<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, 2003


    [   ] 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,
2003), was approximately $38.5 million. This amount was based on the last
closing sale price of a share of common stock of $100.00 as of the same date.

   Common Stock $1 par value, 458,048 shares outstanding as of August 8, 2003



<PAGE>



                          CNB FINANCIAL SERVICES, INC.

                                TABLE OF CONTENTS


PART 1:      FINANCIAL INFORMATION                                        PAGE

   Item 1.   Financial Statements

                Consolidated Statements of Financial Condition as of
                  June 30, 2003 (Unaudited) and December 31, 2002.........  3

                Consolidated Statements of Income for the Three and Six
                   Months ended June 30, 2003 and 2002 (Unaudited)........  4

                Consolidated Statements of Changes in Shareholders'
                   Equity for the Six Months Ended June 30, 2003
                   (Unaudited) and the Year Ended December 31, 2002.......  5

                Consolidated Statements of Cash Flows for the Six Months
                   Ended June 30, 2003 and 2002 (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, 2003............................. 11

   Item 3.   Quantitative and Qualitative Disclosures about Market Risk... 18

   Item 4.   Controls and Procedures...................................... 19


PART II:     OTHER INFORMATION

   Item 1.   Legal  Proceedings........................................... 21

   Item 6.   Exhibits and Reports on Form 8-K............................. 21

             SIGNATURES................................................... 22


                           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; 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,
                                  ASSETS                             2003                 2002
                                                                 ------------          ------------
                                                                  (Unaudited)
<S>                                                              <C>                   <C>
Cash and due from banks                                          $  8,443,554          $  7,832,735
Federal funds sold                                                  2,221,633             4,127,299
Securities available for sale
   (at approximate market value)                                   43,730,863            43,429,902
Federal Home Loan Bank stock, at cost                                 646,900               429,000
Federal Reserve Bank stock, at cost                                   129,650               129,650
Loans and lease receivable, net                                   132,597,708           128,330,303
Accrued interest receivable                                           801,652               891,986
Foreclosed real estate (held for sale), net                             1,800                 1,800
Premises and equipment, net                                         4,675,939             4,800,135
Cash surrender value of life insurance                              1,047,745               964,179
Intangible assets                                                      92,141                96,483
Other assets                                                        1,152,632               568,608
                                                                 ------------          ------------

         TOTAL ASSETS                                            $195,542,217          $191,602,080
                                                                 ============          ============


                   LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
        Demand                                                   $ 27,667,579          $ 26,663,469
        Interest-bearing demand                                    30,927,318            30,087,763
        Savings                                                    23,128,522            21,489,855
        Time, $100,000 and over                                    37,349,638            37,433,561
        Other time                                                 57,320,919            57,387,901
                                                                 ------------          ------------
                                                                 $176,393,976          $173,062,549
   Accrued interest payable                                           816,856             1,010,086
   Deferred income taxes                                               28,021               158,269
   Accrued expenses and other liabilities                           1,668,297             1,101,158
                                                                 ------------          ------------

         TOTAL LIABILITIES                                       $178,907,150          $175,332,062
                                                                 ------------          ------------

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                                               11,844,931            11,267,374
   Accumulated other comprehensive income                             468,496               681,004
                                                                 ------------          ------------

         TOTAL SHAREHOLDERS' EQUITY                              $ 16,635,067          $ 16,270,018
                                                                 ------------          ------------

         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $195,542,217          $191,602,080
                                                                 ============          ============

</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,
                                                    ------------------------------          ------------------------------
                                                       2003                2002                2003                2002
                                                    ----------          ----------          ----------          ----------
<S>                                                <C>                 <C>                 <C>                 <C>
INTEREST INCOME
   Interest and fees on loans                       $2,369,050          $2,268,127          $4,689,197          $4,478,250
   Interest and dividends on securities
      U.S. Government agencies and
         corporations                                  335,699             493,769             676,933           1,073,772
      Mortgage backed securities                       161,108              87,708             322,887              91,990
      State and political subdivisions                  14,613               9,470              27,725              16,833
      Other                                              7,499               7,331              12,098              15,396
   Interest on federal funds sold                        5,454              22,737              12,981              36,054
                                                    ----------          ----------          ----------          ----------
                                                    $2,893,423          $2,889,142          $5,741,821          $5,712,295
                                                    ----------          ----------          ----------          ----------
INTEREST EXPENSE
   Interest on interest bearing demand,
     savings and time deposits                      $1,073,340          $1,343,743          $2,289,608          $2,726,326
   Interest on federal funds purchased                     124                --                   270                --
                                                    ----------          ----------          ----------          ----------
                                                    $1,073,464          $1,343,743          $2,289,878          $2,726,326
                                                    ----------          ----------          ----------          ----------

