1.2%
                                                      --------     -----
                                                      $365,409     100.0%
                                                      ========     =====

     (1)  Includes the fair value of the embedded derivatives. See Note 3 to the
          Unaudited Consolidated Interim Financial Statements.

CMOs and  asset-backed  securities  increased  $20.854 million from December 31,
2000,  and  represent  45.8%  of the  securities  available  for  sale  ("SAFS")
portfolio at March 31, 2001. The weighted-average life and weighted-average rate
of CMOs and asset-backed  securities was 7.4 years and 6.99%,  respectively,  at
March 31, 2001. Mortgage-backed securities ("MBS") increased $5.254 million from
December 31, 2000, and represent  11.6% of the SAFS portfolio at March 31, 2001.
The weighted-average life and weighted-average rate of the MBS was 6.2 years and
6.92%, respectively,  at March 31, 2001. If interest rates continue to decrease,
the Company  anticipates  that the  weighted-average  lives of CMOs and MBS will
decrease and the fair value of the securities will increase.  Alternatively,  if
interest rates rise, the Company anticipates that the weighted-average  lives of
CMOs and MBS will increase and the fair value of the securities will decrease.

Corporate and taxable municipal debt securities  remained  relatively  unchanged
from  December  31, 2000,  and  represent  18.6% of SAFS at March 31, 2001.  The
weighted-average  life and  weighted-average  rate of the  corporate and taxable
municipal  debt  portfolio was 7.2 years and 9.13%,  respectively,  at March 31,
2001.  Included in corporate debt securities are two corporate  obligations that
management  believes are  other-than-temporarily  impaired.  For the years ended
December  31,  2000 and  1999,  the  Company  wrote-down  these  corporate  debt
securities a total of $2.056 million and $1.392 million,  respectively.  No such
write-downs  were taken during the quarter  ended March 31, 2001.  The remaining
carrying  value of the two corporate  obligations is $1.354 million at March 31,
2001,    which    management   will   continue   to   monitor   for   additional
other-than-temporary impairment.


                                       22

<PAGE>

U.S.  government agency  securities  decreased $17.603 million from December 31,
2000, and represents 14.2% of SAFS at March 31, 2001. The weighted-average  life
and  weighted-average  rate of U.S.  agency  securities was 6.5 years and 6.87%,
respectively, at March 31, 2001. The decrease in U.S. agency securities resulted
primarily from a substantial  number of these  securities  having call features,
and in a decreasing interest rate environment, these securities were called.

Loans and leases

Net loans and leases  receivable  decreased $1.860 million from $524.967 million
at December  31,  2000 to  $523.107  million at March 31,  2001.  The  following
schedule details the Company's loan and lease portfolio:

                                                     March 31,      December 31,
                                                       2001             2000
                                                     ---------      ------------
Loans secured by real estate:
Residential ...................................       $106,925        $104,430
Commercial ....................................        100,567         100,769
Agricultural ..................................         17,020          17,781
Construction ..................................          2,314           3,363
Home equity ...................................         31,444          31,009
                                                      --------        --------
                                                       258,270         257,352
                                                      --------        --------
Other loans and leases:
Commercial ....................................         44,999          42,731
Agricultural ..................................         16,802          17,507
Manufactured housing ..........................         46,612          48,062
Lease receivables .............................         87,826          88,874
Tax-exempt ....................................          7,065           8,003
Consumer ......................................         75,175          76,219
                                                      --------        --------
                                                       278,479         281,396
                                                      --------        --------
Net deferred loan fees/costs
  and unearned discount .......................         (5,365)         (5,636)

Allowance for loan and lease losses ...........         (8,277)         (8,145)
                                                      --------        --------
Net loans and leases receivable ...............       $523,107        $524,967
                                                      ========        ========

Loans secured by residential real estate increased $2.495 million, from $104.430
million at December 31, 2000 to $106.925  million at March 31, 2001. The Company
anticipates that its residential real estate activity will continue to increase.
In light of this anticipated increase in residential real estate activity and as
part of its asset/liability  management strategy,  the Company sells most of its
fixed rate  residential real estate loans on the secondary  market,  and retains
servicing  rights  on  the  majority  of  the  loans  it  sells.  The  Company's
residential  real estate  servicing  portfolio  increased  $3.454 million,  from
$15.371  million at  December  31,  2000 to $18.825  million at March 31,  2001.
Commercial  real estate  loans  decreased  $202,000,  from  $100.769  million at
December 31, 2000 to $100.567  million at March 31, 2001.  Generally,  the first
quarter of the Company's  fiscal year experiences a slow down in commercial real
estate  originations  due to the weather  conditions  and seasonal  construction
activity in the Company's primary market. The Company anticipates an increase in
commercial real estate loan volume in the second and third quarters of 2001.


