<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 MARCH 31, 2004

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

                     FOR THE TRANSITION PERIOD FROM __TO __

                         Commission file number 0-30665

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

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

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

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

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

                        YES [X]                    NO [ ]

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

                        YES [ ]                    NO [X]

The aggregate value of the common stock of the Registrant that was held by
non-affiliates as of the most recently completed second fiscal quarter (June 30,
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 May 10, 2004

<PAGE>

                          CNB FINANCIAL SERVICES, INC.

                                TABLE OF CONTENTS

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

     Item 1. Financial Statements

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

              Consolidated Statements of Income for the Three Months ended
                March 31, 2004 and 2003 (Unaudited) .............................................................    4

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

              Consolidated Statements of Cash Flows for the Three Months
                Ended March 31, 2004 and 2003 (Unaudited)........................................................    6

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

     Item 2. Management's Discussion and Analysis of Financial Condition and
              Results of Operations for the Three Months ended March 31, 2004....................................   12

     Item 3. Quantitative and Qualitative Disclosures about Market Risk..........................................   19

     Item 4. Controls and Procedures.............................................................................   20


PART II:     OTHER INFORMATION

     Item 1. Legal  Proceedings..................................................................................   22

     Item 6. Exhibits and Reports on Form 8-K....................................................................   22

             SIGNATURES..........................................................................................   23
</TABLE>

                           Forward-Looking Statements

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

                                        2
<PAGE>

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

<TABLE>
<CAPTION>
                                                       MARCH 31,         DECEMBER 31,
                                                          2004               2003
                                                      -------------     -------------
                                                       (Unaudited)
<S>                                                   <C>               <C>
                          ASSETS
Cash and due from banks                               $  10,385,376     $   7,641,280
Federal funds sold                                        3,918,000             3,000
Securities available for sale
   (at approximate market value)                         33,662,082        39,361,934
Federal Home Loan Bank stock, at cost                       707,400           865,700
Federal Reserve Bank stock, at cost                         129,650           129,650
Loans and lease receivable, net                         147,885,935       144,665,208
Accrued interest receivable                                 774,951           838,659
Premises and equipment, net                               5,307,613         5,288,633
Cash surrender value of life insurance                    1,071,356         1,065,435
Deferred income taxes                                       202,718           352,405
Intangible assets                                            22,308            23,795
Other assets                                                491,599           820,052
                                                      -------------     -------------

     TOTAL ASSETS                                     $ 204,558,988     $ 201,055,751
                                                      =============     =============

             LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
        Demand                                        $  32,393,895     $  29,485,097
        Interest-bearing demand                          34,406,926        34,042,317
        Savings                                          26,284,765        24,360,890
        Time, $100,000 and over                          36,600,198        36,642,560
        Other time                                       55,062,222        56,367,865
                                                      -------------     -------------
                                                      $ 184,748,006     $ 180,898,729
   Accrued interest payable                                 640,039           673,624
   FHLB borrowings                                                -         1,200,000
   Accrued expenses and other liabilities                 1,788,907         1,714,457
                                                      -------------     -------------

     TOTAL LIABILITIES                                $ 187,176,952     $ 184,486,810
                                                      -------------     -------------

SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000  shares
       authorized; 458,048 shares outstanding         $     458,048     $     458,048
   Capital surplus                                        3,863,592         3,863,592
   Retained earnings                                     13,029,425        12,460,556
   Accumulated other comprehensive income                    30,971          (213,255)
                                                      -------------     -------------

     TOTAL SHAREHOLDERS' EQUITY                       $  17,382,036     $  16,568,941
                                                      -------------     -------------

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 204,558,988     $ 201,055,751
                                                      =============     =============
</TABLE>

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

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED
                                                     MARCH 31,
                                             -------------------------
                                                2004          2003
                                             ----------     ----------
<S>                                          <C>            <C>
INTEREST INCOME
   Interest and fees on loans                $2,384,198     $2,320,147
   Interest and dividends on securities
      U.S. Government agencies and
         corporations                           243,549        341,234
      Mortgage backed securities                 89,731        161,779
      State and political subdivisions           44,978         13,112
      Other                                       2,863          4,599
   Interest on federal funds sold                 2,785          7,527
                                             ----------     ----------
                                             $2,768,104     $2,848,398
                                             ----------     ----------
INTEREST EXPENSE
   Interest on interest bearing demand,      $  778,859     $1,216,268
     savings and time deposits
   Interest on federal funds purchased                -            146
   Interest on FHLB borrowings                    2,900              -
                                             ----------     ----------
                                             $  781,759     $1,216,414
                                             ----------     ----------

