<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                     FOR THE TRANSITION PERIOD FROM - TO --

                         Commission file number 0-30665

                          CNB Financial Services, Inc.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as specified in its charter)

          United States of America                       55 - 0773918
      -------------------------------       ------------------------------------
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
       incorporation or organization)

101 S. Washington Street, Berkeley Springs, WV               25411
----------------------------------------------             ----------
   (Address of principal executive offices)                (Zip Code)

Issuer's telephone number, (304) 258 - 1520

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 such 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 by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

                                YES [ ]  NO [X]

The aggregate value of the common stock of the Registrant that was held by
non-affiliates as of the most recently completed second fiscal quarter (June 30,
2004), was approximately $30.9 million. This amount was based on the last
closing sale price of a share of common stock of $80.00 as of the same date.

   Common Stock $1 par value, 458,048 shares outstanding as of August 3, 2004

<PAGE>

                          CNB FINANCIAL SERVICES, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       PAGE
<S>                                                                                                    <C>
PART 1:    FINANCIAL INFORMATION

  Item 1.  Financial Statements

           Consolidated Statements of Financial Condition as of June 30, 2004 (Unaudited)
             and December 31, 2003 .................................................................     3

           Consolidated Statements of Income for the Three and Six Months ended June 30, 2004 and
             2003 (Unaudited) ......................................................................     4

           Consolidated Statements of Changes in Shareholders' Equity for the Three and Six
             Months Ended June 30, 2004 (Unaudited) and the Year Ended December 31, 2003 ...........     5

           Consolidated Statements of Cash Flows for the Six Months
             Ended June 30, 2004 and 2003 (Unaudited) ..............................................     6

           Notes to Consolidated Financial Statements (Unaudited) ..................................     7

  Item 2.  Management's Discussion and Analysis of Financial Condition and

           Results of Operations for the Three and Six Months ended June 30, 2004 ..................    13

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk ..............................    22

  Item 4.  Controls and Procedures .................................................................    23

PART II:   OTHER INFORMATION

  Item 1.  Legal  Proceedings ......................................................................    25

  Item 6.  Exhibits and Reports on Form 8-K ........................................................    25

                       SIGNATURES ..................................................................    27
</TABLE>

                           Forward-Looking Statements

      The Private Securities Litigation Reform Act of 1995 indicates that the
disclosure of forward-looking information is desirable for investors and
encourages such disclosure by providing a safe harbor for forward-looking
statements that involve risk and uncertainty. All statements other than
statements of historical fact included in this Form 10-Q including statements in
Management's Discussion and Analysis of Financial Condition and Results of
Operations are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. In order to comply with the terms of the safe
harbor, CNB notes that a variety of factors could cause CNB's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in those forward-looking statements. These factors could
include the following possibilities: (1) competitive pressures among depository
and other financial institutions may increase significantly; (2) changes in the
interest rate environment may reduce margins; (3) general economic conditions
may become unfavorable resulting in reduced credit quality or demand for loans;
(4) legislative or regulatory changes could increase expenses; and (5)
competitors may have greater financial resources and develop products that
enable them to compete more successfully than CNB.

                                       2
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                JUNE 30,        DECEMBER 31,
                                                                 2004              2003
                                                             -------------     -------------
                                                              (Unaudited)
<S>                                                          <C>               <C>
                        ASSETS
Cash and due from banks                                      $   8,667,038     $   7,641,280
Federal funds sold                                                  43,000             3,000
Securities available for sale
   (at approximate market value)                                43,104,816        39,361,934
Federal Home Loan Bank stock, at cost                              818,400           865,700
Federal Reserve Bank stock, at cost                                129,650           129,650
Loans and lease receivable, net                                158,263,963       144,665,208
Accrued interest receivable                                        924,378           838,659
Premises and equipment, net                                      5,606,557         5,288,633
Cash surrender value of life insurance                           1,172,193         1,065,435
Deferred income taxes                                              817,548           352,405
Intangible assets                                                  796,790            23,795
Other assets                                                       491,244           820,052
                                                             -------------     -------------

         TOTAL ASSETS                                        $ 220,835,577     $ 201,055,751
                                                             =============     =============

          LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
        Demand                                               $  35,577,288     $  29,485,097
        Interest-bearing demand                                 39,404,984        34,042,317
        Savings                                                 29,843,028        24,360,890
        Time, $100,000 and over                                 37,427,186        36,642,560
        Other time                                              58,620,086        56,367,865
                                                             -------------     -------------
                                                             $ 200,872,572     $ 180,898,729
   Accrued interest payable                                        588,096           673,624
   FHLB borrowings                                                 700,000         1,200,000
   Securities sold under repurchase agreement                      213,080                 -
   Accrued expenses and other liabilities                        1,673,752         1,714,457
                                                             -------------     -------------

         TOTAL LIABILITIES                                   $ 204,047,500     $ 184,486,810
                                                             -------------     -------------
SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000  shares
       authorized; 458,048 shares outstanding                $     458,048     $     458,048
   Capital surplus                                               3,863,592         3,863,592
   Retained earnings                                            13,438,612        12,460,556
   Accumulated other comprehensive income                         (972,175)         (213,255)
                                                             -------------     -------------

         TOTAL SHAREHOLDERS' EQUITY                          $  16,788,077     $  16,568,941
                                                             -------------     -------------

         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $ 220,835,577     $ 201,055,751
                                                             =============     =============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                       3
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED            SIX MONTHS ENDED
                                                     JUNE 30,                     JUNE 30,
                                           ---------------------------   ---------------------------
                                               2004           2003           2004           2003
                                           ------------   ------------   ------------   ------------
<S>                                        <C>            <C>            <C>            <C>
INTEREST INCOME
   Interest and fees on loans              $  2,429,297   $  2,369,050   $  4,813,495   $  4,689,197
   Interest and dividends on securities
      U.S. Government agencies and
         corporations                           251,320        335,699        494,869        676,933
      Mortgage backed securities                 76,763        161,108        166,494        322,887
      State and political subdivisions           58,116         14,613        103,094         27,725
      Other                                       7,048          7,499          9,911         12,098
   Interest on federal funds sold                 4,821          5,454          7,606         12,981
                                           ------------   ------------   ------------   ------------
                                           $  2,827,365   $  2,893,423   $  5,595,469   $  5,741,821
                                           ------------   ------------   ------------   ------------
INTEREST EXPENSE
   Interest on interest bearing demand,    $    746,012   $  1,073,340   $  1,524,871   $  2,289,608
     savings and time deposits
   Interest on federal funds purchased                -            124              -            270
   Interest on borrowings                         1,257              -          4,157              -
                                           ------------   ------------   ------------   ------------
                                           $    747,269   $  1,073,464   $  1,529,028   $  2,289,878
                                           ------------   ------------   ------------   ------------

           NET INTEREST INCOME             $  2,080,096   $  1,819,959   $  4,066,441   $  3,451,943

PROVISION FOR LOAN LOSSES                        94,000         86,000        181,000        137,000
                                           ------------   ------------   ------------   ------------
           NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES   $  1,986,096   $  1,733,959   $  3,885,441   $  3,314,943
                                           ------------   ------------   ------------   ------------
NONINTEREST INCOME
   Service charges on deposit accounts     $    286,844   $    247,305   $    544,033   $    438,094
   Other service charges, commissions
      and fees                                  101,373         95,547        190,620        187,430
   Insurance commissions                         33,711         26,363         66,713         50,634
   Other operating income                        13,455         26,542         30,986         45,391
   Net gain on sale of securities                85,670         52,497        135,546         97,092
   Income from title company                     17,791         13,300         27,620         23,550
                                           ------------   ------------   ------------   ------------
                                           $    538,844   $    461,554   $    995,518   $    842,191
                                           ------------   ------------   ------------   ------------
NONINTEREST EXPENSES
   Salaries                                $    620,503   $    483,439   $  1,216,421   $  1,162,828
   Employee benefits                            221,328        216,920        439,207        429,140
   Occupancy of premises                         84,505         75,801        162,411        147,814
   Furniture and equipment expense              210,956        184,898        413,010        302,435
   Other operating expenses                     532,431        509,738        948,319        912,237
                                           ------------   ------------   ------------   ------------
                                           $  1,669,723   $  1,470,796   $  3,179,368   $  2,954,454
                                           ------------   ------------   ------------   ------------