           NET INTEREST INCOME                      $1,819,959          $1,545,399          $3,451,943          $2,985,969

PROVISION FOR LOAN LOSSES                               86,000              38,500             137,000             111,500
                                                    ----------          ----------          ----------          ----------

           NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES            $1,733,959          $1,506,899          $3,314,943          $2,874,469
                                                    ----------          ----------          ----------          ----------

NONINTEREST INCOME
   Service charges on deposit accounts              $  247,305          $  190,973          $  438,094          $  339,175
   Other service charges, commissions
      and fees                                          95,547             105,497             187,430             172,862
   Insurance commissions                                26,363              26,053              50,634              51,384
   Other operating income                               26,542              11,063              45,391              48,016
   Net gain on sale of securities                       52,497              23,903              97,092              78,028
   Income from title company                            13,300              19,400              23,550              33,400
   Gain on sale of other real estate owned                --                 4,127                --                 3,492
                                                    ----------          ----------          ----------          ----------
                                                    $  461,554          $  381,016          $  842,191          $  726,357
                                                    ----------          ----------          ----------          ----------
NONINTEREST EXPENSES
   Salaries                                         $  483,439          $  563,720          $1,162,828          $1,095,392
   Employee benefits                                   216,920             182,250             429,140             370,477
   Occupancy of premises                                75,801              65,190             147,814             142,956
   Furniture and equipment expense                     184,898              93,737             302,435             180,828
   Other operating expenses                            509,738             403,595             912,237             825,752
                                                    ----------          ----------          ----------          ----------
                                                    $1,470,796          $1,308,492          $2,954,454          $2,615,405
                                                    ----------          ----------          ----------          ----------

            INCOME BEFORE INCOME TAXES              $  724,717          $  579,423          $1,202,680          $  985,421

PROVISION FOR INCOME TAXES                             283,873             212,934             446,484             345,151
                                                    ----------          ----------          ----------          ----------

            NET INCOME                              $  440,844          $  366,489          $  756,196          $  640,270
                                                    ==========          ==========          ==========          ==========

BASIC EARNINGS PER SHARE                            $     0.96          $     0.80          $     1.65          $     1.40
                                                    ==========          ==========          ==========          ==========
</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 (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                                                                         Other             Total
                                                      Common           Capital         Retained      Comprehensive     Shareholders'
                                                      Stock            Surplus         Earnings          Income            Equity
                                                   ------------     ------------     ------------     ------------     ------------
<S>                                               <C>              <C>              <C>              <C>              <C>
BALANCE, DECEMBER 31, 2001                         $    458,048     $  3,863,592     $ 10,426,618     $    177,979     $ 14,926,237
                                                                                                                       ------------
Comprehensive income:
   Net income for 2002                                     --               --          1,307,965             --          1,307,965
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $308,306)            --               --               --            503,025          503,025
                                                                                                                       ------------
Total Comprehensive Income                                 --               --               --               --          1,810,990
                                                                                                                       ------------
Cash dividends ($1.02 per share)                           --               --           (467,209)            --           (467,209)
                                                   ------------     ------------     ------------     ------------     ------------

BALANCE, DECEMBER 31, 2002                         $    458,048     $  3,863,592     $ 11,267,374     $    681,004     $ 16,270,018
Comprehensive income:
   Net income for six months
       ended June 30, 2003                                 --               --            756,196             --            756,196
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $12,071)             --               --               --            (19,693)         (19,693)
                                                                                                                       ------------
  Change in minimum pension liability
    adjustment (net of tax of $118,177)                                                                   (192,815)        (192,815)
                                                                                                                       ------------
Total Comprehensive Income                                 --               --               --               --            543,688
                                                                                                                       ------------
Cash dividends ($0.39 per share)                           --               --           (178,639)            --           (178,639)
                                                   ------------     ------------     ------------     ------------     ------------

BALANCE, JUNE 30, 2003                             $    458,048     $  3,863,592     $ 11,844,931     $    468,496     $ 16,635,067
                                                   ============     ============     ============     ============     ============