           NET INTEREST INCOME               $1,986,345     $1,631,984

PROVISION FOR LOAN LOSSES                        87,000         51,000
                                             ----------     ----------

           NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES     $1,899,345     $1,580,984
                                             ----------     ----------

NONINTEREST INCOME
   Service charges on deposit accounts       $  257,189     $  190,789
   Other service charges, commissions
      and fees                                   89,247         91,883
   Insurance commissions                         33,002         24,271
   Other operating income                        17,531         18,849
   Net gain on sale of securities                49,876         44,595
   Income from title company                      9,829         10,250
                                             ----------     ----------
                                             $  456,674     $  380,637
                                             ----------     ----------
NONINTEREST EXPENSES
   Salaries                                  $  595,918     $  679,389
   Employee benefits                            217,879        212,220
   Occupancy of premises                         77,906         72,013
   Furniture and equipment expense              202,054        117,537
   Other operating expenses                     415,888        402,499
                                             ----------     ----------
                                             $1,509,645     $1,483,658
                                             ----------     ----------

            INCOME BEFORE INCOME TAXES       $  846,374     $  477,963

PROVISION FOR INCOME TAXES                      277,505        162,611
                                             ----------     ----------

            NET INCOME                       $  568,869     $  315,352
                                             ==========     ==========

BASIC EARNINGS PER SHARE                     $     1.24     $     0.69
                                             ==========     ==========
</TABLE>

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

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                                                                                        OTHER            TOTAL
                                                       COMMON          CAPITAL        RETAINED      COMPREHENSIVE     SHAREHOLDERS'
                                                       STOCK           SURPLUS        EARNINGS         INCOME           EQUITY
                                                    ------------    ------------    ------------    ------------      -------------
<S>                                                 <C>             <C>             <C>             <C>               <C>
BALANCE, DECEMBER 31, 2002                          $    458,048    $  3,863,592    $ 11,267,374    $    681,004      $ 16,270,018
Comprehensive income:
   Net income for 2003                                         -               -       1,742,840               -         1,742,840
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $382,304)                -               -               -        (623,758)         (623,758)
  Change in minimum pension liability
     adjustment (net of tax of $165,792)                                                                (270,501)         (270,501)
                                                                                                                      ------------
Total Comprehensive Income                                     -               -               -               -           848,581
                                                                                                                      ------------
Cash dividends ($1.20 per share)                               -               -        (549,658)              -          (549,658)
                                                    ------------    ------------    ------------    ------------      ------------

BALANCE, DECEMBER 31, 2003                          $    458,048    $  3,863,592    $ 12,460,556    $   (213,255)     $ 16,568,941
                                                                                                                      ------------
Comprehensive income:
   Net income for three months
     ended March 31, 2004                                      -               -         568,869               -           568,869
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax of $149,687)                -               -               -         244,226           244,226
  Change in minimum pension liability
     adjustment                                                                                                -                 -
                                                                                                                      ------------
Total Comprehensive Income                                     -               -               -               -           813,095
                                                    ------------    ------------    ------------    ------------      ------------

BALANCE, MARCH 31, 2004                             $    458,048    $  3,863,592    $ 13,029,425    $     30,971      $ 17,382,036
                                                    ============    ============    ============    ============      ============
</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>
                                                                              THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                         ------------------------------
                                                                             2004             2003
                                                                         ------------      ------------
<S>                                                                      <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                               $    568,869      $    315,352
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                            171,462           122,644
     Provision for loan losses                                                 87,000            51,000
     Net (gain) on sale of securities                                         (49,876)          (44,595)
     (Increase) decrease in accrued interest receivable                        63,708           (60,866)
     Decrease in other assets                                                 317,494           212,436
     Increase (decrease) in accrued interest payable                          (33,585)           13,534
     (Increase) in cash surrender value on life insurance in excess
          of premiums paid                                                          -           (15,000)
     Increase in accrued expenses and other liabilities                        74,450           288,812
     Amortization of deferred loan (fees) cost                                    484            10,551
     Amortization (accretion) of premium and discount on investments           19,291            41,208
                                                                         ------------      ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                       $  1,219,297      $    935,076
                                                                         ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Net (increase) in loans                                             $ (3,308,211)     $ (2,822,319)
     Proceeds from sales of securities                                      3,900,535         3,196,279
     Proceeds from maturities of securities                                 9,144,734         9,028,456
     Purchases of securities                                               (6,920,919)      (15,774,000)
     Purchases of Federal Home Loan Bank stock                               (230,100)                -
     Redemptions of Federal Home Loan Bank stock                              388,400                 -
     Purchases of premises and equipment                                     (177,996)         (165,227)
     Net (increase) decrease in federal funds sold                         (3,915,000)        3,235,712
     Premiums paid on life insurance                                           (5,921)          (15,665)
                                                                         ------------      ------------
         NET CASH (USED IN) INVESTING ACTIVITIES                         $ (1,124,478)     $ (3,316,764)
                                                                         ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand and savings deposits                          $  5,197,282      $  1,961,377
    Net (decrease) in time deposits                                        (1,348,005)       (1,180,562)
    Net (decrease) in FHLB borrowings                                      (1,200,000)                -
                                                                         ------------      ------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES                       $  2,649,277      $    780,815
                                                                         ------------      ------------