            INCOME BEFORE INCOME TAXES     $    855,217   $    724,717   $  1,701,591   $  1,202,680

PROVISION FOR INCOME TAXES                      267,391        283,873        544,896        446,484
                                           ------------   ------------   ------------   ------------

            NET INCOME                     $    587,826   $    440,844   $  1,156,695   $    756,196
                                           ============   ============   ============   ============

BASIC EARNINGS PER SHARE                   $       1.28   $       0.96   $       2.52   $       1.65
                                           ============   ============   ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                       4
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                  ACCUMULATED
                                                                                                     OTHER           TOTAL
                                                     COMMON         CAPITAL         RETAINED      COMPREHENSIVE   SHAREHOLDERS'
                                                     STOCK          SURPLUS         EARNINGS         INCOME          EQUITY
                                                  ------------    ------------    ------------    ------------    ------------
<S>                                               <C>             <C>             <C>             <C>             <C>
BALANCE, DECEMBER 31, 2002                        $    458,048    $  3,863,592    $ 11,267,374    $    681,004    $ 16,270,018
                                                                                                                  ------------
Comprehensive income:
   Net income for 2003                                       -               -       1,742,840               -       1,742,840
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $382,304)              -               -               -        (623,758)       (623,758)
  Change in minimum pension liability
     adjustment (net of tax of $165,792)                                                              (270,501)       (270,501)
                                                                                                                  ------------
Total Comprehensive Income                                   -               -               -               -         848,581
                                                                                                                  ------------
Cash dividends ($1.20 per share)                             -               -        (549,658)              -        (549,658)
                                                  ------------    ------------    ------------    ------------    ------------
BALANCE, DECEMBER 31, 2003                        $    458,048    $  3,863,592    $ 12,460,556    $   (213,255)   $ 16,568,941
                                                                                                                  ------------
Comprehensive income:
   Net income for six months
     ended June 30, 2004                                     -               -       1,156,695               -       1,156,695
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $465,143)              -               -               -        (758,920)       (758,920)
                                                                                                                  ------------
Total Comprehensive Income                                   -               -               -               -         397,775
                                                                                                                  ------------
Cash dividends ($0.39 per share)                             -               -        (178,639)              -        (178,639)
                                                  ------------    ------------    ------------    ------------    ------------
BALANCE, JUNE 30, 2004 (unaudited)                $    458,048    $  3,863,592    $ 13,438,612    $   (972,175)   $ 16,788,077
                                                  ============    ============    ============    ============    ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                       5
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED
                                                                                  JUNE 30,
                                                                        ----------------------------
                                                                            2004            2003
                                                                        ------------    ------------
<S>                                                                     <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                              $  1,156,695    $    756,196
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                           349,145         265,230
     Provision for loan losses                                               181,000         137,000
     Net (gain) on sale of securities                                       (135,546)        (97,092)
     (Increase) decrease in accrued interest receivable                      (51,193)         90,334
     (Increase) decrease in other assets                                     268,155        (344,733)
     (Decrease) in accrued interest payable                                  (85,528)       (193,230)
     (Increase) in cash surrender value on life insurance in excess
          of premiums paid                                                   (47,936)        (15,000)
     Increase (decrease) in accrued expenses and other liabilities           (47,286)        239,714
     Amortization of deferred loan (fees) cost                                 7,491          14,333
     Amortization (accretion) of premium and discount on investments          40,042          77,789
                                                                        ------------    ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                      $  1,635,039    $    930,541
                                                                        ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Net (increase) in loans                                            $ (5,367,273)   $ (4,418,738)
     Proceeds from sales of securities                                     6,391,436       4,758,799
     Proceeds from maturities, repayments and calls of securities         10,719,660      15,499,727
     Purchases of securities                                             (21,982,537)    (20,571,948)
     Purchases of Federal Home Loan Bank stock                              (416,400)       (217,900)
     Redemptions of Federal Home Loan Bank stock                             463,700               -
     Purchases of premises and equipment                                    (272,490)       (359,550)
     Net (increase) decrease in federal funds sold                           (40,000)      1,905,666
     Premiums paid on life insurance                                         (58,822)        (68,566)
     Cash from acquired branch                                             5,020,017               -
                                                                        ------------    ------------
         NET CASH (USED IN) INVESTING ACTIVITIES                        $ (5,542,709)   $ (3,472,510)
                                                                        ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand and savings deposits                         $  8,727,807    $  3,482,332
    Net (decrease) in time deposits                                       (3,328,820)       (150,905)
    Net increase in securities sold under repurchase agreement               213,080               -
    Net (decrease) in FHLB borrowings                                       (500,000)              -
    Cash dividends paid                                                     (178,639)       (178,639)
                                                                        ------------    ------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES                      $  4,933,428    $  3,152,788
                                                                        ------------    ------------
         NET INCREASE IN CASH AND CASH EQUIVALENTS                      $  1,025,758    $    610,819
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                             7,641,280       7,832,735
                                                                        ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $  8,667,038    $  8,443,554
                                                                        ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period:
               Interest                                                 $  1,614,556    $  2,482,837
               Income taxes                                             $    554,009    $    246,000
     Net transfer to foreclosed real estate, held for sale from loans
            receivable                                                  $          -    $          -
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                       6
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1. Basis of Presentation and Contingencies

            In the opinion of CNB Financial Services, Inc. ("CNB" or the
      "Company"), the accompanying unaudited consolidated financial statements
      contain all adjustments (consisting of only normal recurring accruals)
      necessary for a fair presentation of CNB financial condition as of June
      30, 2004 and the results of operations for the three and six months ended
      June 30, 2004 and 2003 and cash flows for the six months ended June 30,
      2004 and 2003.

            The accompanying unaudited financial statements have been prepared
      in accordance with the instructions for Form 10-Q. These financial
      statements should be read in conjunction with the consolidated financial
      statements and the notes included in CNB's Annual Report for the year
      ended December 31, 2003.

            In the ordinary course of business, the company and its subsidiary
      are involved in various legal proceedings.

            In the opinion of the management of CNB, there are no proceedings
      pending to which CNB is a party or to which its property is subject,
      which, if determined adversely to CNB, would be material in relation to
      CNB's financial condition. There are no proceedings pending other than
      ordinary routine litigation incident to the business of CNB. In addition,
      no material proceedings are pending or are known to be threatened or
      contemplated against CNB by government authorities.

Note 2. Business Combinations

            On June 11, 2004, Citizens National Bank purchased certain assets
      and liabilities associated with the Hancock Branch of Fidelity Bank, a
      subsidiary bank of Mercantile Bankshares Corporation (formerly Home
      Federal). The results of the Hancock Branch's operations have been
      included in the consolidated financial statements since that date.

            The following table provides information concerning the allocations
      of the purchase price and the fair values of the assets and liabilities
      acquired of the Hancock branch:

                                AT JUNE 30, 2004

<TABLE>
<S>                                              <C>
Assets acquired:

   Loans                                         $  8,419,973
     Accrued interest receivable                       34,526
     Fixed assets                                     324,166
     Intangible asset-premium on deposits             780,616
     Prepaid expenses                                   2,139
                                                 ------------
Total assets acquired                            $  9,561,420
                                                 ------------

Liabilities assumed:

     Deposit accounts                            $(14,574,856)
     Accrued expenses                                  (6,581)
                                                 ------------

Total liabilities assumed                        $(14,581,437)
                                                 ------------

Cash from acquired branch                        $ (5,020,017)
                                                 ============
</TABLE>

                                       7
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 2. Business Combinations (continued)

            The aggregate purchase price was $5.0 million, including $253,000 of
      cash and currency. Citizens National Bank recorded $781,000 of core
      deposit intangible, which has a weighted-average useful life of 7 years.

Note 3. Securities

            The amortized cost and estimated market value of debt securities at
      June 30, 2004 and December 31, 2003 by contractual maturity are shown
      below. Expected maturities will differ from contractual maturities because
      borrowers may have the right to call or prepay obligations with or without
      call or prepayment penalties.