</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,
                                                                             ---------------------------------
                                                                                 2003                 2002
                                                                             ------------         ------------
<S>                                                                         <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                   $    756,196         $    640,270
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                                265,230              184,146
     Provision for loan losses                                                    137,000              111,500
     Net (gain) on sale of securities                                             (97,092)             (78,028)
     (Gain) on sale of real estate owned                                             --                 (3,492)
     Decrease in accrued interest receivable                                       90,334               48,426
     (Increase) decrease in other assets                                         (344,733)             246,192
     (Decrease) in accrued interest payable                                      (193,230)             (73,736)
     (Increase) in cash surrender value on life insurance in excess
          of premiums paid                                                        (15,000)              (3,408)
     Increase in accrued expenses and other liabilities                           239,714              109,756
     Amortization of deferred loan (fees) cost                                     14,333               35,713
     Amortization (accretion) of premium and discount on investments               77,789                6,126
                                                                             ------------         ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                           $    930,541         $  1,223,465
                                                                             ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net (increase) in loans                                                 $ (4,418,738)        $ (4,760,972)
     Proceeds from sales of securities                                          4,758,799            7,075,471
     Proceeds from maturities of securities                                    15,499,727           11,594,511
     Purchases of securities                                                  (20,789,848)         (20,195,598)
     Purchases of premises and equipment                                         (359,550)            (448,448)
     Proceeds from sales of other real estate owned, net                             --                 48,390
     Net (increase) decrease in federal funds sold                              1,905,666             (954,894)
     Premiums paid on life insurance                                              (68,566)             (49,078)
                                                                             ------------         ------------
         NET CASH (USED IN) INVESTING ACTIVITIES                             $ (3,472,510)        $ (7,690,618)
                                                                             ------------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand and savings deposits                              $  3,482,332         $  8,511,787
    Net (decrease) increase in time deposits                                     (150,905)           3,044,326
    Cash dividends paid                                                          (178,639)            (164,897)
                                                                             ------------         ------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES                           $  3,152,788         $ 11,391,216
                                                                             ------------         ------------

         NET INCREASE IN CASH AND CASH EQUIVALENTS                           $    610,819         $  4,924,063
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                  7,832,735            4,229,810
                                                                             ------------         ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   $  8,443,554         $  9,153,873
                                                                             ============         ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period:
               Interest                                                      $  2,482,837         $  2,800,063
               Income taxes                                                  $    246,000         $    264,000
     Net transfer to foreclosed real estate, held for sale from loans
            receivable                                                       $       --           $     30,000

</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

                  In the opinion of CNB, 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, 2003 and the results of operations for the
         three and six months ended June 30, 2003 and 2002 and cash flows for
         the six months ended June 30, 2003 and 2002.

                  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 the CNB's
         Annual Report for the year ended December 31, 2002.

         Reclassifications:

                  Certain 2002 amounts have been reclassified to conform with
         2003 classifications. Such reclassifications had no effect on financial
         position and results of operations.

Note 2.   Securities

                  The amortized cost and estimated market value of debt
         securities at June 30, 2003 and December 31, 2002 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, 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                        $ 3,750,046        $     7,804        $      --          $ 3,757,850        4.90%
      After 1 but within 5 years               7,876,245            528,212               --            8,404,457        4.71
      After 5 but within 10 years             15,002,028            217,602               --           15,219,630        4.55
                                             -----------        -----------        -----------        -----------
                                             $26,628,319        $   753,618        $      --          $27,381,937        4.65%
                                             -----------        -----------        -----------        -----------

    States and political subdivisions
      Within one year                        $   350,000        $     4,335        $      --          $   354,335        6.21%
      After 1 but within 5 years                 368,364              4,167               --              372,531        3.44
      After 5 but within 10 years                775,000             58,556               --              833,556        6.22
                                             -----------        -----------        -----------        -----------
                                             $ 1,493,364        $    67,058        $      --          $ 1,560,422        5.53%
                                             -----------        -----------        -----------        -----------

    Mortgage backed securities               $14,542,550        $   246,135        $       181        $14,788,504        4.93%
                                             -----------        -----------        -----------        -----------

Total securities available for sale          $42,664,233        $ 1,066,811        $       181        $43,730,863        4.77%
                                             ===========        ===========        ===========        ===========

Restricted:
    Federal Reserve Bank stock               $   129,650        $      --          $      --          $   129,650        6.00%
    Federal Home Loan Bank stock                 646,900               --                 --              646,900        2.25
                                             -----------        -----------        -----------        -----------
Total restricted investments                 $   776,550        $      --          $      --          $   776,550        2.92%
                                             ===========        ===========        ===========        ===========
</TABLE>



                                       7
<PAGE>


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

Note 2.   Securities (continued)

<TABLE>
<CAPTION>
                                                                        December 31, 2002                            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                        $ 5,300,481        $    26,917        $      --          $ 5,327,398        4.75%
      After 1 but within 5 years               9,880,564            496,919               --           10,377,483        4.76
      After 5 but within 10 years             12,135,426            187,756               --           12,323,182        4.99
                                             -----------        -----------        -----------        -----------
                                             $27,316,471        $   711,592        $      --          $28,028,063        4.86%
                                             -----------        -----------        -----------        -----------

    States and political subdivisions
      Within one year                        $   350,000        $     9,747        $      --          $   359,747        8.27%
      After 5 but within 10 years                775,000             21,967               --              796,967        6.22
                                             -----------        -----------        -----------        -----------
                                             $ 1,125,000        $    31,714        $      --          $ 1,156,714        6.86%
                                             -----------        -----------        -----------        -----------

    Mortgage backed securities               $13,890,037        $   355,088        $      --          $14,245,125        5.20%
                                             -----------        -----------        -----------        -----------

Total securities available for sale          $42,331,508        $ 1,098,394        $      --          $43,429,902        5.02%
                                             ===========        ===========        ===========        ===========

Restricted:
    Federal Reserve Bank stock               $   129,650        $      --          $      --          $   129,650        6.00%
    Federal Home Loan Bank stock                 429,000               --                 --              429,000        3.25
                                             -----------        -----------        -----------        -----------
Total restricted investments                 $   558,650        $      --          $      --          $   558,650        3.89%
                                             ===========        ===========        ===========        ===========
</TABLE>




                  The carrying value of securities pledged to secure public
         deposits and for other purposes as required or permitted by law totaled
         $12,669,665 at June 30, 2003 and $12,864,841 at December 31, 2002.

