FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549-1004

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                                                  
For the quarter ended March 31, 1999  

Commission file number:  33-66014


                     FNB Financial Corporation                    
       (Exact name of registrant as specified in its charter)

Commonwealth of Pennsylvania                  23-2466821      
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)               Identification No.)


  101 Lincoln Way West, McConnellsburg, PA               17233   
  (Address of principal executive offices)         (Zip code)


Registrant's telephone number, including area code:   717/485-3123 

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

                                YES X      NO   

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

             Class              Outstanding at March 31, 1999
(Common stock, $0.63 par value)   400,000


















































                            FNB FINANCIAL CORPORATION

                                      INDEX

                                                               Page
PART I  -  FINANCIAL INFORMATION

    Condensed consolidated balance sheets - 
      March 31, 1999 and December 31, 1998                 5

    Condensed consolidated statements of income -     
      Three months ended March 31, 1999 and 1998           6

      Condensed consolidated statements of comprehensive
        income                                       -
        Three months ended March 31, 1999 and 1998           7

    Condensed consolidated statements of cash flows -
      Three months ended March 31, 1999 and 1998           8

    Notes to condensed consolidated financial
      statements                                          9-11

    Table #1 - Schedule of held to maturity and
      available for sale investment activity for the
      period January 1, 1999 through March 31, 1999        12

    Table #2 - Schedule of gross unrealized gains and
      unrealized losses within the held to maturity and
      available for sale investment portfolios by 
      investment type                                      13

    Management's discussion and analysis of financial
      condition and results of operations                14-23 


PART II  -  OTHER INFORMATION                               24

    Signatures                                             26























                         PART I - FINANCIAL INFORMATION




































            FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<S>                                          <C>            <C>
                                              March 31,     December 31,
                                                1999           1998
ASSETS:                                      (unaudited)    (audited*)

Cash and Due from banks                      $ 2,736,242    $ 3,134,802
Interest-bearing deposits with banks           2,113,137      2,019,612
Marketable Debt Securities
       Held-to-maturity (Market value - 1999
       $2,341,602 and 1998: $2,429,959)        2,377,315      2,449,621
       Available-for-sale                     31,207,980     32,679,228
Marketable Equity Securities
   Available for Sale                            217,700        208,288
Federal Reserve, Atlantic Central Banker's Bank
   and Federal Home Loan Bank Stock              394,100        394,100
Federal Funds Sold                             3,949,000      4,136,000
Loans, net of unearned discount &
       Allowance for loan losses              62,984,903     61,900,581
Bank buildings, equipment, furniture &
       fixtures, net                           3,270,641      3,149,012
Accrued interest receivable                      704,480        718,543
Deferred income tax charges                      120,470         16,989
Other real estate owned                          322,261        370,511
Intangible Assets                                173,765        177,856
Other assets                                   2,346,059      2,210,251

    Total Assets                            $112,918,053   $113,565,394
                                              ==========     ==========
LIABILITIES :

Deposits:
   Demand deposits                           $10,258,192    $10,819,419
   Savings deposits                           29,669,854     30,911,801
   Time certificates                          59,506,440     58,501,511
   Other time deposits                           481,775        271,204
      Total deposits                         $99,916,261   $100,503,935
Accrued interest payable & other liabilities     923,442        868,129
Liability for other borrowed funds               167,601        168,764
Deferred income taxes                                0              0  
Accrued dividends payable                         72,000        108,000

    Total Liabilities                       $101,079,304   $101,648,828

STOCKHOLDERS' EQUITY:

Capital stock, Common, par value $0.63; 
   6,000,000 shares authorized; 400,000
   outstanding                               $   252,000    $   252,000
Additional paid-in capital                     1,789,833      1,789,833
Retained earnings                              9,739,320      9,621,863
Accumulated other comprehensive income            57,596        252,870

    Total Stockholders' Equity               $11,838,749    $11,916,566

    Total Liabilities & Stockholders' Equity$112,918,053   $113,565,394
                                              ==========     ==========
</TABLE>
*Condensed from audited financial statements.


The accompanying notes are an integral part of these condensed
financial statements.

     FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY

            CONDENSED CONSOLIDATED STATEMENTS OF INCOME

            Three Months Ended March 31, 1999 and 1998
                            (UNAUDITED)
<TABLE>
<S>                                              <C>         <C>
                                                     1999      
1998
                    
Interest & Dividend Income

Interest & fees on loans                         $1,318,898 
$1,323,777
       Interest on investment securities:
              U.S. Treasury Securities                1,585      
3,494
              Obligations of other U.S.
                  Government Agencies               354,521    
326,713
              Obligations of State & Political
                  Subdivisions                      128,776    
126,656
       Interest on deposits with banks               28,085     
25,288
       Dividends on Equity Securities                 8,163      
8,139
       Interest on federal funds sold                42,565     
49,800
              Total Interest & Dividend Income    1,882,593  
1,863,867

Interest Expense

       Interest on deposits                       1,017,540    
982,733
       Interest on Other Borrowed Money               2,795      
2,870
              Total interest expense              1,020,335    
985,603   
              Net interest income                   862,258    
878,264
       Provision for loan losses                     30,000    
101,114
              Net interest income after 
              Provision for loan losses             832,258    
777,150

Other income

       Service charges on deposit accounts           22,940     
20,218
       Other service charges, collection &
              exchange charges, commissions
              and fees                               63,275     
49,886
       Other income                                  33,094     
15,085
       Net Securities gains/(losses)                 (3,691)     
1,573 
              Total other income                    115,618     
86,762

Other expenses                                      717,382    
660,091
       Income before income taxes                   230,494    
203,821
       Applicable income taxes                       41,037     
48,942
  Net income                                       $189,457   
$154,879
                                                    =======    
=======
Earnings per share of Common Stock:
       Net income per share                           $0.47      
$0.39

Cash dividend declared per share                      $0.18      
$0.17

Weighted average number of shares outstanding       400,000    
400,000
</TABLE>

The accompanying notes are an integral part of these condensed 
financial statements.




     FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY

     CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

            Three Months Ended March 31, 1999 and 1998
                            (UNAUDITED)
<TABLE>
<S>                                              <C>         <C>
                                                     1999      
1998

Net income                                       $189,457   
$154,879
Other Comprehensive income, net of tax 
    Unrealized holding gains/(losses) for period (195,274)   (
32,643)  
Comprehensive Income                             $( 5,817)  
$122,236   
                                                  =======    
=======
</TABLE>

The accompanying notes are an integral part of these condensed 
financial statements.





































          FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Three Months Ended March 31, 1999 and 1998
<TABLE>
<S>                                               <C>              <C>
                                 (UNAUDITED)
                                                      1999            1998
Cash flows from operating activities:
      Net income                                  $  189,457       $  154,879
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:                             
            Depreciation & amortization               65,933           65,409
            Provision for loan losses                 30,000          101,114
            Net (gain)/loss on sales of
              investments                              3,691          
(1,573)
            (Increase) decrease in accrued
                   interest receivable                14,063         
(30,256)
             Loss on Disposal of Other Real Estate     2,500            2,000
             Deferred Income Taxes                    (2,886)             0 
 
             Increase (decrease) in accrued
                   interest payable and
                   other liabilities                  55,313           67,543
             Other (net)                            (115,409)        
(81,971)
Net cash provided (used)by operating
      activities                                     242,662          277,145
Cash flows from investing activities:
     Net (increase) decrease in interest-
            bearing deposits with banks              (93,525)      
5,545,779 
     Purchases of Held-to-maturity
            securities                                   0                0 
 
     Purchases of Available-for-sale
            securities                            (1,053,706)     
(4,591,794)  
     Proceeds from sales of Available-for-
            sale securities                              0                0  
     Proceeds from maturities of Held-to-
            maturity securities                       72,306          513,694
     Proceeds from maturities of Available-
            for-sale securities                    2,215,982        3,038,533
     Purchases of marketable equity securities           0           
(45,000)
     Net (increase) decrease in loans             (1,114,322)        
290,936 
     Proceeds from sale of Other real
            estate owned                              45,750           19,025
     Purchases of bank premises &
            equipment (net)                         (183,471)        
(57,504)
     Purchase of Life Insurance                          0        
(1,985,000)
     Increase in Cash Value of Life Insurance        (20,399)         
(3,983) 
     Purchase of other bank stock                        0                0 
 
Net cash provided (used) by investing 
            activities                              (131,385)      
2,724,686 
Cash flows from financing activities:
     Net increase (decrease) in deposits            (587,674)     
(1,453,355)
     Net increase (decrease) in Other borrowings      (1,163)       
(288,581)
     Cash dividends paid                            (108,000)       
(104,000) 
Net cash provided (used) by financing
     activities                                     (696,837)     
(1,845,936)
Net increase (decrease) in cash & cash
     equivalents                                    (585,560)      
1,155,895 
Cash & cash equivalents, beginning balance         7,270,802        6,422,312
Cash & cash equivalents, ending balance           $6,685,242       $7,578,207
                                                   =========        =========
Supplemental disclosure of cash flows information
     Cash paid during the year for:
           Interest                               $  927,927       $  898,184
           Income taxes                               35,926              0  
Supplemental schedule of noncash investing &
      financing activities
      Unrealized gain (loss) on Available-for-sale         
           securities, net of income tax effect     (195,274)        (
32,643)
      Accrued dividends payable                       72,000           68,000

</TABLE> 
The accompanying notes are an integral part of these condensed 
financial statements.


                 FNB FINANCIAL CORPORATION
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     MARCH 31, 1999
                         (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

     The financial information presented at and for the three
     months ended March 31, 1999, and March 31, 1998 is
     unaudited.  Information presented at December 31, 1998, is
     condensed from audited year-end financial statements.
     However, this unaudited information reflects all adjustments,
     consisting solely of normal recurring adjustments, that are,
     in the opinion of management, necessary for a fair
     presentation of the financial position, results of operations
     and cash flows for the interim period.

NOTE 2 - PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of
     the corporation and its wholly-owned subsidiary, The First
     National Bank of McConnellsburg.  All significant
     intercompany transactions and accounts have been
     eliminated.    

NOTE 3 - CASH FLOWS

     For purposes of the statements of cash flows, the corporation
     has defined cash and cash equivalents as those amounts
     included in the balance sheet captions "cash and due from
     banks" and "federal funds sold".  As permitted by Statement
     of Financial Accounting Standards No. 104, the corporation
     has elected to present the net increase or decrease in
     deposits in banks, loans and time deposits in the statement
     of cash flows.