            Securities are summarized as follows:

<TABLE>
<CAPTION>

                                                            JUNE 30, 2004                            WEIGHTED
                                      ---------------------------------------------------------      AVERAGE
                                                        GROSS          GROSS         ESTIMATED         TAX
                                        AMORTIZED     UNREALIZED     UNREALIZED        FAIR         EQUIVALENT
                                          COST          GAINS          LOSSES          VALUE           YIELD
                                      ------------   ------------   ------------   ------------    ------------
<S>                                   <C>            <C>            <C>            <C>             <C>
Available for sale:
   U.S. Government agencies
     and corporations
     After 1 but within 5 years       $  3,443,706   $     46,442   $      3,191   $  3,486,957        4.36%
     After 5 but within 10 years        23,861,300          4,690        770,688     23,095,302        4.17
                                      ------------   ------------   ------------   ------------
                                      $ 27,305,006   $     51,132   $    773,879   $ 26,582,259        4.19%
                                      ------------   ------------   ------------   ------------

   States and political subdivisions
     Within one year                  $    315,000            $ -   $     12,352   $    302,648        4.03%
     After 1 but within 5 years            934,948          4,802         19,039        920,711        2.78
     After 5 but within 10 years         6,914,396         11,629        210,116      6,715,909        3.60
                                      ------------   ------------   ------------   ------------
                                      $  8,164,344   $     16,431   $    241,507   $  7,939,268        3.44%
                                      ------------   ------------   ------------   ------------

   Mortgage backed securities         $  8,767,196            $ -   $    183,907   $  8,583,289        4.36%
                                      ------------   ------------   ------------   ------------
Total securities available for sale   $ 44,236,546   $     67,563   $  1,199,293   $ 43,104,816        4.37%
                                      ============   ============   ============   ============

Restricted:
   Federal Reserve Bank stock         $    129,650   $          -   $          -   $    129,650        6.00%
   Federal Home Loan Bank stock            818,400              -              -        818,400        1.34
                                      ------------   ------------   ------------   ------------
Total restricted investments          $    948,050   $          -   $          -   $    948,050        1.98%
                                      ============   ============   ============   ============
</TABLE>

                                       8
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 3. Securities (continued)

<TABLE>
<CAPTION>

                                                           DECEMBER 31, 2003                         WEIGHTED
                                       ---------------------------------------------------------     AVERAGE
                                                         GROSS          GROSS         ESTIMATED        TAX
                                         AMORTIZED     UNREALIZED     UNREALIZED        FAIR        EQUIVALENT
                                           COST          GAINS          LOSSES          VALUE          YIELD
                                       ------------   ------------   ------------   ------------   ------------
<S>                                    <C>            <C>            <C>            <C>             <C>
Available for sale:
   U.S. Government agencies
     and corporations
     Within one year                   $  3,679,936   $     56,310   $          -   $  3,736,246       4.41%
     After 1 but within 5 years           4,015,285        182,346         21,560      4,176,071       4.76
     After 5 but within 10 years         17,436,050         32,346        162,056     17,306,340       4.26
                                       ------------   ------------   ------------   ------------
                                       $ 25,131,271   $    271,002   $    183,616   $ 25,218,657       4.36%
                                       ------------   ------------   ------------   ------------
   States and political subdivisions
     After 1 but within 5 years        $    468,556   $      7,274   $        193   $    475,637       2.85%
     After 5 but within 10 years          4,143,424         42,818          6,904      4,179,338       3.42
                                       ------------   ------------   ------------   ------------
                                       $  4,611,980   $     50,092   $      7,097   $  4,654,975       3.07%
                                       ------------   ------------   ------------   ------------

   Mortgage backed securities          $  9,526,351   $     42,478   $     80,527   $  9,488,302       4.44%
                                       ------------   ------------   ------------   ------------

Total securities available for sale    $ 39,269,602   $    363,572   $    271,240   $ 39,361,934       4.25%
                                       ============   ============   ============   ============

Restricted:
   Federal Reserve Bank stock          $    129,650   $          -   $          -   $    129,650       6.00%
   Federal Home Loan Bank stock             865,700              -              -        865,700       3.52
                                       ------------   ------------   ------------   ------------
Total restricted investments           $    995,350   $          -   $          -   $    995,350       3.84%
                                       ============   ============   ============   ============
</TABLE>


            The carrying value of securities pledged to secure public deposits
      and for other purposes as required or permitted by law totaled $15,232,407
      at June 30, 2004 and $15,337,515 at December 31, 2003. Also, a security
      with a carrying value of $240,548 is designated for customer repurchase
      agreements at June 30, 2004.

            Proceeds from sales of securities available for sale (excluding
      maturities) during the six months ended June 30, 2004 and the year ended
      December 31, 2003 were $6,391,436 and $13,044,280, respectively. Gross
      gains (losses) of $135,546 and $(-0-) during the six months ended June 30,
      2004 and $210,572 and $(69,122) for the year ended December 31, 2003 were
      realized on the respective sales.

                                       9
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 3. Securities (continued)

            The following table shows our investments' gross unrealized losses
      and fair value, aggregated by investment category and length of time that
      individual securities have been in a continuous unrealized loss position,
      at June 30, 2004.

<TABLE>
<CAPTION>
                                       LESS THAN 12 MONTHS                  TOTAL
                                   ---------------------------   ---------------------------
                                       FAIR        UNREALIZED       FAIR         UNREALIZED
DESCRIPTION OF SECURITIES              VALUE         LOSSES         VALUE          LOSSES
--------------------------------   ------------   ------------   ------------   ------------
<S>                                <C>            <C>            <C>            <C>
U.S. government agencies
   and corporations                $ 23,576,624   $    773,879   $ 23,576,624   $    773,879

State and political subdivisions      5,899,415        241,507      5,899,415        241,507

Mortgage backed securities            8,583,289        183,907      8,583,289        183,907
                                   ------------   ------------   ------------   ------------

Total temporarily impaired
   securities                      $ 38,059,328   $  1,199,293   $ 38,059,328   $  1,199,293
                                   ============   ============   ============   ============
</TABLE>

Note 4. Loans and Leases Receivable

            Major classifications of loans at June 30, 2004 and December 31,
      2003, were as follows:

<TABLE>
<CAPTION>
                                    JUNE 30,        DECEMBER 31,
                                      2004              2003
                                 --------------    --------------
<S>                              <C>               <C>
Loans:
  Real estate                    $  109,799,888    $   98,404,610
  Commercial real estate             23,254,610        21,521,317
  Consumer                           16,957,155        16,852,449
  Commercial                          9,450,851         8,934,099
  Overdrafts                             97,631           135,958
                                 --------------    --------------
                                 $  159,560,135    $  145,848,433

Leases:                                 177,134           186,318
                                 --------------    --------------
                                 $  159,737,269    $  146,034,751
Net deferred loan fees, costs,
    premiums and discounts              259,071           238,220
Allowance for loan losses            (1,732,377)       (1,607,763)
                                 --------------    --------------
                                 $  158,263,963    $  144,665,208
                                 ==============    ==============
</TABLE>

                                       10
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 4. Loans and Leases Receivable (continued)

            An analysis of the allowance for possible loan losses is as follows:

<TABLE>
<CAPTION>
                                     JUNE 30,              DECEMBER 31,
                           ----------------------------    ------------
                               2004            2003            2003
                           ------------    ------------    ------------
<S>                        <C>             <C>             <C>
Balance, Beginning         $  1,607,763    $  1,484,448    $  1,484,448
    Provision charged to
        operations              181,000         137,000         312,000
    Recoveries                   98,422          24,910          80,626
    Loans charged off          (154,808)       (104,769)       (269,311)
                           ------------    ------------    ------------
Balance, Ending            $  1,732,377    $  1,541,589    $  1,607,763
                           ============    ============    ============
</TABLE>

            Loans are placed in nonaccrual status when, in the judgment of
      management, the probability of collection of interest is deemed to be
      insufficient to warrant further accrual. When interest accruals are
      discontinued, interest credited to income is reversed. Nonaccrual loans
      are restored to accrual status when all delinquent principal and interest
      becomes current or the loan is considered secured and in the process of
      collection. Certain loans that are determined to be sufficiently
      collateralized may continue to accrue interest after reaching 90 days past
      due. A summary of nonperforming loans is as follows:

<TABLE>
<CAPTION>
                                                        JUNE 30,         DECEMBER 31,
                                                -----------------------  ------------
                                                   2004         2003         2003
                                                ----------   ----------   ----------
<S>                                             <C>          <C>          <C>
Nonaccrual  loans                               $  749,987   $  420,519   $  348,660
Loans past due 90 days or more still accruing
interest                                                 -            -       27,045
                                                ----------   ----------   ----------
     Total                                      $  749,987   $  420,519   $  375,705
                                                ==========   ==========   ==========
</TABLE>

Note 5. Time Deposits

            At June 30, 2004, the scheduled maturities of time deposits are as
      follows:

<TABLE>
<CAPTION>
                            TIME DEPOSITS       ALL TIME
                          $100,000 AND OVER     DEPOSITS
                          -----------------   ------------
<S>                       <C>                 <C>
Within 3 months              $  3,772,417     $ 10,198,614
3 months thru 6 months          3,976,524       10,067,374
6 months thru 12 months         4,581,893       11,600,236
Over 12 months                 25,096,352       64,181,048
                             ------------     ------------
                             $ 37,427,186     $ 96,047,272
                             ============     ============
</TABLE>

                                       11
<PAGE>

                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 6. Federal Home Loan Bank Borrowings

<TABLE>
<CAPTION>
                                                       JUNE 30,                DECEMBER 31,
                                             --------------------------        ------------
                                               2004               2003             2003
                                             ---------           ------        ------------
<S>                                          <C>                 <C>           <C>
Federal Home Loan Bank advances              $ 700,000           $    -        $  1,200,000
</TABLE>

            Citizens National Bank is a member of the Federal Home Loan Bank
      ("FHLB") of Pittsburgh and, as such, can take advantage of the FHLB
      program for overnight and term advances at published daily rates. Under
      the terms of a blanket collateral agreement, advances from the FHLB are
      collateralized by qualifying mortgages and US government agencies and
      mortgage-backed securities. In addition, all of the Bank's stock in the
      FHLB is pledged as collateral for such debt. Advances available under this
      agreement are limited by available and qualifying collateral and the
      amount of FHLB stock held by the borrower.

Note 7. Supplemental Retirement Plan

            On January 2, 2004, the Bank entered into a nonqualified
      supplemental retirement benefit agreement with the President which when
      fully vested would pay the President or his beneficiary an amount of
      $30,000 per year for 10 years beginning June 11, 2011, if he retires on or
      after May 29, 2011. Termination of employment prior to that date other
      than by reasons of death or disability will result in a reduced benefit.
      The expense for the three and six months ended June 30, 2004 was $8,160
      and $16,320, respectively.

                                       12
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      GENERAL

            CNB Financial Services, Inc. ("CNB" or the "Company") was organized
      under the laws of West Virginia in March 2000 at the direction of the
      Board of Directors of Citizens National Bank (the "Bank") for the purpose
      of becoming a financial services holding company. The Company's primary
      function is to direct, plan and coordinate the business activities for the
      Bank and its subsidiary. We refer to the Company and its subsidiary as
      "CNB".

            On August 31, 2000, the Bank, via merger, became a wholly-owned
      subsidiary of the Company and the shareholders of the Bank became
      shareholders of the Company. Each Bank shareholder received two shares of
      the Company stock for each share of the Bank's common stock. The merger
      was accounted for as a pooling of interests.

            The Bank was organized on June 20, 1934, and has operated in
      Berkeley Springs in Morgan County, West Virginia, as a national banking
      association continuously since that time. The Bank is a full-service
      commercial bank conducting general banking and trust activities through
      four full-service offices and three automated teller machines located in
      Morgan and Berkeley Counties, West Virginia. The Bank formed CNB Insurance
      Services, Inc., a wholly owned subsidiary, which is a property and
      casualty insurance agency selling primarily personal lines of insurance.

            The Bank exercised an option in December 2003 to purchase a parcel
      of land in Falling Waters, Berkeley County, West Virginia for the future
      site of an additional full-service branch. The expected building
      completion date is the first quarter of 2005.

            On January 26, 2004, CNB entered into an agreement to purchase
      certain assets and liabilities associated with the Hancock Branch of
      Fidelity Bank, a subsidiary bank of Mercantile Bankshares Corporation
      (formerly Home Federal). The purchase, which took place on June 11, 2004,
      increased the assets and liabilities of CNB by $14.6 million. CNB assumed
      responsibility for all the deposit services including checking, savings
      and certificate of deposits. Additionally, CNB acquired loans, equipment
      and leasehold improvements and assumed the lease for the real estate
      located at 333 East Main Street, Hancock, Maryland.

            The following discussion and analysis presents the significant
      changes in financial condition and results of operations of CNB for the
      three and six months ended June 30, 2004 and 2003. This discussion may
      include forward-looking statements based upon management's expectations.
      Actual results may differ. We have rounded amounts and percentages used in
      this discussion and have based all average balances on daily averages.

      CRITICAL ACCOUNTING POLICIES

            CNB has established various accounting policies which govern the
      application of accounting principles generally accepted in the United
      States of America in the preparation and presentation of CNB's
      consolidated financial statements. The significant accounting policies of
      CNB are described in "Item 1, Critical Accounting Policies" and Note 1:
      Summary of Significant Accounting Policies of the Consolidated Financial
      Statements on Form 10-K as of December 31, 2003, and along with the
      disclosures presented in other financial statement notes, provide
      information on how significant assets and liabilities are valued in the
      financial statements and how those values are determined. Certain
      accounting policies involve significant judgments, assumptions and
      estimates by management that have a material impact on the carrying value
      of certain assets and liabilities, which management considers to be
      critical accounting policies. The judgments, assumptions and estimates
      used by management are based on historical experience, knowledge of the
      accounts and other factors, which are believed to be reasonable under the
      circumstances. Because of the nature of the judgment and assumptions made
      by management, actual results could differ from these judgments and
      estimates, which could have a material impact on the carrying values of
      assets and liabilities and the results of operations of the Company.

                                       13
<PAGE>

            CNB views the determination of the allowance for loan losses as a
      critical accounting policy that requires the most significant judgments,
      assumptions and estimates used in the preparation of its consolidated
      financial statements. For a more detailed discussion on the allowance for
      loan losses, see Nonperforming Loans and Allowance For Loan Losses in the
      Management's Discussion and Analysis and Allowance for Loan Losses in Note
      1: Summary of Significant Accounting Policies and Note 4: Loans and Leases
      Receivable in the Notes to Consolidated Financial Statements in the Form
      10-K for December 31, 2003.

      EARNINGS SUMMARY

            Net income for the three months ended June 30, 2004 was $588,000 or
      $1.28 per share compared to $441,000 or $0.96 per share for the same
      period in 2003. Annualized return on average assets and average equity
      were 1.1% and 13.3% respectively, for the three months ended June 30,
      2004, compared with .9% and 10.6%, respectively, for the three months
      ended June 30, 2003.

            Net income for the six months ended June 30, 2004 was $1.2 million
      or $2.52 per share compared to $756,000 or $1.65 per share for the same
      period in 2003. Annualized return on average assets and average equity
      were 1.1% and 13.4% respectively, for the six months ended June 30, 2004,
      compared with .8% and 9.2%, respectively, for the six months ended June
      30, 2003.

            Net income for the second half of 2004 is expected to decrease
      compared to net income for the first half of 2004 due to the additional
      expenses related to the opening of the new branch facility and the slowing
      of the maturities of the higher interest bearing 36 month Certificate of
      Deposits causing interest expense to level out. Although, net income
      increased during the first six months of 2004 compared to the first six
      months of 2003, the additional expenses relating to the opening of the
      branch facility will be incurred in the second half of the year. The
      steady loan growth is expected to continue through 2004 although not at
      the level experienced in the recent past. As a result of lower interest
      rates and slower loan growth, interest income on loans will be impacted.