                  Proceeds from sales of securities available for sale
         (excluding maturities) during the six months ended June 30, 2003 and
         the year ended December 31, 2002 were $4,758,799 and $7,075,471,
         respectively. Gross gains (losses) of $100,243 and $(3,151) during the
         six months ended June 30, 2003 and $78,028 and $(-0-) for the year
         ended December 31, 2002 were realized on the respective sales.


                                       8
<PAGE>



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


 Note 3.   Loans and Lease Receivable

                  Major classifications of loans at June 30, 2003 and December
           31, 2002, were as follows:

<TABLE>
<CAPTION>
                                        JUNE 30,            DECEMBER 31,
                                          2003                  2002
                                      -------------         -------------
<S>                                  <C>                   <C>
Loans:
  Real estate                         $  88,971,240         $  83,239,409
  Commercial real estate                 18,401,657            13,934,900
  Consumer                               18,055,574            22,575,379
  Commercial                              8,281,990             9,684,720
  Overdrafts                                 80,758                72,763
                                      -------------         -------------
                                      $ 133,791,219         $ 129,507,171

Lease:                                      133,059               135,341
                                      -------------         -------------
                                      $ 133,924,278         $ 129,642,512
Net deferred loan fees, costs,
    premiums and discounts                  215,019               172,239
Allowance for loan losses                (1,541,589)           (1,484,448)
                                      -------------         -------------
                                      $ 132,597,708         $ 128,330,303
                                      =============         =============

</TABLE>


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


<TABLE>
<CAPTION>
                                           JUNE 30,                    DECEMBER 31,
                                -------------------------------        ------------
                                    2003               2002                2002
                                -----------         -----------         -----------
<S>                             <C>                 <C>                 <C>
Balance, Beginning              $ 1,484,448         $ 1,336,960         $ 1,336,960
    Provision charged to
        operations                  137,000             111,500             261,000
    Recoveries                       24,910              25,663              37,230
    Loans charged off              (104,769)            (68,192)           (150,742)
                                -----------         -----------         -----------
Balance, Ending                 $ 1,541,589         $ 1,405,931         $ 1,484,448
                                ===========         ===========         ===========

</TABLE>

                  Loans are placed in nonaccrual status when, in the judgement
         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,
                                                              ------------------------      ------------
                                                                2003            2002            2002
                                                              --------        --------        --------
<S>                                                          <C>             <C>             <C>
Nonaccrual  loans                                             $420,519        $  3,693        $ 12,711
Loans past due 90 days or more still accruing interest            --           149,779         553,170
                                                              --------        --------        --------
     Total                                                    $420,519        $153,472        $565,881
                                                              ========        ========        ========
</TABLE>



                                       9
<PAGE>



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

Note 3.   Loans and Lease Receivable (continued)

                  Proceeds from sale of loans during the six months ended June
         30, 2003 and the year ended December 31, 2002 were $0. There were no
         gains or losses on sale of loans.

Note 4.  Time Deposits

                  At June 30, 2003, 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                      $ 6,152,639                $ 12,344,897
3 months thru 6 months                 6,986,440                  14,430,282
6 months thru 12 months                5,057,139                  11,714,911
Over 12 months                        19,153,420                  56,180,467
                                    ------------                ------------
                                    $ 37,349,638                $ 94,670,557
                                    ============                ============
</TABLE>


                                       10
<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 purchased a parcel of land in Berkeley County, West
         Virginia on April 20, 2001 for $450,000 to construct a new branch
         facility. The Bank leased a parcel of land adjacent to the purchased
         land and rented a temporary facility in which to conduct business while
         the permanent bank building was under construction. The temporary
         facility opened for business in August 2001. Construction on the
         permanent facility began in September 2001 and was completed in March
         2002. On March 18, 2002, the temporary facility was closed, and the new
         branch building opened.

                  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, 2003 and 2002. 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.

EARNINGS SUMMARY

                  Net income for the three months ended June 30, 2003 was
         $441,000 or $0.96 per share compared to $366,000 or $0.80 per share for
         the same period in 2002. Annualized return on average assets and
         average equity were .91% and 10.63% respectively, for the three months
         ended June 30, 2003, compared with .81% and 9.74%, respectively, for
         the three months ended June 30, 2002.