                                       23

<PAGE>

Lease receivables decreased $1.048 million, from $88.874 million at December 31,
2000 to $87.826  million at March 31,  2001.  Lease  receivables  are secured by
automobiles  and sport utility  vehicles and  generally  have terms ranging from
three to five years.  Consumer  loans  decreased  $1.004  million,  from $76.219
million at December  31,  2000 to $75.175  million at March 31,  2001.  Consumer
loans are  primarily  comprised of  automobile  loans.  The decrease in consumer
loans  and  lease  receivables  is  primarily  due to the slow  down in  economy
resulting in a decrease in demand for automobiles.  The Company will continue to
focus its efforts in growth related to the lease  receivables,  residential real
estate, and commercial real estate/commercial loan portfolios.

Deposits

Total deposits increased $29.626 million,  from $799.938 million at December 31,
2000 to $829.564  million at March 31, 2001. The following  schedule details the
Company's deposit liabilities:

                                                     March 31,      December 31,
                                                       2001             2000
                                                     ---------      ------------
Non-interest bearing deposits .................       $ 65,458        $ 69,134
NOW accounts ..................................         98,902         101,034
Savings accounts ..............................        131,125         129,290
Money market accounts .........................         85,310          68,773
Time deposits of $100,000 or more .............        170,866         142,240
Other time deposits ...........................        277,903         289,467
                                                      --------        --------
Total deposits ................................       $829,564        $799,938
                                                      ========        ========

The Company's  primary  source of funds is deposits.  The Company offers deposit
accounts  having a range  of  interest  rates  and  terms.  The  Company  offers
transaction accounts,  savings accounts, money market accounts, N.O.W. accounts,
and  certificate  of deposit  accounts  with  various  terms.  The Company  only
solicits   deposits  from  its  primary  market  area  and  depositors   include
individuals, local governments and businesses.

The flow of deposits is influenced significantly by general economic conditions,
changes in prevailing  interest rates, and  competition.  The variety of deposit
accounts  offered by the Company has allowed it to be  competitive  in obtaining
funds and to respond with flexibility to changes in consumer demand. The Company
manages  the  pricing  of its  deposits  in  keeping  with  its  asset/liability
management,  liquidity and profitability  objectives.  Based on experience,  the
Company  believes  that its  transaction  accounts,  savings  accounts and money
market accounts are relatively stable sources of deposits.  However, the ability
of the Company to attract and maintain  certificates of deposits, as well as the
rates paid on those  deposits,  has been and will  continue to be  significantly
affected by market conditions.


                                       24

<PAGE>

Borrowings

Although  deposits  are the  Company's  primary  source  of funds,  the  Company
utilizes  security  repurchase  agreements  and  other  borrowings  as a funding
source.  The Company regularly has security  repurchase  agreements with several
customers in the ordinary course of business. For liquidity management, lines of
credit have also been  established with  correspondent  banks to meet short-term
funding needs. At March 31, 2001, the Company had short-term borrowings with the
Federal  Home Loan Bank of New York  (FHLB)  amounting  to  $8.560  million  and
short-term  repurchase  agreements  totaling  $23.469  million.  The Company has
$1.060  million in long-term  borrowings  with the FHLB at March 31, 2001.  This
FHLB borrowing bears interest at 5.45%,  amortizes  monthly and matures in 2003.
In 1995 and  1996,  the  Company  issued  Industrial  Revenue  Bonds to fund the
construction of its administrative and operations complex. As of March 31, 2001,
the remaining  balance on the bonds was $4.500  million and bears  interest at a
variable  interest rate, which adjusts weekly,  based on a commercial paper rate
index. The bonds have annual principal payments due through 2025.