         NET INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS           $  2,744,096      $ (1,600,873)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                              7,641,280         7,832,735
                                                                         ------------      ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $ 10,385,376      $  6,231,862
                                                                         ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period:
               Interest                                                  $    815,344      $  1,229,802
</TABLE>

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

                                       6
<PAGE>


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

Note 1. Basis of Presentation and Contingencies

                  In the opinion of CNB Financial Services, Inc. ("CNB" or the
            "Company"), the accompanying unaudited consolidated financial
            statements contain all adjustments (consisting of only normal
            recurring accruals) necessary for a fair presentation of CNB
            financial condition as of March 31, 2004 and the results of
            operations for the three months ended March 31, 2004 and 2003 and
            cash flows for the three months ended March 31, 2004 and 2003.

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

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

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

                                       7
<PAGE>

            Note 2. Securities

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

                  Securities are summarized as follows:

<TABLE>
<CAPTION>

                                                                 MARCH 31, 2004                             WEIGHTED
                                           -----------------------------------------------------------      AVERAGE
                                                             GROSS           GROSS          ESTIMATED         TAX
                                            AMORTIZED      UNREALIZED      UNREALIZED         FAIR         EQUIVALENT
                                              COST            GAINS          LOSSES           VALUE          YIELD
                                           -----------     -----------     -----------     -----------     ----------
<S>                                        <C>             <C>             <C>             <C>             <C>
Available for sale:
     U.S. Government agencies
         and corporations
         Within one year                   $ 1,502,197     $   100,618     $         -     $ 1,602,815        4.69%
         After 1 but within 5 years          2,511,642         105,058               -       2,616,700        4.80
         After 5 but within 10 years        16,173,557          87,685          22,793      16,238,449        4.03
                                           -----------     -----------     -----------     -----------
                                           $20,187,396     $   293,361     $    22,793     $20,457,964        4.17%
                                           -----------     -----------     -----------     -----------

     States and political subdivisions
         After 1 but within 5 years        $   468,656     $    13,217     $         -     $   481,873        4.32%
         After 5 but within 10 years         5,339,953         125,849             993       5,464,809        5.21
                                           -----------     -----------     -----------     -----------
                                           $ 5,808,609     $   139,066     $       993     $ 5,946,682        4.94%
                                           -----------     -----------     -----------     -----------

     Mortgage backed securities            $ 7,179,831     $    88,443     $    10,838     $ 7,257,436        4.47%
                                           -----------     -----------     -----------     -----------

Total securities available for sale        $33,175,836     $   520,870     $    34,624     $33,662,082        4.37%
                                           ===========     ===========     ===========     ===========
Restricted:
     Federal Reserve Bank stock            $   129,650     $         -     $         -     $   129,650        6.00%
     Federal Home Loan Bank stock              707,400               -               -         707,400        1.37
                                           -----------     -----------     -----------     -----------
Total restricted investments               $   837,050     $         -     $         -     $   837,050        2.09%
                                           ===========     ===========     ===========     ===========
</TABLE>