                  Net income for the six months ended June 30, 2003 was $756,000
         or $1.65 per share compared to $640,000 or $1.40 per share for the same
         period in 2002. Annualized return on average assets and average equity
         were .78% and 9.15% respectively, for the six months ended June 30,
         2003, compared with .72% and 8.51%, respectively, for the six months
         ended June 30, 2002.

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.


                                       11
<PAGE>

                  Net interest income for the three months ended June 30, 2003
         increased by $274,000 or 17.8% over the same period in 2002. Interest
         income for the three months ended June 30, 2003 increased by $4,000 or
         0.2% compared to the same period in 2002, while interest expense
         decreased by $270,000 or 20.1% during the three months ended June 30,
         2003, as compared to the same period in the prior year.

                  Net interest income for the six months ended June 30, 2003
         increased by $466,000 or 15.6% over the same period in 2002. Interest
         income for the three months ended June 30, 2003 increased by $30,000 or
         0.5% compared to the same period in 2002, while interest expense
         decreased by $436,000 or 16.0% during the three months ended June 30,
         2003, as compared to the same period in the prior year.

                  Increased net interest income for the three and six month
         periods is attributable to a significantly higher level of net interest
         earning assets offset by a decrease in the rates earned thereon. Due to
         the higher loan demand, the Bank has experienced a shift in the asset
         mix from lower yielding overnight federal funds and investment
         securities to higher yielding loans. The decrease in the rates earned
         on interest earning assets is due to the current economic conditions.
         Although deposit growth remains strong, the substantial deposit growth
         the Bank experienced in 2002 has leveled off. The Bank's increased loan
         demand and static deposit growth has resulted in an increased loan to
         deposit ratio. 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.

                  During the second quarter of 2003 compared to the same period
         in 2002, average net interest earning assets increased $12.9 million or
         7.6% and average net interest bearing liabilities increased $6.1
         million or 4.3% resulting in increased net interest income. CNB
         experienced a 32 basis point increase in the ratio of net interest
         income to average interest earning assets. The 89 basis point decrease
         in rates paid on average interest bearing liabilities offset by a 49
         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.


                                       12
<PAGE>



     TABLE 1. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                            JUNE 30, 2003                               JUNE 30, 2002
                                                  -----------------------------------         -----------------------------------
                                                     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                            $   1,796     $     5        1.15%          $   4,187     $    23        1.65%
    Securities:
      Taxable                                        45,255         508        4.49              48,878         593        4.85
      Tax-exempt (1)                                  1,164          11        5.73                 682           5        4.44
    Loans (net of unearned interest) (2)(5)(6)      133,131       2,251        6.76             114,723       2,165        7.55
                                                  ---------------------------------           ---------------------------------
        Total interest earning assets (1)         $ 181,346     $ 2,775        6.12%          $ 168,470     $ 2,786        6.61%
                                                  ---------------------------------           ---------------------------------

Nonearning assets:
    Cash and due from banks                       $   6,401                                   $   7,665
    Bank premises and equipment, net                  4,724                                       4,508
    Other assets                                      2,951                                       2,348
    Allowance for loan losses                        (1,531)                                     (1,398)
                                                  ---------                                   ---------
        Total assets                              $ 193,891                                   $ 181,593
                                                  =========                                   =========

Interest bearing liabilities:
    Savings deposits                               $ 22,819     $    28        0.49%          $  19,342     $    25        0.52%
    Time deposits                                    94,536         961        4.07              95,347       1,229        5.16
    NOW accounts                                     24,574          71        1.16              22,513          77        1.37
    Money market accounts                             6,485          13        0.80               5,087          12        0.94
                                                  ---------------------------------           ---------------------------------
        Total interest bearing liabilities        $ 148,414     $ 1,073        2.89%          $ 142,289     $ 1,343        3.78%
                                                  ---------------------------------           ---------------------------------

Noninterest bearing liabilities:
    Demand deposits                               $  26,538                                   $  22,454
    Other liabilities                                 2,357                                       1,790
    Shareholders' equity                             16,582                                      15,060
                                                  ---------                                   ---------
        Total liabilities and
           shareholders' equity                   $ 193,891                                   $ 181,593
                                                  =========                                   =========

                                                                -------                                     -------
Net interest income (1)                                         $ 1,702                                     $ 1,443
                                                                =======                                     =======

Net interest spread (3)                                                        3.23%                                       2.83%
                                                                              ======                                      =====

Net interest income to average
    interest earning assets (1)                                                3.75%                                       3.43%
                                                                              ======                                      =====

</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 $118,000 in 2003 and $103,000 in
     2002.

(6)  Interest income on loans includes fees of $38,445 in 2003 and $52,960 in
     2002 from the Business Manager Program, student loans and lease
     receivables.