Non-performing Assets

Non-performing assets are summarized in the following table:

                                                     March 31,      December 31,
                                                       2001             2000
                                                     ---------      ------------
Non-accrual loans ...............................      $4,283          $4,415
Accruing loans past due 90 days .................         278             249
                                                       ------          ------
Total non-performing loans ......................       4,561           4,664
Other real estate owned and repossessed assets ..       1,102           1,134
                                                       ------          ------
Total non-performing assets (loan related) ......       5,663           5,798

Impaired corporate debt securities ..............       1,354           1,354
                                                       ------          ------
Total non-performing assets .....................      $7,017          $7,152
                                                       ======          ======

Non-performing loans as a % of total loans ......        0.86%           0.87%
Non-performing assets as a % of total
  assets (loan related) .........................        0.59%           0.61%
Allowance for loan and lease losses to
  non-performing loans ..........................      181.47%         174.64%

Non-accrual  loans at March  31,  2001  were  comprised  of  $1.422  million  of
commercial/commercial  real estate loans,  $1.973 million of agricultural loans,
$617,000 of residential real estate, and $271,000 of manufactured housing loans.
Loans  past due 90 days or more and  still  accruing  were  comprised  mainly of
manufactured housing loans at March 31, 2001.

The remaining  carrying value of the two impaired  corporate debt obligations is
$1.354 million at March 31, 2001. These debt securities,  which are not actively
traded,  are monitored  closely by management and at this time,  management does
not  believe  any  additional  write-down  is  required.   However,  if  adverse
conditions continue or worsen, additional write-downs may be necessary.


                                       25

<PAGE>

Gross  charge-offs  for  quarter  ended March 31,  2001  amounted  to  $208,000.
Charge-offs  were  mainly  comprised  of  consumer/manufactured   housing  loans
amounting to $170,000.  Recoveries for the quarter ended March 31, 2001 amounted
to $80,000.  Provisions  for loan and lease losses  amounted to $260,000 for the
quarter ended March 31, 2001. The allowance for loan losses increased  $132,000,
from $8.145  million at December  31, 2000 to $8.277  million at March 31, 2001.
The allowance for loan and lease losses represents  management's  estimate of an
amount  adequate to provide for probable  losses  inherent in the loan and lease
portfolio.  In its  continuing  evaluation  of the  allowance  and its adequacy,
management considers the Company's loan and lease loss experience, the amount of
past-due and  non-performing  loans,  current  economic  conditions,  underlying
collateral  values  securing  loans and other factors which affect the allowance
for loan and lease losses.

Liquidity and Capital Resources

Liquidity  is the  ability of the  Company to convert  assets  into cash or cash
equivalents without significant loss and to raise additional funds by increasing
liabilities.  Liquidity  management involves maintaining the ability to meet the
day-to-day cash flow  requirements of our customers,  whether they be depositors
wishing to withdraw  funds or  borrowers  requiring  funds to meet their  credit
needs.

Asset and liability  management  functions not only to assure adequate liquidity
in order to meet the needs of our customers, but also to maintain an appropriate
balance between interest-sensitive assets and interest-sensitive  liabilities in
order  to  generate  an  appropriate  return  to  stockholders.  In the  banking
environment,  both assets and  liabilities  are considered  sources of liquidity
funding  and both are  monitored  on a daily  basis.  The asset  portion  of the
balance  sheet  provides  liquidity  primarily  through  loans,  mortgage-backed
security and collateralized mortgage obligation principal repayments, maturities
and  calls of  securities  and sales  from the  available  for sale and  trading
portfolios.

Management  closely  monitors the timing of cash  inflows and outflows  although
changes in interest rates,  economic  conditions and competitive forces strongly
impact the  predictability  of these cash flows. The Company attempts to provide
stable and  flexible  sources of funding  through its branch  network as well as
with  limited  use of  borrowings.  Management  believes  that the  level of the
Company's  liquid  assets  combined  with daily  monitoring  of cash inflows and
outflows provide adequate  liquidity to fund outstanding loan commitments,  meet
daily  withdrawal   requirements  of  depositors,   and  meet  all  other  daily
obligations of the Company.