      NET INTEREST INCOME

            Net interest income represents the primary component of CNB's
      earnings. It is the difference between interest and fee income related to
      earning assets and interest expense incurred to carry interest-bearing
      liabilities. Changes in the volume and mix of interest earning assets and
      interest bearing liabilities, as well as changing interest rates, impact
      net interest income. To manage these changes, their impact on net interest
      income and the risk associated with them, CNB utilizes an ongoing
      asset/liability management program. This program includes analysis of the
      difference between rate sensitive assets and rate sensitive liabilities,
      earnings sensitivity to rate changes, and source and use of funds. A
      discussion of net interest income and the factors impacting it is
      presented below.

            Net interest income for the three months ended June 30, 2004
      increased by $260,000 or 14.3% over the same period in 2003. Interest
      income for the three months ended June 30, 2004 decreased by $66,000 or
      2.3% compared to the same period in 2003, while interest expense decreased
      by $326,000 or 30.4% during the three months ended June 30, 2004, as
      compared to the same period in the prior year.

            Net interest income for the six months ended June 30, 2004 increased
      by $614,000 or 17.8% over the same period in 2003. Interest income for the
      six months ended June 30, 2004 decreased by $146,000 or 2.6% compared to
      the same period in 2003, while interest expense decreased by $761,000 or
      33.2% during the six months ended June 30, 2004, as compared to the same
      period in the prior year.

            Increased net interest income for the three and six month period is
      attributable to a higher level of net interest earning assets offset by a
      decrease in the rates earned thereon. The Bank continues to experience a
      shift in the asset mix from lower yielding overnight federal funds and
      investment securities to higher yielding loans due to the continued high
      loan demand. The decrease in the rates earned on interest earning assets
      is due to the current economic conditions.

                                       14
<PAGE>

      The Bank has continued to experience steady deposit growth. Although the
      average balance on interest bearing liabilities increased, total interest
      expense decreased due to a decrease in the average rates paid on all
      interest bearing liabilities. The Bank's higher loan demand and steady
      deposit growth has resulted in an increased loan to deposit ratio.

            During the second quarter of 2004 compared to the same period in
      2003, average net interest earning assets increased $11.6 million or 6.4%
      and average net interest bearing liabilities increased $6.3 million or
      4.3% resulting in increased net interest income. CNB experienced a 40
      basis point increase in the ratio of net interest income to average
      interest earning assets. The 96 basis point decrease in rates paid on
      average interest bearing liabilities offset by a 42 basis point decrease
      in rates earned on average interest earning assets contributed to the
      increase in the net interest margin. The acquisition of the Hancock branch
      did not have a significant impact on the net interest margin due to the
      transaction occurring only 19 days prior to quarter end.

            During the first six months of 2004 compared to the same period in
      2003, average net interest earning assets increased $9.1 million or 5.0%
      and average net interest bearing liabilities increased $5.7 million or
      3.9% resulting in increased net interest income. CNB experienced a 55
      basis point increase in the ratio of net interest income to average
      interest earning assets. The 110 basis point decrease in rates paid on
      average interest bearing liabilities offset by a 38 basis point decrease
      in rates earned on average interest earning assets contributed to the
      increase in the net interest margin.

            See Table 1 and Table 2 - Distribution of Assets, Liabilities, and
      Shareholders' Equity; Interest Rates and Interest Differential.

            The net interest margin is impacted by the change in the spread
      between yields on earning assets and rates paid on interest bearing
      liabilities.

                                       15
<PAGE>

                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                     JUNE 30, 2004                               JUNE 30, 2003
                                         -------------------------------------       ------------------------------------
                                            QTR                                         QTR
                                          AVERAGE          QTR          YIELD/        AVERAGE           QTR        YIELD/
                                          BALANCE        INTEREST      RATE (4)       BALANCE         INTEREST    RATE (4)
                                         ---------       --------      -------       ---------        --------    -------
                                                                         (IN THOUSANDS OF DOLLARS)
<S>                                      <C>             <C>           <C>           <C>              <C>         <C>
Interest earning assets:
  Federal funds sold                     $   1,585        $     5       0.91%        $   1,796        $      5      1.15%
  Securities:
     Taxable                                32,809            335       4.08            45,255             508      4.49
     Tax-exempt(1)                           7,040             58       4.99             1,164              11      5.73
  Loans (net of unearned interest)
   (2)(5)(6)                               151,485          2,350       6.21           133,131           2,251      6.76
                                         ---------        -------       ----         ---------        --------      ----
       Total interest earning assets(1)  $ 192,919        $ 2,748       5.70%        $ 181,346        $  2,775      6.12%
                                         ---------        -------       ----         ---------        --------      ----

Nonearning assets:
  Cash and due from banks                $   8,249                                   $   6,401
  Bank premises and equipment, net           5,348                                       4,724
  Other assets                               2,953                                       2,951
  Allowance for loan losses                (1,705)                                      (1,531)
                                         ---------                                   ---------
       Total assets                      $ 207,764                                   $ 193,891
                                         =========                                   =========

Interest bearing liabilities:
  Savings deposits                       $  26,961        $    34       0.50%        $  22,819        $     28      0.49%
  Time deposits                             92,301            624       2.70            94,536             961      4.07
  NOW accounts                              25,910             70       1.08            24,574              71      1.16
  Money market accounts                      9,088             18       0.79             6,485              13      0.80
  Borrowings                                   475              1       0.84                 -               -
                                         ---------        -------       ----         ---------        --------      ----
       Total interest bearing
        liabilities                      $ 154,735        $   747       1.93%        $ 148,414        $  1,073      2.89%
                                         ---------        -------       ----         ---------        --------      ----
Noninterest bearing liabilities:
  Demand deposits                        $  33,057                                   $  26,538
  Other liabilities                          2,302                                       2,357
  Shareholders' equity                      17,670                                      16,582
                                         ---------                                   ---------
       Total liabilities and
         shareholders' equity            $ 207,764                                   $ 193,891
                                         =========                                   =========
                                                          -------                                     --------
Net interest income (1)                                   $ 2,001                                     $  1,702
                                                          =======                                     ========
Net interest spread (3)                                                 3.77%                                       3.23%
                                                                        ====                                        ====
Net interest income to average
  interest earning assets (1)                                           4.15%                                       3.75%
                                                                        ====                                        ====
</TABLE>

(1) Yields are expressed on a tax equivalent basis using a 34% tax rate.

(2) For the purpose of these computations, nonaccruing loans are included in the
    amounts of average loans outstanding.

(3) Net interest spread is the difference between the weighted average yield on
    interest-earning assets and the weighted average cost of interest-bearing
    liabilities.

(4) Yields/Rates are expressed on annualized basis.

(5) Interest income on loans excludes fees of $79,000 in 2004 and $118,000 in
    2003.

(6) Interest income on loans includes fees of $29,257 in 2004 and $38,445 in
    2003 from the Business Manager Program, student loans and lease receivables.

                                       16
<PAGE>

                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                     JUNE 30, 2004                               JUNE 30, 2003
                                         -------------------------------------       ------------------------------------
                                            YTD                                         YTD
                                          AVERAGE          YTD          YIELD/        AVERAGE           YTD        YIELD/
                                          BALANCE        INTEREST      RATE (4)       BALANCE         INTEREST    RATE (4)
                                         ---------       --------      -------       ---------        --------    -------
                                                                         (IN THOUSANDS OF DOLLARS)
<S>                                      <C>             <C>           <C>           <C>              <C>         <C>
Interest earning assets:
  Federal funds sold                     $   1,421       $     8         0.91%       $   1,950        $     13      1.15%
  Securities:
    Taxable                                 32,206           671         4.17           45,513           1,019      4.48
    Tax-exempt(1)                            6,200           103         5.03            1,036              20      5.85
  Loans (net of unearned interest)
   (2)(5)(6)                               149,953         4,672         6.23          132,231           4,483      6.78
                                         ---------       -------         ----        ---------        --------      ----
       Total interest earning assets(1)  $ 189,780       $ 5,454         5.75%       $ 180,730        $  5,535      6.13%
                                         ---------       -------         ----        ---------        --------      ----

Nonearning assets:
  Cash and due from banks                $   8,629                                   $   6,443
  Bank premises and equipment, net           5,306                                       4,761
  Other assets                               2,985                                       3,102
  Allowance for loan losses                 (1,684)                                     (1,513)
                                         ---------                                   ---------
       Total assets                      $ 205,016                                   $ 193,523
                                         =========                                   =========