NOTE 4 - FEDERAL INCOME TAXES

     For financial reporting purposes the provision for loan
     losses charged to operating expense is based on management's
     judgement, whereas for federal income tax purposes, the
     amount allowable under present tax law is deducted. 
     Additionally, certain expenses are charged to operating
     expense in the period the liability is incurred for financial
     reporting purposes, whereas for federal income tax purposes,
     these expenses are deducted when paid.  As a result of these
     timing differences, deferred taxes were computed after
     reducing pre-tax accounting income for nontaxable municipal
     and loan income.

NOTE 5 - INVESTMENTS

     The activity within the held to maturity and available for
     sale portfolios for the period January 1, 1999, through
     March 31, 1999, is summarized in Table #1 on page 12.  No
     sales were conducted from securities contained within the held
     to maturity portfolio.

     The amortized cost and estimated market values of investments
     by investment type and classification as available for sale or
     held to maturity along with each portfolio's gross unrealized
     gain or gross unrealized loss are contained in Table #2 on
     page 13.

     Management has purchased for the portfolio mortgage-backed
     securities.  The large portion of these securities have a
     variable rate coupon and all have scheduled principal
     payments.  During periods of rising interest rates, payments
     from variable rate mortgage-backed securities may accelerate
     as prepayments of underlying mortgages occur as home-owners
     refinance to a fixed rate while during periods of declining
     interest rates, prepayments on high fixed rate mortgage-backed
     securities may accelerate as home owners refinance to lower
     rate mortgages. These prepayments cause yields on mortgage-
     backed securities to fluctuate as larger payments of principal
     necessitate the acceleration of premium amortization or
     discount accretion.  Due to the low dollar amount of mortgage-
     backed securities in relation to the total portfolio,
     management feels that interest rate risk and prepayment risks
     associated with mortgage-backed securities will not have a
     material impact on the financial condition of the Bank.

     In regard to Collateralized Mortgage Obligations (CMOs), the
     Bank presently has none of these types of investments in its
     portfolio.

NOTE 6 - ALLOWANCE FOR LOAN LOSSES AND NONACCRUAL LOANS

     Activity in the allowance for loan losses is summarized as
     follows:
<TABLE>
<S>                                          <C>       <C>
                                                1999       1998    
                                             
     Allowance for loan losses beginning of the year   $731,641   
$425,813
     Loans charged-off during the year:
          Real estate mortgages                        0          
 0 
          Installment loans                         12,446     
10,856
          Commercial & all other                    30,000     
88,237
               Total charge-offs                    42,446     
99,093
     Recoveries of loans previously charged-off:
          Real estate mortgages                        0          
0
          Installment loans                          8,658      
1,047
          Commercial & all other                       375        
330
               Total recoveries                      9,033      
1,377
     Net loans charged-off (recovered)              33,413     
97,716 
     Provision for loan losses charged to operations     30,000   
 101,114
     Allowance for loan losses, March 31               $728,228   
$429,211
                                             ========  ========
</TABLE>


     
The following table shows the principal balance of nonaccrual loans
as of March 31, 1999:
<TABLE>
<S>                                                 <C>     
Nonaccrual loans                                    $ 395,356.60
                                                      ==========
Interest income that would have been
   accrued at original contract rates                $ 8,628.85 
Amount recognized as interest income                   2,147.64 
   Foregone revenue                                  $ 6,481.21 
                                                       =========   
</TABLE>
      

NOTE 7 - OTHER COMMITMENTS

     In the normal course of business, the bank makes various
     commitments and incurs certain contingent liabilities which
     are not reflected in the accompanying financial statements. 
     These commitments include various guarantees and commitments
     to extend credit.  The bank does not anticipate any losses
     as a result of these transactions.

































                             TABLE #1
        SCHEDULE OF HELD TO MATURITY AND AVAILABLE FOR SALE
                     DEBT SECURITY PORTFOLIOS
                        TRANSACTION SUMMARY
       FOR THE PERIOD JANUARY 1, 1999 THROUGH MARCH 31, 1999
<TABLE>
<S>                        <C>           <C>          <C>
                            HELD TO        AVAILABLE      TOTAL
                            MATURITY       FOR SALE    INVESTMENT
                            PORTFOLIO      PORTFOLIO    PORTFOLIO

BEGINNING BALANCE 1/1/99   $2,449,621    $32,330,835  $34,780,456

PURCHASES                           0      1,053,706    1,053,706

NET LOSSES/GAINS                    0          3,691        3,691 

MATURITIES/CALLS PAYDOWNS/
PREMIUM AMORTIZATION/DISCOUNT
ACCRETION                      72,306      2,215,982    2,288,288

ENDING BALANCE 3/31/99     $2,377,315    $31,164,868  $33,549,565
                            =========     ==========   ==========
</TABLE>







































                                    TABLE #2
               SCHEDULE OF UNREALIZED GAINS AND UNREALIZED LOSSES
               WITHIN THE HELD TO MATURITY AND AVAILABLE FOR SALE
                    INVESTMENT PORTFOLIOS BY INVESTMENT TYPE
                                 MARCH 31, 1999
<TABLE>
<S>                        <C>        <C>            <C>         <C>      <C>   
     <C>             <C>         <C>       
                             HELD TO    HELD TO     HELD TO    HELD TO     
AVAILABLE   AVAILABLE   AVAILABLE   AVAILABLE
                             MATURITY   MATURITY    MATURITY   MATURITY     FOR
SALE    FOR SALE    FOR SALE    FOR SALE
                              BOOK      MARKET     UNREALIZED UNREALIZED    
BOOK       MARKET     UNREALIZED  UNREALIZED
SECURITY PORTFOLIO            VALUE      VALUE         GAIN       LOSS      
VALUE       VALUE         GAIN        LOSS   