                                       26

<PAGE>

The  Company  and its  bank  subsidiary  are  currently  subject  to two sets of
regulatory  capital  measures,  a  leverage  ratio test and  risk-based  capital
guidelines.  The  risk-based  guidelines  assign  weightings  to all  assets and
certain  off-balance  sheet items and establish an 8% minimum ratio of qualified
total  capital to  risk-weighted  assets.  At least half of total  capital  must
consist of "Tier 1" capital,  which comprises common equity,  retained  earnings
and  a  limited  amount  of  minority  interest  in  consolidated   subsidiaries
(subordinated  debt), less goodwill.  Up to half of total capital may consist of
so-called "Tier 2" capital,  comprising a limited amount of  subordinated  debt,
other  preferred  stock,  certain other  instruments and a limited amount of the
allowance for loan and lease losses. The leverage ratio test establishes minimum
limits on the ratio of Tier 1 capital to total  tangible  assets,  without  risk
weighting.  For  top-rated  companies,  the  minimum  leverage  ratio is 4%, but
lower-rated or rapidly expanding companies may be required to meet substantially
higher minimum  leverage  ratios.  The FDIC  Improvement  Act of 1991 ("FDICIA")
mandated  actions to be taken by banking  regulators for financial  institutions
that are  undercapitalized as measured by these ratios.  FDICIA established five
levels of  capitalization  for financial  institutions  ranging from "critically
undercapitalized"  to  "well-capitalized."  As of  March  31,  2001,  the Tier 1
leverage and risk-based  capital ratios for the Company and its bank  subsidiary
were as follows:

Summary of Capital Ratios

                                              Tier 1                     Total
                                            Risk-Based                Risk-Based
                                              Capital     Leverage      Capital
                                               Ratio        Ratio        Ratio
                                            ----------    --------    ----------
CNB Financial Corp. ....................       9.59         6.90         10.82
Central National Bank ..................       9.31         6.67         10.56
Regulatory Minimum .....................       4.00         4.00          8.00
FDICIA's "Well-Capitalized" Standard ...       6.00         5.00         10.00

All capital  ratios for the Company  and its  subsidiary  bank at March 31, 2001
were above minimum capital standards for financial  institutions.  Additionally,
the  Company  and its  subsidiary  bank  capital  ratios at that date were above
FDICIA's "well-capitalized" standard.

Total stockholders'  equity amounted to $65.248 million at March 31, 2001, which
is a $2.102 million  increase from the $63.146 million at December 31, 2000. The
increase resulted  primarily from earnings  retention of $1.344 million,  and an
increase in accumulated other comprehensive income of $758,000.

       Item 3: Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Interest rate risk is the most  significant  market risk  affecting the Company.
Other types of market  risk,  such as foreign  currency  exchange  rate risk and
commodity  risk,  do not arise in the normal  course of the  Company's  business
activities.


                                       27

<PAGE>

Interest  rate risk is defined as an exposure  to a movement  in interest  rates
that could have an adverse  effect on the  Company's  net interest  income.  Net
interest  income  is  susceptible  to  interest  rate  risk to the  degree  that
interest-bearing  liabilities  mature or  re-price  on a  different  basis  than
earning  assets.  When  interest-bearing  liabilities  mature or  re-price  more
quickly than earning assets in a given period, a significant  increase in market
rates of interest could adversely  affect net interest income.  Similarly,  when
earning   assets   mature  or  re-price   more  quickly  than   interest-bearing
liabilities, falling interest rates could result in a decrease in net income.

An important element of both earnings performance and liquidity is management of
interest  rate  sensitivity.   Interest  rate  sensitivity  management  involves
comparison  between the  maturity  and  re-pricing  dates of earning  assets and
interest-bearing  liabilities, with the goal being to minimize the impact on net
interest income in periods of extreme fluctuations in interest rates. Quarterly,
the  change  in  net  interest  income,  as  well  as  several  other  strategic
measurement  ratios,  are presented to the Company's  Asset/Liability  Committee
(ALCO) and Board of Directors  and compared to  Company-established  guidelines.
The Company  consistently  maintains the ratios within the acceptable  ranges of
the guidelines  established.  On a weekly basis, the ALCO, which is comprised of
Senior Management,  meets to monitor the interest rate sensitivity and liquidity
position.

The ALCO  utilizes  the results of a detailed  and dynamic  simulation  model to
quantify the  estimated  exposure of net interest  income to sustained  interest
rate  changes.  While ALCO  routinely  monitors  simulated  net interest  income
sensitivity over a one-year period, it also utilizes additional tools to monitor
longer-term  interest rate risk.  The  simulation  model  captures the impact of
changing  interest rates on the interest  income  received and interest  expense
paid on all earning  assets and  interest-bearing  liabilities  reflected on the
Company's  balance sheet.  This sensitivity  analysis is compared to ALCO policy
limits which specify a maximum  tolerance level for net interest income exposure
over a one year horizon,  assuming no balance  sheet  growth,  a 200 basis point
upward and downward shift in interest  rates,  and the use of convexity  factors
which  estimate  the  change in  interest  rate risk  caused by  changes  in the
Company's  structure in response to the rate change. As of March 31, 2001, under
this  analysis,  a 200 basis point  increase in interest rates would result in a
$1.863  million  decrease  (5.8%) in annual net interest  income and a 200 basis
point  decrease in  interest  rates would  result in a $1.355  million  increase
(4.2%) in annual net interest  income.  These  amounts were within the Company's
ALCO policy limits.