                                       13
<PAGE>


     TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                            JUNE 30, 2003                               JUNE 30, 2002
                                                  -----------------------------------         -----------------------------------
                                                     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                             $   1,950        $ 13        1.15%          $   3,691     $    36        1.64%
   Securities:
     Taxable                                         45,513       1,019        4.48              48,628       1,189        4.89
     Tax-exempt (1)                                   1,036          20        5.85                 489           9        5.58
   Loans (net of unearned interest) (2)(5)          132,231       4,483        6.78             113,600       4,305        7.58
                                                  ---------------------------------           ---------------------------------
        Total interest earning assets (1)         $ 180,730     $ 5,535        6.13%          $ 166,408     $ 5,539        6.66%
                                                  ---------------------------------           ---------------------------------

Nonearning assets:
   Cash and due from banks                        $   6,443                                   $   6,342
   Bank premises and equipment, net                   4,761                                       4,444
   Other assets                                       3,102                                       2,399
   Allowance for loan losses                         (1,513)                                     (1,383)
                                                  ---------                                   ---------
        Total assets                              $ 193,523                                   $ 178,210
                                                  =========                                   =========

Interest bearing liabilities:
   Savings deposits                               $  22,274        $ 55        0.49%          $  18,682     $    66        0.71%
   Time deposits                                     95,121       2,070        4.35              94,654       2,477        5.23
   NOW accounts                                      24,396         141        1.16              21,623         155        1.43
   Money market accounts                              6,322          24        0.76               5,106          28        1.10
                                                  ---------------------------------           ---------------------------------
        Total interest bearing liabilities        $ 148,113     $ 2,290        3.09%          $ 140,065     $ 2,726        3.89%
                                                  ---------------------------------           ---------------------------------

Noninterest bearing liabilities:
   Demand deposits                                $  26,508                                   $  21,221
   Other liabilities                                  2,369                                       1,876
   Shareholders' equity                              16,533                                      15,048
                                                  ---------                                   ---------
        Total liabilities and
           shareholders' equity                   $ 193,523                                   $ 178,210
                                                  =========                                   =========


Net interest income (1)                                         $ 3,245                                      $ 2,813
                                                                =======                                      =======

Net interest spread (3)                                                        3.04%                                      2.77%
                                                                              =====                                      =====

Net interest income to average
   interest earning assets (1)                                                 3.59%                                      3.38%
                                                                              =====                                      =====

</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 $207,000 in 2003 and $173,000 in
     2002.

(6)  Interest income on loans includes fees of $69,338 in 2003 and $99,411 in
     2002 from the Business Manager Program, student loans and lease
     receivables.


                                       14
<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, 2003,
         and June 30, 2002, amounted to $86,000 and $39,000, respectively. The
         provision for loan losses for the six months ended June 30, 2003, and
         June 30, 2002, amounted to $137,000 and $112,000, respectively. Loan
         quality remains stable and past due and nonaccruals are minimal.
         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, 2003
         increased $81,000 or 21.1% to $462,000 from $381,000 in the second
         quarter of 2002. The increase in noninterest income is attributable to
         fees generated from the Bounce Protection program, debit cards, gain on
         sale of loans and gain on sale of investment securities offset by a
         decrease in overdraft fees, title insurance commissions, gain on sale
         of other real estate owned and trust fee income. The fees related to
         the Bounce Protection program and debit cards have a direct correlation
         to the increased deposit base of the bank. The decrease in trust fees
         was a direct result of the fees earned from the settlement of an estate
         in the second quarter of 2002.

                  Noninterest income for the six months ended June 30, 2003
         increased $116,000 or 16.0 % to $842,000 from $726,000 for the same
         period in 2002. The increase in noninterest income was attributable to
         fees generated from the Bounce Protection program, debit card income,
         gain on sale of loans and gain on sale of investment securities offset
         by a decrease in overdraft fees, title insurance commissions, trust fee
         income and gain on sale of other real estate owned.

                  Another factor affecting noninterest income is in March 2002,
         one of the Bank's Board of Directors passed away and the Bank was the
         beneficiary of a life insurance policy on the director. The Bank
         received $43,379 in a death benefit, $21,645 of which was recorded in
         assets as cash surrender value. The difference of $21,734 was reflected
         in other operating income during the first quarter 2002.

         NONINTEREST EXPENSES

                  Noninterest expenses for the three and six months ended June
         30, 2003, increased $162,000 or 12.4% and $339,000 or 13.0% primarily
         due to increases in employee benefits, occupancy expense, furniture,
         fixtures and equipment expenses and other operating expenses. Employee
         benefit costs rose due to increased health insurance and pension costs.
         The increase in occupancy expense was due to an increase in
         depreciation relating to the new south Martinsburg branch facility and
         general building repairs and maintenance expenses. The increase in
         furniture and equipment expense was due to an increase in depreciation
         expense relating to the new computer equipment and peripherals
         associated with the upgrade of the Bank's technology systems. Another
         factor relating to the increase in furniture and equipment expense was
         an increase in the cost of equipment maintenance contracts the Bank
         entered into. The increase in other operating expenses was due to an
         increase in stationery, supplies & printing, postage, data processing
         and debit card expense offset by a decrease in telephone, advertising
         and ATM (Automated Teller Machine) expense.