Interest bearing liabilities:
  Savings deposits                       $  26,079       $    65         0.50%       $  22,274        $     55      0.49%
  Time deposits                             92,375         1,285         2.78           95,121           2,070      4.35
  NOW accounts                              25,600           139         1.09           24,396             141      1.16
  Money market accounts                      9,085            36         0.79            6,322              24      0.76
  Borrowings                                   684             4         1.17                -               -
                                         ---------       -------         ----        ---------        --------      ----
       Total interest bearing
         liabilities                     $ 153,823       $ 1,529         1.99%       $ 148,113        $  2,290      3.09%
                                         ---------       -------         ----        ---------        --------      ----
Noninterest bearing liabilities:
  Demand deposits                        $  31,608                                   $  26,508
  Other liabilities                          2,295                                       2,369
  Shareholders' equity                      17,290                                      16,533
                                         ---------                                   ---------
       Total liabilities and
        shareholders' equity             $ 205,016                                   $ 193,523
                                         =========                                   =========
                                                         -------                                      --------
Net interest income (1)                                  $ 3,925                                      $  3,245
                                                         =======                                      ========

Net interest spread (3)                                                  3.76%                                      3.04%
                                                                         ====                                       ====
Net interest income to average
  interest earning assets (1)                                            4.14%                                      3.59%
                                                                         ====                                       ====
</TABLE>

(1) Yields are expressed on a tax equivalent basis using a 34% tax rate.

(2) For the purpose of these computations, nonaccruing loans are included in the
    amounts of average loans outstanding.

(3) Net interest spread is the difference between the weighted average yield on
    interest-earning assets and the weighted average cost of interest-bearing
    liabilities.

(4) Yields/Rates are expressed on annualized basis.

(5) Interest income on loans excludes fees of $141,000 in 2004 and $207,000 in
    2003.

(6) Interest income on loans includes fees of $65,688 in 2004 and $69,338 in
    2003 from the Business Manager Program, student loans and lease receivables.

                                       17
<PAGE>

      PROVISION FOR LOAN LOSSES

            The amount charged to provision for loan losses is based on
      management's evaluation of the loan portfolio. Management determines the
      adequacy of the allowance for loan losses, based on past loan loss
      experience, current economic conditions and composition of the loan
      portfolio. The allowance for loan losses is the best estimate of
      management of the probable losses which have been incurred as of a balance
      sheet date.

            The provision for loan losses is a charge to earnings which is made
      to maintain the allowance for loan losses at a sufficient level. The
      provision for loan losses for the three months ended June 30, 2004, and
      June 30, 2003, amounted to $94,000 and $86,000, respectively. The
      provision for loan losses for the six months ended June 30, 2004, and June
      30, 2003, amounted to $181,000 and $137,000, respectively. Loan quality
      remains stable and past dues are minimal while nonaccruals have shown an
      increase. Nonaccruals have increased primarily due to one borrower with an
      outstanding loan balance of $308,000. Management believes this loan is
      sufficiently collateralized and the Bank will not incur any loss.
      Management believes the allowance for loan losses is adequate and is not
      aware of any information relating to the loan portfolio which it expects
      will materially impact future operating results, liquidity or capital
      resources. In addition, federal regulators may require additional reserves
      as a result of their examination of the bank. See "Nonperforming Assets
      and Allowance for Loan Losses" for further discussion.

      NONINTEREST INCOME

            Noninterest income for the three months ended June 30, 2004
      increased $77,000 or 16.8% to $539,000 from $462,000 in the second quarter
      of 2003. Noninterest income for the six months ended June 30, 2004
      increased $153,000 or 18.2% to $995,000 from $842,000 during the first six
      months of 2003. The increase in noninterest income is attributable, in
      general, to an increase in service charge fees effective October 1, 2003
      the bank assesses its customers. Specifically, noninterest income
      increased due to fees generated from the Bounce Protection program,
      insurance commissions, gain on sale of investment securities and offset by
      a decrease in gain on sale of loans. This increase for the first six
      months of 2004 was offset by a decrease in overdraft fees and trust fees.
      The fees related to the Bounce Protection program have a direct
      correlation to the increased deposit base of the bank. Insurance
      commissions increased due to a large group health account written in the
      third quarter of 2003 and general rate increases from the insurance
      companies.

      NONINTEREST EXPENSES

            Noninterest expenses for the three months ended June 30, 2004,
      increased $199,000 or 13.5% and for the six months ended June 30, 2004,
      increased $225,000 or 7.6%. Salaries increased due to normal merit
      increases, salaries for employees of the acquired Hancock branch and
      additional payroll expenses related to the conversion of the Hancock
      branch. The increase in furniture and equipment expense was due to an
      increase in depreciation expense relating to the new computer equipment,
      software and peripherals associated with the 2003 upgrade of the Bank's
      technology systems. Another factor relating to the increase in furniture
      and equipment expense was an increase in the cost and number of equipment
      maintenance contracts the Bank entered into primarily due to the 2003
      technology system upgrade. The increase in other operating expenses was
      due to an increase in stationery, supplies & printing, telephone and
      advertising expense offset by a decrease in postage, data processing
      expense and bounce protection expense. The increase in stationery,
      supplies and printing and advertising are a direct result of the Bank's
      acquisition of the full service branch of Fidelity Bank in Hancock,
      Maryland. Bounce protection expense decreased due to the expiration of the
      Bank's contract with Pinnacle Financial Strategies in February 2004.

                                       18
<PAGE>

      INCOME TAXES

            The Bank's provision for income taxes decreased $16,000 or 5.8% to
      $267,000 for the three months ended June 30, 2004 and increased $98,000 or
      22.0% to $545,000 for the six months ended June 30, 2004. The effective
      tax rates for the second quarter of 2004 and 2003 were 31.3% and 39.2%,
      respectively and for the first six months of 2004 and 2003 were 32.0% and
      37.1%, respectively. The Bank's income tax expense differs from the amount
      computed at statutory rates primarily due to the tax-exempt earnings from
      certain investment securities.

      FINANCIAL CONDITION

            The Bank's total assets increased during the second quarter ended
      June 30, 2004 due to the acquisition of the Hancock branch. In particular,
      $8.4 million in loans, $324,000 in premises and equipment were acquired
      along with $781,000 in core deposit intangible assets. The total
      liabilities which were assumed were $14.6 million in deposits and $6,600
      in other accrued expenses.

            The Bank's assets also increased due primarily to a $1.0 million
      increase in cash and due from banks, $3.7 million increase in investment
      securities, $5.2 million increase in loans due to normal business growth.
      The Bank's liabilities also increased due primarily to $5.4 million in
      deposit growth and an increase of $213,000 in securities sold under
      repurchase agreements offset by a decrease of $500,000 in borrowings.
      Shareholders' equity increased $219,000 to $16.8 million at June 30, 2004,
      primarily due to net income of $1.2 million offset by the semi-annual cash
      dividend of $179,000 and a $759,000 decrease in accumulated other
      comprehensive income. The components of accumulated other comprehensive
      income at June 30, 2004, were unrealized gains and losses on available for
      sale securities, net of deferred income taxes and minimum pension
      liability adjustment, net of deferred income taxes. The unrealized gains
      and losses are primarily a function of available market interest rates
      relative to the yield being generated on the available for sale portfolio.
      No earnings impact results unless the securities are actually sold.

      LOAN PORTFOLIO

            At June 30, 2004, total loans increased $13.6 million or 9.4% to
      $158.3 million from $144.7 million at December 31, 2003. This increase is
      mainly a result of the purchase of $8.4 million in loans from the Hancock
      branch acquisition. Also, contributing to the growth is an increase in
      real estate lending with an increased emphasis in commercial real estate
      and land development. The Bank feels additional growth in all lending
      areas is possible during the remainder of 2004.

      NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

            Nonperforming assets consist of nonaccrual loans, loans which are
      past due 90 days or more and still accruing interest, restructured loans
      and other real estate owned. The following table summarized the Bank's
      nonperforming assets as of the periods shown:

                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                JUNE 30,           DECEMBER 31,
                                        ------------------------   ------------
                                           2004          2003          2003
                                        ----------    ----------   ------------
<S>                                     <C>           <C>          <C>
 Nonaccrual loans                       $  749,987    $  420,519    $  348,660

 Loans past due 90 days or more
    still accruing interest                      -             -        27,045
                                        ----------    ----------    ----------
 Total nonperforming loans              $  749,987    $  420,519    $  375,705
                                        ----------    ----------    ----------

 Other real estate owned                $        -    $    1,800    $        -
                                        ----------    ----------    ----------

 Total nonperforming assets             $  749,987    $  422,319    $  375,705
                                        ==========    ==========    ==========

 Nonperforming loans/Total loans              0.47%         0.32%         0.26%
 Nonperforming assets/Total assets            0.34%         0.22%         0.19%
 Allowance for loan losses/Total loans        1.09%         1.16%         1.11%
</TABLE>

            As of June 30, 2004, the Bank has no loans which management
      considers to be impaired. Management is aware of four borrowers who have
      exhibited weaknesses. Their loans have aggregate uninsured balances of
      $1.3 million. A specific allowance of $80,000 related to these loans has
      been established as part of the allowance for loan losses. The loans are
      collateralized and management anticipates any additional potential loss
      would be minimal.

            The allowance for loan losses is the best estimate by management of
      the probable losses which have been incurred as of a balance sheet date.
      Management makes this determination quarterly by its analysis of overall
      loan quality, changes in the mix and size of the loan portfolio, previous
      loss experience, general economic conditions, information about specific
      borrowers and other factors. The Bank's methodology for determining the
      allowance for loan losses established both an allocated and an unallocated
      component. The allocated portion of the allowance represents the results
      of analyses of individual loans that the Bank monitors for potential
      credit problems and pools of loans within the portfolio. Management bases
      the allocated portion of the allowance for loans principally on current
      loan risk ratings, historical loan loss rates adjusted to reflect current
      conditions, as well as analyses of other factors that may have affected
      the collectibility of loans in the portfolio. The Bank analyzes all
      commercial loans it is monitoring as potential credit problems to
      determine whether those loans are impaired, with impairment measured by
      reference to the borrowers' collateral values and cash flows.

            The unallocated portion of the allowance for loan losses represents
      the results of analyses that measure probable losses inherent in the
      portfolio that are not adequately captured in the allocated allowance
      analyses. These analyses include consideration of unidentified losses
      inherent in the portfolio resulting from changing underwriting criteria,
      changes in the types and mix of loans originated, industry concentrations
      and evaluations, allowance levels relative to selected overall credit
      criteria and other economic indicators used to estimate probable incurred
      losses. At June 30, 2004, the allowance for loans losses totaled $1.7
      million compared to $1.6 million at December 31, 2003. The allowance for
      loans losses as a percentage of loans was 1.1% as of June 30, 2004 and
      December 31, 2003.

                                       20
<PAGE>

            An analysis of the allowance for loan losses is summarized below:

<TABLE>
<CAPTION>
In thousands                         JUNE 30,                   DECEMBER 31,
                              -----------------------    --------------------------
                                       2004                        2003
                              -----------------------    --------------------------
                                          PERCENT OF                   PERCENT OF
                                        LOANS IN EACH                 LOANS IN EACH
                                         CATEGORY TO                   CATEGORY TO
                               AMOUNT    TOTAL LOANS      AMOUNT       TOTAL LOANS
                              --------  -------------    -------      -------------
<S>                           <C>       <C>              <C>          <C>
Commercial, financial         $   817        21%         $   782            21%
    and agriculture
Real estate - residential         467        68              401            67
     mortgage
Installment and other             315        11              274            12
Unallocated                       133       N/A              151           N/A
                              -------       ---          -------           ---
       Total                  $ 1,732       100%         $ 1,608           100%
                              =======       ===          =======           ===
</TABLE>

      DEPOSITS

            The Bank's deposits increased $20.0 million or 11.0% during the six
      months ended June 30, 2004. This increase is mainly a result of the
      assumption of $14.6 million in deposits from the Hancock acquisition. The
      breakdown of the assumed deposits are $8.2 million in demand and savings
      and $6.4 million in certificates of deposit. The Bank continues to
      experience a slight change in the deposit account mix through the first
      six months of 2004. Steady growth continues in regular demand,
      interest-bearing demand and savings deposits due to the continued customer
      growth in the Bank's other branches in Morgan and Berkeley Counties, West
      Virginia. The slight change in the deposit account mix is attributable to
      the continued maturity of rate sensitive certificate of deposits and
      customers temporarily placing their money in demand or savings accounts.
      The Bank experienced an overall increase of $3.1 million in other time
      deposits and rate sensitive jumbo certificate of deposits during the first
      six months of 2004. This increase is attributable to the $6.4 million in
      certificates of deposit acquired from the Hancock branch acquisition
      offset by a decrease of $3.3 million. This decrease is primarily due to
      the maturity of the 36-month Ultimate Certificate of Deposit. Deposits, in
      general, have experienced an increase due to customer's concerns with the
      weak economy and stock market.

      CAPITAL RESOURCES

            Shareholders' equity increased $219,000 or 1.3% during the first six
      months of 2004 due to $1.2 million in net income offset by the semi-annual
      cash dividend of $179,000 and a $759,000 decrease in accumulated other
      comprehensive income. The Bank is subject to regulations of the Office of
      the Comptroller of the Currency that impose certain minimum regulatory
      capital requirements. Under each measure, the Bank was substantially in
      excess of the minimum regulatory requirements, and, by definition was
      "well capitalized" at June 30, 2004. The following table summarized, as of
      June 30, 2004, the Bank's capital ratios.

<TABLE>
<CAPTION>
                                  Components        Actual       Required
                                  of Capital        Ratio          Ratio
                                  ----------        -----        --------
<S>                               <C>               <C>          <C>
Tier 1 Capital                    $ 17,699           8.5%          4.0%
Total Risk Based Capital          $ 19,401          14.3%          8.0%
</TABLE>

      RECENTLY ISSUED ACCOUNTING STANDARDS

            On March 9, 2004, the SEC staff issued Accounting Bulletin No. 105,
      "Application of Accounting Principles to Loan Commitments", which provides
      guidance regarding mortgage loan interest rate lock commitments related to
      loans held for sale as written options, effective for commitments entered
      into after March 31, 2004. This Statement had no material effect on the
      Company's consolidated financial statements.

                                       21
<PAGE>

      ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            Market risk is the exposure to economic loss that arises from
      changes in the values of certain financial instruments. The types of
      market risk exposures generally faced by banking entities include interest
      rate risk, equity market price risk, foreign currency risk and commodity
      price risk. Due to the nature of its operations, only equity market price
      risk and interest rate risk are significant to the Bank.

            The objective of the Bank's liquidity management program is to
      ensure the continuous availability of funds to meet the withdrawal demands
      of depositors and the credit needs of borrowers. The basis of the Bank's
      liquidity comes from the stability of its core deposits. Liquidity is also
      available through the available for sale securities portfolio and
      short-term funds such as federal funds sold which totaled $43.1 million,
      or 19.5% of total assets at June 30, 2004. In addition, liquidity may be
      generated through loan repayments and over $3.0 million of available
      borrowing arrangements with correspondent banks. At June 30, 2004,
      management considered the Bank's ability to satisfy its anticipated
      liquidity needs over the next twelve months. Management believes that the
      Bank is well positioned and has ample liquidity to satisfy these needs.
      The Bank generated $1.6 million of cash from operations in the first six
      months of 2004, which compares to $931,000 during the same time period in
      2003. Additional cash of $4.9 million was generated through net financing
      activities through June 30, 2004, which compares to $3.2 million for the
      first six months of 2003. These proceeds along with proceeds from the
      sales and calls of investment securities were used to fund loans and
      purchase securities during each year. Net cash used in investing
      activities totaled $5.5 million during the first six months of 2004
      compared to $3.5 million during the same time period in 2003. Details on
      both the sources and uses of cash are presented in the Consolidated
      Statements of Cash Flows contained in the financial statements.