                                       28

<PAGE>

Interest rate risk analyses  performed by the Company  indicate that the Company
is  liability  sensitive,  or its  interest-bearing  liabilities  re-price  more
quickly than its earning assets. As a result, rising interest rates could result
in a decrease in net interest income.  The Company has taken steps to manage its
interest  rate risk by  attempting  to match the  re-pricing  periods of earning
assets to its  interest-bearing  liabilities.  The Company's current emphasis in
growing loans with terms less than five years and selling  long-term  fixed rate
loans are  methods  the  Company  has  utilized  to manage  interest  rate risk.
Additionally,  the  Company  will focus on growing its core  deposit  base which
should be less volatile when rates change when compared to time deposits greater
than  $100,000  and   short-term   borrowings   (which   represented   22.4%  of
interest-bearing  liabilities  at March 31, 2001),  which are more volatile when
rates change due to their  short-terms  which  typically range from 1 day to six
months.  Under a  declining  rate  scenario,  the  analysis  indicates  that the
Company's benefit from its mis-match in interest-bearing  liabilities re-pricing
more quickly than earning assets is mitigated due to the  optionality of earning
assets.  The Company is asset sensitive in a rapidly declining rate environment,
as earning assets would re-price faster than interest-bearing  liabilities would
re-price.  Management makes certain assumptions in relation to prepayment speeds
for loans, CMOs and mortgaged-backed  securities, which would prepay much faster
in a falling rate scenario.  These assumptions are based on historical  analyses
and  industry  standards  for  prepayments.  Management  continuously  evaluates
various alternatives to address interest rate risk.

The preceding  sensitivity  analysis  does not represent a Company  forecast and
should not be relied upon as being  indicative  of expected  operating  results.
These hypothetical estimates are based upon numerous assumptions including:  the
nature  and  timing  of  interest  rate  levels  including  yield  curve  shape,
prepayments on loans and securities,  deposit decay rates,  pricing decisions on
loans and deposits,  reinvestment/replacement of asset and liability cash flows,
and others.  While  assumptions  are developed  based upon current  economic and
local market conditions, the Company cannot make assurances as to the predictive
nature of these  assumptions  including how customer  preferences  or competitor
influences might change.  Also, as market  conditions vary from those assumed in
the    sensitivity    analysis,    actual    results   will   differ   due   to:
prepayment/refinancing  levels likely deviating from those assumed,  the varying
impact of interest  rate changes on caps and floors on  adjustable  rate assets,
the  potential  effect  of  changing  debt  service  levels  on  customers  with
adjustable  rate loans,  depositor  early  withdrawals  and  product  preference
changes, and other  internal/external  variables.  Furthermore,  the sensitivity
analysis  does not  reflect  actions  that ALCO might take in  responding  to or
anticipating changes in interest rates.


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<PAGE>

                               CNB Financial Corp.
                           Part II - Other Information

Item 1 - Legal Proceedings

         No material changes since filing of the Registrant's Form 10-K for the
         year end December 31, 2000

Item 2 - Changes in Securities and Use of Proceeds

         None

Item 3 - Defaults upon Senior Securities

         None

Item 4 - Submission of Matters to a Vote of Security Holders

         None

Item 5 - Other Information

         None

Item 6 - Exhibits and reports on Form 8-K

         (A)  Exhibits
              None

         (B)  Current Reports filed on Form 8-K
              March 1, 2001 - Related to the announcement of the first quarter
              dividend and the continuation of the stock repurchase program.


                                       30

<PAGE>

SIGNATURES

Pursuant  to the  requirements  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.


                                        CNB FINANCIAL CORP.
                                        Registrant


Date: May 11, 2001                      By: /s/ DONALD L. BRASS
      ------------                          -------------------
                                           Donald L. Brass
                                           President


Date: May 11, 2001                      By: /s/ PETER J. CORSO
      ------------                          -------------------
                                            Peter J. Corso
                                            Executive Vice President


                                       31