U.S. GOVERNMENT TREASURIES         0          0           0           0         
0           0            0              0

U.S. GOVERNMENT TREASURIES         0          0           0           0         
  0           0            0            0 

U.S. GOVERNMENT AGENCIES           0          0           0           0  
10,991,996  11,154,513      162,517            0

U.S. GOVERNMENT AGENCIES     465,158    425,125           0      (40,033) 
7,573,344   7,358,801            0     (214,543)

SBA GUARANTEED LOAN POOL 
CERTIFICATES                 270,798    273,080        2,281          0     
784,948     793,564        8,615            0

SBA GUARANTEED LOAN POOL
CERTIFICATES                 861,242    854,224           0       (7,018)   
572,312     569,988            0       (2,323)

MORTGAGE-BACKED SECURITIES         0          0           0           0     
634,021     645,527       11,506            0

MORTGAGE-BACKED SECURITIES         0          0           0           0     
374,353     370,763            0       (3,590)

SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S.                     780,117    789,173       9,056           0   
9,742,235   9,827,688       85,453            0 

SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S.                           0          0           0           0     
491,658     487,136            0       (4,522)

MARKETABLE EQUITY SECURITIES       0          0           0           0      
79,400     134,200       54,800            0

MARKETABLE EQUITY SECURITIES       0          0           0           0      
94,146      83,500            0      (10,646)

FEDERAL RESERVE BANK STOCK,
ATLANTIC CENTRAL BANKERS BANK
STOCK AND FEDERAL HOME LOAN
BANK STOCK                         0          0           0           0     
394,100     394,100            0            0

GRAND TOTALS               2,377,315  2,341,602       11,338     (47,051)
31,732,514  31,819,780      322,891     (235,625)
                           =========  =========       ======      ====== 
==========  ==========      =======      =======
</TABLE>
CLASSIFICATION OF HELD TO MATURITY AND AVAILABLE FOR SALE
SECURITIES

Due to the implementation of FAS 115, management has segregated
securities as Held to Maturity, Available for Sale or Trading
securities.  At the implementation of FAS 115 on January 1, 1994,
management determined that no securities were Trading securities;
that tax-free municipal with maturity dates less than the year 2000
were classified as Held to maturity securities due to management's
intention to hold these securities for tax planning purposes; and
that all other securities were classified as Available for Sale
securities due to management's intention to hold these securities
for liquidity planning purposes.  Purchases of tax-free municipals
with maturities of 5 years or less made following implementation of
FAS 115 are classified as Held to Maturity securities with all
other purchase Available for Sale; however, management may decide
on a case-by-case basis that a security may be either classified as
Held to Maturity or Available for Sale depending upon the reasons
for purchase.  Held to Maturity classifications are typically used
for securities purchased specifically for interest rate management
or tax-planning purposes while Available for Sale classifications
are typically used for liquidity planning purposes.         


                  FNB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

Net income for the first three months of 1999 was $189,457,
compared to $154,879 for the first three months of 1998 and
$218,142 for the same period in 1997.  This represents an increase
of $34,578 or 22% from 1998 and a decrease of $28,685 or 13.15%
from 1997.  Net income on an adjusted per share basis for the first
three months of 1999 was $0.47 an increase of $.08 from the $0.39
per share for 1998, and a decrease of $0.08 from the $0.55 per
share for the three months ended March 31, 1997.  This increase
from 1998 is a direct result of a decrease in the allowance for
loan loss provision which was $101,114 for the first three months
in 1998 compared to $30,000 for the first three months in 1999. 

Total interest and dividend income for the first three months of
1999 was $1,882,593 compared to $1,863,867 for the first three
months of 1998, an increase of $18,726, and compared to $1,788,629
for the three months ended March 31, 1997, representing an increase
of $93,964.  This increase is a result of an increase in the
balance of earning assets and investments in the Bank's security
portfolio.  Since March 31, 1998, net loans have increased
$4,252,941 or 7.24% while the book value of investment debt
securities has increased $3,563,367 or 11.88%.  This increase in
loans, the Bank's highest yielding interest-earning asset, and
increase in the lower yielding assets of investments held in the
Bank's investment portfolio have increased the Bank's interest
income for the first three months of 1999.  

During the first quarter of 1999, interest rates on loans and on
investments have remained relatively the same.  Also, during the
first quarter, some investment securities with call features were
called by the issuer resulting in the loss of higher interest
earning assets.  At the same time, some residential mortgage
customers refinanced their mortgage loans to lower interest rates
at our institution and at other institution's which resulted in a
general decline in the yield on both investment securities and
loans since the fourth quarter of 1998.  Management has decreased
deposit rates but not at the same pace as that of earning assets. 
Combined with the aforementioned increase in loans and increase in
investments, net interest income has increased, however, the bank's
net interest margin during the first quarter of 1998 has decreased
due to the decrease of yields on loans and investments while the
cost of deposits did not decrease as greatly as that of earning
assets.  Management anticipates the decrease in interest rates on
loans and investments and the decrease of deposit rates to lower
levels will result in the slight decrease of the interest margin
during the next few earning periods. 