         INCOME TAXES

                  The Bank's provision for income taxes increased $71,000 or
         33.3% to $284,000 for the three months ended June 30, 2003 and
         increased $101,000 or 29.4% to $446,000 for the six months ended June
         30, 2003. The effective tax rates for the second quarter of 2003 and
         2002 were 39.2% and 36.8%, respectively and for the first six months of
         2003 and 2002 were 37.1% and 35.0%, respectively. The Bank's higher
         effective tax rate for the first six months of 2003



                                       15
<PAGE>

         compared to the first six months of 2002, is due to an decrease in
         nontaxable income, principally life insurance proceeds. The increase in
         the income tax provision in 2003 is attributable to higher taxable
         income. 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 at June 30, 2003 increased $4.0
         million or 2.1% to $195.5 million from December 31, 2002 due primarily
         to a $4.3 million increase in loans, $301,000 increase in investment
         securities, a $611,000 increase in cash and due from banks and a
         $584,000 increase in other assets offset by a $1.9 million decrease in
         federal funds sold. The Bank's total liabilities increased $3.6 million
         or 2.0% to $178.9 million at June 30, 2003, consisting mainly of
         deposit growth, which increased to $176.4 million. Shareholders' equity
         increased $365,000 to $16.6 million at June 30, 2003, primarily due to
         net income of $756,000 offset by the semi-annual cash dividend of
         $179,000 and a $212,000 decrease in accumulated other comprehensive
         income. The components of accumulated other comprehensive income at
         June 30, 2003, 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, 2003, total loans increased $4.3 million or 3.3%
         to $132.6 million from $128.3 million at December 31, 2002. The loan
         mix showed a slight change compared with December 31, 2002. The loan
         portfolio change is primarily due to the reclassification of loans
         within the loan portfolio during the Bank's recent mainframe computer
         conversion. The Bank feels additional growth in all lending areas is
         possible during the remainder of 2003.


         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:


<TABLE>
<CAPTION>
                                                     JUNE 30,                DECEMBER 31,
                                             -------------------------       ------------
                                               2003             2002             2002
                                             --------         --------         --------
<S>                                          <C>              <C>              <C>
 Nonaccrual loans                            $420,519         $  3,693         $ 12,711

 Loans past due 90 days or more
    still accruing interest                      --            149,779          553,170
                                             --------         --------         --------
 Total nonperforming loans                   $420,519         $153,472         $565,881
                                             --------         --------         --------

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

 Total nonperforming assets                  $422,319         $153,472         $567,681
                                             ========         ========         ========

 Nonperforming loans/Total loans                 0.32%            0.13%            0.44%
 Nonperforming assets/Total assets               0.22%            0.08%            0.30%
 Allowance for loan losses/Total loans           1.16%            1.22%            1.16%
</TABLE>



                  As of June 30, 2003, the Bank has no loans which management
         considers to be impaired. Management is aware of two borrowers who have
         exhibited weaknesses. Their loans have aggregate uninsured balances of
         $705,623. A specific allowance of $37,633 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.


                                       16
<PAGE>

                  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, 2003,
         and December 31, 2002, the allowance for loans losses totaled $1.5
         million. The allowance for loans losses as a percentage of loans was
         1.16% as of June 30, 2003 and December 31, 2002.

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

<TABLE>
<CAPTION>
In thousands                                      JUNE 30,                            DECEMBER 31,
                                       ------------------------------         ------------------------------
                                                   2003                                   2002
                                       ------------------------------         ------------------------------
                                                        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
    and agriculture                    $  531                 20%             $  330                 18%

Real estate - residential
     mortgage                             338                 66                 391                 65
Installment and other                     263                 14                 364                 17
Unallocated                                410                N/A                 399                N/A
                                       ------              -----              ------              -----
       Total                           $1,542                100%              $1,484               100%
                                       ======              =====              ======              =====

</TABLE>


         DEPOSITS

                  The Bank's deposits increased $3.3 million or 1.9% during the
         six months ended June 30, 2003. The Bank has experienced a slight
         change in the deposit account mix during the first six months of 2003.
         Steady growth continues in interest-bearing demand and savings
         deposits. The increase is primarily due to the maturity of rate
         sensitive certificate of deposits and customers temporarily placing
         their money in demand or savings accounts. The Bank has experienced a
         slight decrease in other time deposits and rate sensitive jumbo
         certificate of deposits during the first six months of 2003. The
         decrease is primarily due to the maturity of the 36-month Ultimate
         Certificate of Deposit. These maturities are offset by an increase in
         other time deposits. Deposits, in general, have experienced an increase
         due to customer's concerns with the weak economy and stock market.