                                       8
<PAGE>

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

            Note 2. Securities (continued)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 2003                          WEIGHTED
                                           -----------------------------------------------------------      AVERAGE
                                                             GROSS           GROSS          ESTIMATED         TAX
                                            AMORTIZED      UNREALIZED      UNREALIZED         FAIR         EQUIVALENT
                                               COST          GAINS           LOSSES           VALUE          YIELD
                                           -----------     -----------     -----------     -----------     ----------
<S>                                        <C>             <C>             <C>             <C>             <C>
Available for sale:
     U.S. Government agencies
         and corporations
         Within one year                   $ 3,679,936     $    56,310     $         -     $ 3,736,246        4.41%
         After 1 but within 5 years          4,015,285         182,346          21,560       4,176,071        4.76
         After 5 but within 10 years        17,436,050          32,346         162,056      17,306,340        4.26
                                           -----------     -----------     -----------     -----------
                                           $25,131,271     $   271,002     $   183,616     $25,218,657        4.36%
                                           -----------     -----------     -----------     -----------

     States and political subdivisions
         After 1 but within 5 years        $   468,556     $     7,274     $       193     $   475,637        2.85%
         After 5 but within 10 years         4,143,424          42,818           6,904       4,179,338        3.42
                                           -----------     -----------     -----------     -----------
                                           $ 4,611,980     $    50,092     $     7,097     $ 4,654,975        3.07%
                                           -----------     -----------     -----------     -----------

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

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

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

                  The carrying value of securities pledged to secure public
            deposits and for other purposes as required or permitted by law
            totaled $16,514,263 at March 31, 2004 and $15,337,515 at December
            31, 2003.

                  Proceeds from sales of securities available for sale
            (excluding maturities) during the three months ended March 31, 2004
            and the year ended December 31, 2003 were $3,900,535 and
            $13,044,280, respectively. Gross gains (losses) of $49,876 and
            $(-0-) during the three months ended March 31, 2004 and $210,572 and
            $(69,122) for the year ended December 31, 2003 were realized on the
            respective sales.

                                       9
<PAGE>

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


      Note 3. Loans and Leases Receivable

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

<TABLE>
<CAPTION>
                                     MARCH 31,        DECEMBER 31,
                                       2004               2003
                                   -------------      -------------
<S>                                <C>                <C>
Loans:
  Real estate                      $ 100,195,045      $  98,404,610
  Commercial real estate              23,588,170         21,521,317
  Consumer                            16,352,023         16,852,449
  Commercial                           8,917,107          8,934,099
  Overdrafts                              70,081            135,958
                                   -------------      -------------
                                   $ 149,122,426      $ 145,848,433

Leases:                                  182,294            186,318
                                   -------------      -------------
                                   $ 149,304,720      $ 146,034,751
Net deferred loan fees, costs,
    premiums and discounts               253,616            238,220
Allowance for loan losses             (1,672,401)        (1,607,763)
                                   -------------      -------------
                                   $ 147,885,935      $ 144,665,208
                                   =============      =============
</TABLE>

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

<TABLE>
<CAPTION>
                                        MARCH 31,             DECEMBER 31,
                             ----------------------------     ------------
                                 2004            2003             2003
                             -----------      -----------     ------------
<S>                          <C>              <C>              <C>
Balance, Beginning           $ 1,607,763      $ 1,484,448      $ 1,484,448
    Provision charged to
        operations                87,000           51,000          312,000
    Recoveries                    77,705           12,257           80,626
    Loans charged off           (100,067)         (33,479)        (269,311)
                             -----------      -----------      -----------
Balance, Ending              $ 1,672,401      $ 1,514,226      $ 1,607,763
                             ===========      ===========      ===========
</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>
                                                                 MARCH 31,         DECEMBER 31,
                                                           ---------------------   ------------
                                                             2004        2003         2003
                                                           --------     --------   -----------
<S>                                                        <C>          <C>          <C>
Nonaccrual  loans                                          $780,530     $ 98,872     $348,660
Loans past due 90 days or more still accruing interest            -      556,457       27,045
                                                           --------     --------     --------
     Total                                                 $780,530     $655,329     $375,705
                                                           ========     ========     ========
</TABLE>

                                       10
<PAGE>

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

      Note 4. Time Deposits

                  At March 31, 2004, the scheduled maturities of time deposits
            are as follows:

<TABLE>
<CAPTION>
                           TIME DEPOSITS      ALL TIME
                         $100,000 AND OVER    DEPOSITS
                         -----------------  -----------
<S>                      <C>                <C>
Within 3 months             $ 4,731,748     $ 9,784,165
3 months thru 6 months        2,263,636       6,924,603
6 months thru 12 months       6,163,822      14,045,339
Over 12 months               23,440,992      60,908,313
                            -----------     -----------
                            $36,600,198     $91,662,420
                            ===========     ===========
</TABLE>

      Note 5. Federal Home Loan Bank Borrowings

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

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

      Note 6. Supplemental Retirement Plan

                  On January 2, 2004, the Bank entered into a nonqualified
            supplemental retirement benefit agreement with the President which
            when fully vested would pay the President or his beneficiary an
            amount of $30,000 per year for 10 years beginning June 11, 2011, if
            he retires on or after May 29, 2011. Termination of employment prior
            to that date other than by reasons of death or disability will
            result in a reduced benefit. The expense for the quarter ended March
            31, 2004 was $8,160.