Interest expense for the three months ended March 31, 1999, was
$1,020,335, an increase of $34,732 from the $985,603 for the same
period in 1998, and an increase of $92,513 from the $927,822
incurred for the same period in 1997.  This increase is due to an
increase in the balances of interest-bearing deposits.  Total
interest-bearing deposit balances has increased $7,614,501 or 9.28%
since March 31, 1998.

The tax-adjusted net interest margin has decreased 40 basis points
to 3.62% for the first three months of 1998 from that of the first
three months of 1997 which was 4.02%.  This decrease occurred due
to a larger decrease in the yield on earning assets which occured
during the entire 1998 year than in the cost of interest-bearing
liabilities.  The tax-equivalent yield on earning assets for the
first three months of 1998 decreased .59% to 7.58% from 8.17% for
the same period in 1998 while the cost of interest-bearing
liabilities decreased .30% to 4.54% from 4.84% for the same period
in 1998.  Management anticipates to concentrate on the improvement
of net interest margin throughout the year.  Recent decreases in
interest rates on adjustable rate loans and securities will be
offset by maturing higher cost time deposits repriced to lower
yielding deposits and a general decrease in the cost of savings
account balances.  During the year management still anticipates
securities which have call features to most likely be called
resulting in a decrease in yield on the investment portfolio.  This
combined with continued refinancings by mortgage home owners to
lower interest rates will squeeze the net interest margin and may
result in a decrease in such.  Through the decrease of deposit
rates, management will strive to maintain the decrease of the net
interest margin to a minimum.

Total noninterest income for the first three months of 1999
increased $28,856 due to a $2,722 increase in service charges on
deposit accounts and a $13,389 increase in other income as a result
of a $16,416 increase in the cash value of life insurance. 
Operating expenses for the period ended March 31, 1999, were
$717,382, a $57,291 increase from the operating expenses incurred
for the same period in 1998 of $660,091.  

The company's income tax provision for the first three months of
1999 was $41,034 as compared to $48,942 for the first three months
of 1998.  The Company continues to operate with a marginal tax rate
of 34%, during the first quarter of 1999.  The effective income tax
rate for the first three months of 1999 was 17.80% a 6.21% decrease
compared to 24.01% for the first three months of 1998 and a
decrease of 0.48% from the effective tax rate for the first three
months of 1997 of 18.28%.

Total assets as of March 31, 1999, were $112,918,053, a decrease of
$647,341 from the period ending December 31, 1998, representing a
decrease of 0.57%.  This decrease in total assets was anticipated
as there were large temporary deposits at the Bank on December 31,
1998, in business Money Market account balances which were expected
to leave the Bank shortly after the beginning of the 1999 year. 
This in fact did occur and total deposits decreased $587,674 or
0.58%.  The decrease in deposits was the result of decreased Money
Market account balances which are included under the savings
account caption.  Totals savings accounts decreased $1,241,947 to
$29,669,854 from $30,911,801 at December 31, 1998.  This decrease
was a direct result of the movement of the temporary deposits as
discussed previously.  Time deposits increased $1,004,929 to
$59,506,440 from $58,501,511 at December 31, 1998, a 1.72%
increase.   Net loans as of March 31, 1999, were $62,984,903
compared to $61,900,581 as of December 31, 1998.  The allowance for
loan losses at the end of the three months was $728,228 compared to
$731,641 at year end 1998 and is considered adequate, in
management's judgement, to absorb possible losses on existing
loans.  The provision for loan losses for the first three months of
1999 was $30,000 compared to $101,114 for the first three months of
1998 and $9,000 for the same period in 1997.  This decrease from
the 1998 provision and dramatic increase over the 1997 provision
was a direct result of one large commercial loan charge-off in 1998
which necessitated the increase of the allowance for loan losses. 

Total deposits were $99,916,261 as of March 31, 1999, compared to
$100,503,935 on December 31, 1998.  This represents a decrease of
$587,674 or 0.58% which reflects the activity as discussed
previously.

Total equity as of March 31, 1999, was $11,838,749, 10.48% of total
assets, as compared to $11,916,566, 10.49% of total assets as of
December 31, 1998.  This slight decrease in equity reflects a
decrease in Accumulated other comprehensive income which is a
direct result of a decrease in the unrealized gains on securities
available for sale, net of tax effects, during the first quarter of
1999 from that of December 31, 1999.

The Corporation has risk-based capital ratios exceeding regulatory
requirements.  Risk-based capital guidelines require a minimum
ratio of 8.0%.  At March 31, 1999, the risk-based capital ratio of
the Corporation was 18.00% while at December 31, 1998, the
risk-based capital ratio was 18.21%.  The following table presents
the
risk-based capital ratios for the Corporation:


<TABLE>
<S>                                          <C>          <C>
                                           March 31,    Regulatory
                                             1999        Minimum

Leverage Ratio                               10.29%       3.00%
Risk-based capital ratios:
    Tier I (core capital)                    16.94%       4.00%
    Total Capital
    (Tier I and Tier II Capital)             18.00%       8.00%
</TABLE>

Year 2000 Readiness Plan

During the past several months many newspaper and magazine articles
have been written concerning the YEAR 2000 and the potential effect
the change from the year 1999 to the year 2000 will have on
computer systems.  Due to the age of some computer programs,
computer software and computer chips, it is very possible that some
older computers, software and equipment containing computer chip
technology may not function properly when the year 2000 rolls
around, or may indeed not function at all.  