                                       17
<PAGE>


         CAPITAL RESOURCES

                  Shareholders' equity increased $365,000 or 2.2% during the
         first six months of 2003 due to $756,000 in net income offset by the
         semi-annual cash dividend of $179,000 and a $212,000 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,
         2003. The following table summarized, as of June 30, 2003, the Bank's
         capital ratios.

<TABLE>
<CAPTION>
                                                       Components              Actual            Required
                                                       of Capital               Ratio              Ratio
                                                       ----------              ------            --------
<S>                                                     <C>                      <C>                <C>
         Tier 1 Capital                                 $16,160                  8.3%               4.0%
         Total Risk Based Capital                       $17,592                 15.4%               8.0%
</TABLE>

         RECENTLY ISSUED ACCOUNTING STANDARDS

                  In April 2003, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 149, Amendment of
         Statement 133 on Derivative Instruments and Hedging Activities. This
         Statement amends and clarifies financial accounting and reporting for
         derivative instruments, including certain derivative instruments
         embedded in other contracts (collectively referred to as derivatives)
         and for hedging activities under Statement of Financial Accounting
         Standards No. 133, Accounting for Derivative Instruments and Hedging
         Activities. This Statement should be applied prospectively for
         contracts entered into or modified after June 30, 2003.

                  In May 2003, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 150, Accounting for
         Certain Financial Instruments with Characteristics of Both Liabilities
         and Equity. This Statement established standards for how an issuer
         classifies and measures certain financial instruments with
         characteristics of both liabilities and equity. This Statement is
         effective at the beginning of the first interim period beginning after
         June 15, 2003.

                  Adoption of Statements 149 and 150 are not expected to have a
         material impact on CNB Financial Services, Inc.'s financial condition
         or results of operations.

         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. At June 30,
         2003, these totaled $46.0 million, or 23.5% of total assets. In
         addition, liquidity may be generated through loan repayments and over
         $7.0 million of available borrowing arrangements with correspondent
         banks. At June 30, 2003, 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 $931,000 of cash
         from operations in the first six months of 2003, which compares to $1.2
         million during the same time period in 2002. Additional cash of $3.2
         million was generated through net financing activities through June 30,
         2003, which compares to $11.4 million for the first six months of 2002.
         These proceeds along with proceeds from the sales and maturities of
         investment securities were used to fund loans and purchase securities
         during each year. Net cash used in investing activities totaled $3.5
         million during the first six months of 2003 compared to $7.7 million
         during the same time period in 2002. Details on both the sources and
         uses of cash are presented in the Consolidated Statements of Cash Flows
         contained in the financial statements.



                                       18
<PAGE>

                  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.

                  The Bank's base-line scenario holds the prime rate constant at
         4.00 percent through June 2004. Based on the July 2003 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.

         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 were no significant changes in the Company's internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of their evaluation with the exception
         of the Company converting to the use of new software for its core
         processing system on February 14, 2003. The conversion significantly
         affected the Company's accounting systems as well as the loan and
         deposit processing. The conversion resulted in changes to procedures
         and controls, both manual and through electronic data processing.
         Throughout the preparation for the conversion, the new procedures and
         controls were reviewed and planned for and are in the implementation
         stage. Although, the Company's procedures and controls have changed
         with the conversion, management's conclusion that the controls are
         adequate and effective has not changed.

                  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


                                       19
<PAGE>

         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 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.


                                       20
<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 2, 2003.

         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 2004 annual meeting of
                  stockholders:

                                                                    Without
                                                     For           Authority
                                                     ---           ---------
                     J. Robert Ayers               249,900            296
                     John E. Barker                249,900            296
                     Margaret S. Bartles           249,900            296
                     Jay E. Dick                   249,900            296
                     Herbert L. Eppinger           249,900            296
                     Robert L. Hawvermale          249,900            296
                     J. Philip Kesecker            249,900            296
                     Jerald McGraw                 249,900            296
                     Martha H. Quarantillo         249,900            296
                     Thomas F. Rokisky             249,900            296
                     Charles S. Trump, IV          249,900            296
                     Arlie R. Yost                 249,900            296


         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

         b.)      Reports on Form 8-K:

                  Date of Report      Item      Description
                  --------------      ----      -----------
                  August 8, 2003       12       The Company issued a press
                                                release that announced
                                                operating results of its first
                                                six months ended June 30, 2003



                                       21
<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 8, 2003         /s/ Thomas F. Rokisky, President/CEO
               --------------         ------------------------------------

         Date  August 8, 2003         /s/ Rebecca S. Stotler, Vice President/CFO
               --------------         ------------------------------------------



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