            The objective of the Bank's interest rate sensitivity management
      program, also known as asset/liability management, is to maximize net
      interest income while minimizing the risk of adverse effects from changing
      interest rates. This is done by controlling the mix and maturities of
      interest sensitive assets and liabilities. The Bank has established an
      asset/liability committee for this purpose. Daily management of the Bank's
      sensitivity of earnings to changes in interest rates within the Bank's
      policy guidelines are monitored by using a combination of off-balance
      sheet and on-balance sheet financial instruments. The Bank's Chief
      Executive Officer, Senior Lending Officer, Chief Financial Officer and the
      Chief Operations Officer monitor day to day deposit flows, lending
      requirements and the competitive environment. Rate changes occur within
      policy guidelines if necessary to minimize adverse effects. Also, the
      Bank's policy is intended to ensure the Bank measures a range of rate
      scenarios and patterns of rate movements that are reasonably possible. The
      Bank measures the impact that 200 basis point changes in rates would have
      on earnings over the next twelve months.

            In analyzing interest rate sensitivity for policy measurement, the
      Bank compares its forecasted earnings in both a "high rate" and "low rate"
      scenario to a base-line scenario. The Bank's base-line scenario is its
      estimated most likely path for future short-term interest rates over the
      next 12 months. The "high rate" and "low rate" scenarios assumes a 100 and
      200 basis point increases or decreases in the prime rate from the
      beginning point of the base-line scenario over the most current 12-month
      period. The Bank's policy limit for the maximum negative impact on
      earnings resulting from "high rate" or "low rate" scenarios is 10 percent.
      The policy measurement period is 12 months in length, beginning with the
      first month of the forecast.

                                       22
<PAGE>

            The Bank's base-line scenario holds the prime rate constant at 4.25
      percent through June 2005. Based on the July 2004 outlook, if interest
      rates increased or decreased by 200 basis points, the model indicates that
      net interest income during the policy measurement period would be affected
      by less than 10 percent, in both an increasing or decreasing interest rate
      scenario.

      CONTRACTUAL OBLIGATIONS

            During the quarter and six months ended June 30, 2004, there were no
      material changes outside of the normal course of business to the
      quantitative and qualitative disclosures about contractual obligations
      previously reported on Form 10-K for the year ended December 31, 2003. See
      Item 7, "Management's Discussion and Analysis of Financial Condition and
      Results of Operations - Contractual Obligations" in the Form 10-K for
      December 31, 2003 for a detailed discussion.

      ITEM 4. CONTROLS AND PROCEDURES

            The Company's chief executive officer and chief financial officer,
      based on their evaluation as of the end of the reporting period of this
      quarterly report of the Company's disclosure controls and procedures (as
      defined in Rule 13 (a) - 14 (c) of the Securities Exchange Act of 1934),
      have concluded that the Company's disclosure controls and procedures are
      adequate and effective for purposes of Rule 13 (a) - 14 (c) and timely,
      alerting them to material information relating to the Company required to
      be included in the Company's filings with the Securities and Exchange
      Commission under the Securities Exchange Act of 1934.

            There have been no changes in the Company's internal controls over
      financial reporting in the fiscal quarter ended June 30, 2004, that have
      materially affected, or are reasonably likely to materially affect, our
      internal controls over financial reporting.

            As exhibits to this quarterly report on Form 10-Q, certificates of
      the chief executive officer and chief financial officer appear. This form
      of certification is required in accordance with Section 302 of the
      Sarbanes-Oxley Act of 2002. This section of the quarterly report on Form
      10-Q is the information concerning the controls evaluation referred to in
      the Section 302 certifications. This information should be read in
      conjunction with those certifications for a more complete understanding of
      the topics presented.

            Disclosure controls are procedures that a company designs with the
      objective of ensuring that information required to be disclosed in their
      reports filed under the Securities Exchange Act of 1934 (such as this Form
      10-Q), is recorded, processed, summarized and reported within the time
      period specified under the SEC's rules and forms. Disclosure controls are
      also designed with the objective of ensuring that such information is
      accumulated and communicated to management, including the CEO and CFO, as
      appropriate, to allow timely decisions regarding required disclosure.
      Internal controls are procedures that a company designs with the objective
      of providing reasonable assurance that transactions are properly
      authorized, assets are safeguarded against unauthorized or improper use
      and transactions are properly recorded and reported all to permit the
      preparation of a company's financial statements in conformity with
      generally accepted accounting principles.

            The Company's management, including the CEO and CFO, does not expect
      that our disclosure controls or internal controls will prevent all error
      and fraud. A control system, no matter how well conceived and operated,
      can provide only reasonable, not absolute, assurance that the objectives
      of the control system are met. Further, the design of a control system
      must reflect that fact that there are resource constraints, and the
      benefits of controls must be considered relative to their costs. Because
      of the inherent limitations in all control systems, no evaluation of
      controls can provide absolute assurance that all control issues and
      instances of fraud, if any, within the company have been detected. These
      inherent limitations include the realities that judgments and
      decision-making can be faulty, and that breakdowns can occur because of
      simple error or mistake. Additionally, controls can be circumvented by the
      individual acts of some persons, by collusion of two or more people, or by
      management override of the control. The design of any system of control
      also is based in part upon certain assumptions about the likelihood of
      future events and there can be no assurance that any design will succeed
      in achieving its stated goals under all

                                       23
<PAGE>

      potential future conditions. Over time, controls may become inadequate
      because of changes in conditions, or the degree of compliance with the
      policies or procedures may deteriorate.

            Based upon the controls evaluation conducted by our CEO and CFO,
      they have concluded that, subject to the limitations noted above, the
      company's disclosure controls are effective to ensure that material
      information relating to CNB Financial Services and its subsidiaries is
      made known to management, including the CEO and CFO, particularly during
      that period when our periodic reports are being prepared, and that our
      internal controls are effective to provide reasonable assurance that our
      financial statements are fairly presented in conformity with generally
      accepted accounting principles.

                                       24
<PAGE>

                           PART II: OTHER INFORMATION

Item 1. Legal Proceedings

        None; however, CNB is involved in various legal proceedings occurring in
        the ordinary course of business. There are no material legal proceedings
        to which CNB or its subsidiary is a part, or to which any of their
        property is subject.

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

a.)     The annual meeting of stockholders of CNB Financial Services, Inc. was
        held April 7, 2004.

b.)     Proxies for the annual meeting were solicited pursuant to Regulation 14A
        under the Securities and Exchange Act of 1934. There was no solicitation
        in opposition to management's nominees as listed in the proxy statement,
        and all such nominees were reelected.

c.)     (1) Election of Directors

        Elected to serve as directors until the 2005 annual meeting of
        stockholders:

<TABLE>
<CAPTION>
                                           Without
                               For        Authority
<S>                          <C>          <C>
Kenneth W. Apple             295,288         470
J. Robert Ayers              295,288         470
John E. Barker               295,288         470
Margaret S. Bartles          295,288         470
Jay E. Dick                  295,288         470
Herbert L. Eppinger          295,288         470
Robert L. Hawvermale         295,288         470
J. Philip Kesecker           295,288         470
Jerald McGraw                295,288         470
Martha H. Quarantillo        295,288         470
Thomas F. Rokisky            295,288         470
Charles S. Trump, IV         295,288         470
Arlie R. Yost                295,288         470
</TABLE>

Item 6. Exhibits and Reports on Form 8-K

a.)     Exhibits:

        31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002

        31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002

        32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002

        32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002

                                       25
<PAGE>

b.)     Reports on Form 8-K:

<TABLE>
<CAPTION>
Date of Report            Item                       Description
--------------          ---------         ------------------------------------
<S>                     <C>               <C>
May 17, 2004            7, 9 & 12         The Company issued a press release
                                          that announced operating results of
                                          its first three months ended March 31,
                                          2004.

June 14, 2004           5                 The Company issued a press release
                                          that announced the opening of its
                                          newly acquired Hancock, Maryland
                                          banking office.
</TABLE>

                                       26
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

CNB Financial Services, Inc.
      (Registrant)

Date August 3, 2004                 /s/ Thomas F. Rokisky, President/CEO
                                    -------------------------------------

Date August 3, 2004                 /s/ Rebecca S. Stotler, Vice President/CFO
                                    ------------------------------------------

                                       27