                             AWARENESS

The Corporation and the Bank recognized this potential problem in
mid-1997 and organized a Year 2000 Management Team.  This team is
headed by Senior Management and the Data Processing Department,
which reports findings and results to the CEO, the Electronic Data
Processing ("EDP")Committee and, ultimately, to the Board of
Directors.  In September 1997, this team developed and implemented
a  Year 2000 policy to assure that all of the Corporation's
computers, software and equipment will be compatible with the year
2000 in order to avoid disruption to financial services provided by
the Corporation.  

Beginning in March 1997, management of The First National Bank
began discussions with our Computer equipment providers and
programmers regarding the Year 2000 issue and how it would effect
our processing capabilities.  In September 1997, the Bank's EDP
Committee, comprised of four outside Directors, the Data Processing
Manager, Cashier and CFO, and the Board of Directors adopted a Year
2000 Action Plan which has been implemented.  This plan appointed
the CFO in charge of the Year 2000 project implementation as
supervisor of the Data Processing Department. 

                            ASSESSMENT

Pursuant to our Plan, the Corporation and the Bank inventoried
equipment and software which needed to be verified for Year 2000
compliance.  We also outlined our testing dates and strategies,
completion dates for all reprogramming and testing, and a
contingency plan.  In addition, the Plan requires all vendors and
business customers provide Year 2000 compliance assurances. 
Further, any new equipment or computer software purchased from that
date forward must be certified by the vendor to be Year 2000
compatible.

In the Corporation's policy addressing the Year 2000, the
Corporation recognized the importance of assuring, to the best of
its ability, its major business customers and vendors on which it
relies for electricity, voice communication, data processing, all
equipment, data communication, supplies, and any other function
vital to the Corporation's operation are aware of this issue and
have addressed it within their organizations by having their
computer equipment and software analyzed and tested for
compatibility with the Year 2000.  To assess the status of each
major business customer and vendor, the Corporation in November
1997 sent to each a short questionnaire/survey regarding their Year
2000 implementation plans.  As each vendor and business customer
returns the survey, management assesses the capability of each and
follows up to assure, to the best of the Corporation's ability,
each is Year 2000 compatible, or will be by June 30, 1999.

            RENOVATION, VALIDATION, AND IMPLEMENTATION
On Sunday, February 15 and Monday, February 16, 1998, data
processing personnel conducted an in-house test of all computer
equipment and programs, both our main frame and Local Area Network
("LAN"), in order to determine if there were any areas of concern. 
All equipment worked fine after we allowed system dates on the main
frame and the LAN to roll-over from December 31, 1999, to January,
1, 2000.  After the date roll-over we tested programs extensively
performing regular daily procedures as well as year-end close out
procedures.  There were some minor problems which resulted, many of
which we were aware before testing and had previously discussed
with our programmers.  We set June 30, 1998, as the dead-line for
necessary changes to be made by our programmers.  This schedule has
been met and retesting occurred during the third and fourth
quarters of 1998.  Our internal final cut-off for compliance was
December 31, 1998, in order to allow for any unforeseen problems to
be addressed in early 1999.

On May 28, 1998, system dates on the main frame were tested for
September 9, 1999, January 1, 2000, January 3, 2000, February 29,
2000, and March 1, 2000.  These tests were performed by having the
system date rolled over to make sure the system continued to
operate.  There were no problems encountered.  During retesting
procedures of our main frame in the third and fourth quarters of
1998, management performed more extensive testing of these dates. 
Retesting of the main frame occurred at our test location hot site
at CBM.  Those reports generated were reviewed in detail by our in
house processor, Data Processing Manager, CFO, personnel from The
First National Bank of Mercersburg and our chief banking programmer
at CBM.  All areas were tested to assure compliance and renovations
were made as necessary.

System dates on the LAN were tested for September 9, 1999, January
1, 2000, January 3, 2000, and February 29, 2000.  Testing for
September 9, 1999, was conducted on Monday June 8, 1998, when the
system date was moved forward on the LAN to September 8, 1999, and
allowed to roll-over to September 9, 1999.  On Tuesday June 9,
1998, the date was September 9, 1999, on the LAN.  All day system
dates were on this time and the system was allowed to roll over to
September 10, 1999, on June 10, 1998.  On June 10, 1998, the date
was returned to normal.  No problems were incurred.

On June 15, 1998, the date was changed on the LAN to December 31,
1999, and allowed to roll over to January 1, 2000, on June 16,
1998.  All day processing was done on this date.  The system date
remained in the year 2000 until Friday, June 19, 1998, on which
date the future date was January 4, 2000, the second business day
in the year 2000.  The system was returned to the proper date
following this test.  There were no problems encountered.  The
Losendos program (a Qantel terminal emulation program) displayed,
in an auxiliary field, the date at 2010.  This is not used in
calculations and is only used to show date and time for the user of
the system, and is not anticipated to disrupt operations.

On June 22, 1998, the date was changed to February 27, 2000, and
allowed to rollover to February 28, 2000, on Tuesday, June 23,
1998; to February 29, 2000 on Wednesday, June 24, 1998; and to
March 1, 2000, on Thursday, June 25, 1998.  On June 25, 1998, the
system date was returned to the correct date.  There were no
problems encountered other than the credit reporting software to
pull credit reports not recognizing the Date February 29, 2000. 
This was verified with the software vendor who informed us the full
year 2000 needed to be input in order to recognize the year 2000 as
a leap year. The old LAN network displayed the date as 19100 but
everything operated satisfactorily.  As this system is being phased
out over the next year and Y2K compatible PCs are added, this will
not be an issue.  The Losendos program, which is a Qantel terminal
emulation program, displays in an auxiliary field the date at
2010. 
This is not used in calculations and is only used to show date and
time for the user of the system.  This is not anticipated to
disrupt operations.

The purpose of these tests was to assure management the LAN and all
programs on the LAN will operate properly on these various dates. 
Each department was asked to track their usage of programs during
this period and to note any problems which were encountered so they
could be addressed as quickly as possible with our software vendor.

The Bank has completed certification testing with the MAC network
for ATM communications having had MAC successfully process our Year
2000 test files.  A copy of this certification is available.

The Bank has tested its electronic communication ability with its
correspondent Bank, ACBB.  These tests were completed in December
1998 and no problems were encountered.

The Bank has tested its electronic communications with the Federal
Reserve Bank of Philadelphia ("FRB") during the third and fourth
quarters of 1998.  Management scheduled times with the FRB to test
year 2000 compatibility of the following customer applications:

     a.  Wire transfers;
     b.  TT&L;
     c.  ACH;
     d.  Electronic Check Presentment;
     e.  Cash Ordering and Early Credit;
     f.  Reserve Requirements;
     g.  Account Balance Monitoring;
     h.  Savings Bond Ordering;
     i.  Check Returns;
     j.  Account Statements.

Tests of electronic communications with the Federal Reserve Bank of
Philadelphia were conducted throughout the third and fourth
quarters of 1998.   All tests performed appeared to be successfully
processed by the Federal Reserve.  Management is currently
reviewing detailed printouts and testing documentation to verify
the successfulness of each test performed.


SUMMARY OF PHASES OF YEAR 2000 PLAN
In management's opinion based upon progress the following are
statistics as to the progress of each step in the Y2K process.

AWARENESS -  100% COMPLETE

ASSESSMENT - 100% COMPLETE

     Mission critical Qantel System Equipment & Software - Complete
     Mission Critical LAN system Equipment & Software - Complete
     Mission Critical Fedline Equipment & Software - Complete
     Mission Critical Branch Equipment - Complete
     ATMs - Complete
     ATM Network - Complete   
     Major Business Customers both loans and deposits - Complete
     Bank vendors and suppliers - Complete

VALIDATION - 95% COMPLETE
     Mission critical Qantel System Equipment & Software 
          1.  Equipment - Complete
                         9/9/99  - Complete
                         12/31/99 - Complete
                         1/3/2000 - Complete
                         2/28/2000 - Complete
                         2/29/2000 - Complete
                         3/01/2000 - Complete

          2.  Software - 9/9/99  - Complete
                         12/31/99 - Complete
                         1/3/2000 - Complete
                         2/28/2000 - Complete
                         2/29/2000 - Complete
                         3/01/2000 - Complete

     Mission Critical LAN system Equipment & Software
                         9/9/99  - Complete
                         12/31/99 - Complete
                         1/3/2000 - Complete
                         2/28/2000 - Complete
                         2/29/2000 - Complete
                         3/01/2000 - Complete
               Credit reporting Software - TransUnion complete

     Mission Critical Fedline Equipment & Software
                         9/9/99  - Complete Equipment only
                         12/31/99 - Complete 
                         1/3/2000 - Complete
                         2/28/2000 - Complete
                         2/29/2000 - Complete 
                         3/01/2000 - Complete 

     Mission Critical Branch Equipment - Complete
            Alarm systems at all locations have had vendor
                certified inspections completed and verified for
                Year 2000 readiness
          Office telephone systems inspections have been completed
                at all locations. 
                 Upgrade of Main office Voice mail required by
                6/30/99.

     ATMs - Complete
     ATM Network - Complete   
     Major Business Customers both loans and deposits - Complete
     Bank vendors and suppliers - Complete


RENOVATION - 95% COMPLETE OVERALL
             100% QANTEL SOFTWARE

     Mission critical Qantel System 
               1.  Equipment - Complete no changes necessary
               
               2.  Software 
                    IRA - New program installed; testing to be
                          completed in 2nd quarter of 1999.
                    Dividend - Complete
                    General Ledger - Complete
                    DDA - Complete
                    CD - Complete
                    Loans - Complete
                    Savings - Complete
                    Clubs - Complete
                    CIF - Complete
                    Utility Programs - Complete
                    Lock Boxes - Complete

     Mission Critical LAN system Equipment & Software - Complete
     Mission Critical Fedline Equipment & Software - Complete
     Mission Critical Branch Equipment - Complete
            Alarm systems at all locations have had vendor
                certified inspections completed and verified for
                Year 2000 readiness
          Office telephone systems inspections have been completed
                at all locations. 
                 Upgrade of Main office Voice mail required by
                6/30/99. 
     ATMs 
          NCR Main Office - Complete
          NCR Hancock Office - Complete
          Diebold East End Office - Complete


IMPLEMENTATION - 95% COMPLETE OVERALL
                 91% QANTEL SOFTWARE

     Mission critical Qantel System 
               1.  Equipment - Complete no changes necessary
               
               2.  Software 
                    IRA - New program installed; testing during
                          second quarter of 1999.
                    Dividend - Complete
                    General Ledger - Complete
                    DDA - Complete
                    CD - Complete
                    Loans - Complete
                    Savings - Complete
                    Clubs - Complete
                    CIF - Complete
                    Utility Programs - Complete
                    Lock Boxes - Complete

     Mission Critical LAN system Equipment & Software - Complete
     Mission Critical Fedline Equipment & Software - Complete
     Mission Critical Branch Equipment - Complete
          Upgrade of main office voice mail is necessary
     ATMs 
          NCR Main Office - Complete
          NCR Hancock Office - Complete
          Diebold East End Office - Complete

The LAN system has been thoroughly tested during the month of June
has noted above and in other documents.  All areas worked fine.

The Qantel system has been tested by us in February 1998 and our
phase of the retesting complete in September which brings us up to
the January 3, 2000 date.  The First National Bank of Mercersburg
has completed the remaining steps and we have jointly reviewed the
test results with CBM to verify findings.  The revisions to the
Bank's mission critical Qantel software have been loaded onto our
system and were implemented on January 18, 1999.  Retesting of our
system was done on site on February 15 and February 16 for January
3, 2000, and February 29, 2000.  All testing went smoothly ; only
minor none mission critical revisions need to be made.  These
changes were completed and tested by the end of the first quarter. 
The new software programs have been installed during the fourth
quarter of 1998 and were tested these include the General Ledger
program and the Dividends program.  The IRA program is still in the
process of testing and will be completed by 6/30/99.

The NCR ATMs have been upgraded and tested.  The Diebold ATM has
been upgraded and tested.  All other mission critical equipment has
been signed off by the manufacturer or supplier.

The MAC system Year 2000 certification test has been completed and
our verification/certification has been received.

Customer awareness is ongoing, newsletter articles, handouts,
brochures and Year 2000 Readiness information has been developed
and provided to customers, vendors, etc. as requested.  Glossy
brochures have been mailed out to customers; these will be
continually used as statement stuffers.  An article was also
published in the local papers informing customers of the Year 2000
problem and inviting them, as well as other interested individuals,
to a seminar conducted by the Bank in July 1998.  Posters and tent
cards informing customers of our Year 2000 readiness have been
placed in all branch offices.

Deposit and Loan customers whose actions may have a major impact on
the Corporation and the Bank have all been surveyed and
inventoried.  This is an ongoing process and follow-up has been
made to all as necessary.  In order to keep this issue at the
fore-front of large business depositors and loan customers, the
follow-up will continue throughout 1999.

Major Bank vendors and suppliers have been contacted and
verification of their readiness has been made.  Follow-up calls
were completed by December 31, 1998, and ongoing monitoring as
necessary through the second quarter of 1999.  If at that time a
supplier is not ready for Year 2000, the Bank will replace them
with one who is.

Year 2000 Budget

The initial Budget approved by the EDP Committee and the Board for
Year 2000 renovations has been $25,000.  These costs are specific
costs dealing with the renovation, supplies, upgrades, postage,
education of customers, legal fees for reviewing documents,
personnel costs for testing, and new equipment and software
necessary to become Year 2000 compatible.  This budget does not
include cost accounting costs such as salaried personnel time
involved by in house employees.  The reason for this exclusion is
that the salaried personnel working on this issue are required to
complete these tasks along with their other duties.  The total
costs incurred to date, March 31, 1999, for Year 2000 costs as
highlighted in this section have been $22,249.42.  The EDP
Committee and the Board review this budget as necessary to
determine if an increase in the initial $25,000 budget is warranted
based upon costs incurred to date.

Year 2000 Contingency Plan

A contingency plan has been developed, has been reviewed and
completed by management.  It will be presented to the EDP Committee
and the Board for adoption.  This plan addresses potential problems
which may arise concerning Year 2000 problems.

The Corporation's and Bank's Year 2000 Contingency Plan was
developed to address the possibility that information technology
and non-information technology systems may not function properly
after December 31, 1999.  If the Bank must implement its
contingency plan, the following areas have been included in such
plan:  the mission-critical Qantel System; the LAN management
information reporting system; the ATM and MAC networks; Fedline,
which included wire transfers, automated clearing house and
electronic check presentment; electricity; communications; and cash
reserves.












                    PART II - OTHER INFORMATION














































                    PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

          None

Item 2 - Changes in Securities

          None

Item 3 - Defaults Upon Senior Securities

          Not Applicable

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.  Reports on Form 8-K  - None




























                            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.




                              /s/John C. Duffey             
                              (John C. Duffey, President           
                               and Director of the Company and
                               President/CEO of the Bank)
                              (Duly Authorized Officer)



Date May 5, 1999              /s/Daniel E. Waltz           
                              (Daniel E. Waltz, Treasurer
                               and Director of the Company and
                               Senior Vice President/CFO of
                               the Bank)
                              (Principal Financial &               
                               Accounting Officer)