                                       11
<PAGE>

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

      GENERAL

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

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

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

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

            On January 26, 2004, CNB entered into an agreement to purchase
      certain assets and liabilities associated with the Hancock Branch of
      Fidelity Bank, a subsidiary bank of Mercantile Bankshares Corporation
      (formerly Home Federal). The purchase, which will take place on June 11,
      2004, will increase the assets of CNB to over $218,000,000 and increase
      liabilities by over $17,000,000. CNB will assume responsibility for all
      the deposit services including checking, savings and certificate of
      deposits. Additionally, CNB will acquire loans, equipment and leasehold
      improvements and will assume the lease for the real estate located at 333
      East Main Street, Hancock, Maryland.

            The following discussion and analysis presents the significant
      changes in financial condition and results of operations of CNB for the
      three months ended March 31, 2004 and 2003. This discussion may include
      forward-looking statements based upon management's expectations. Actual
      results may differ. We have rounded amounts and percentages used in this
      discussion and have based all average balances on daily averages.

      EARNINGS SUMMARY

            Net income for the three months ended March 31, 2004 was $569,000 or
      $1.24 per share compared to $315,000 or $0.69 per share for the same
      period in 2003. Annualized return on average assets and average equity
      were 1.1% and 13.5% respectively, for the three months ended March 31,
      2004, compared with .7% and 7.7%, respectively, for the three months ended
      March 31, 2003.

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

                                       12
<PAGE>

NET   INTEREST INCOME

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

      Net interest income for the three months ended March 31, 2004 increased by
$354,000 or 21.7% over the same period in 2003. Interest income for the three
months ended March 31, 2004 decreased by $80,000 or 2.8% compared to the same
period in 2003, while interest expense decreased by $435,000 or 35.7% during the
three months ended March 31, 2004, as compared to the same period in the prior
year.

      Increased net interest income for the three month period is attributable
to a higher level of net interest earning assets offset by a decrease in the
rates earned thereon. The Bank continues to experience a shift in the asset mix
from lower yielding overnight federal funds and investment securities to higher
yielding loans due to the continued high loan demand. The decrease in the rates
earned on interest earning assets is due to the current economic conditions. The
Bank has continued to experience steady deposit growth. Although the average
balance on interest bearing liabilities increased, total interest expense
decreased due to a decrease in the average rates paid on all interest bearing
liabilities. The Bank's higher loan demand and steady deposit growth has
resulted in an increased loan to deposit ratio.

      During the first quarter of 2004 compared to the same period in 2003,
average net interest earning assets increased $6.5 million or 3.6% and average
net interest bearing liabilities increased $5.1 million or 3.5% resulting in
increased net interest income. CNB experienced a 69 basis point increase in the
ratio of net interest income to average interest earning assets. The 124 basis
point decrease in rates paid on average interest bearing liabilities offset by a
33 basis point decrease in rates earned on average interest earning assets
contributed to the increase in the net interest margin. See Table 1 -
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.

                                       13

<PAGE>

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

<TABLE>
<CAPTION>
                                                         MARCH 31, 2004                   MARCH 31, 2003
                                            ----------------------------------   -------------------------------
                                                QTR                                QTR
                                              AVERAGE       QTR        YIELD/    AVERAGE        QTR      YIELD/
                                              BALANCE     INTEREST     RATE(4)   BALANCE     INTEREST    RATE(4)
                                            ----------    --------    --------   -------     --------   --------
                                                                      (IN THOUSANDS OF DOLLARS)
<S>                                         <C>           <C>         <C>      <C>           <C>        <C>
Interest earning assets:
Federal funds sold                          $    1,258    $      3      0.91%  $    2,106    $      8     1.15%
Securities:
     Taxable                                    31,602         336      4.25       45,775         511     4.47
     Tax-exempt (1)                              5,361          45      5.09          907           9     6.01
Loans (net of unearned interest) (2)(5)(6)     148,420       2,322      6.26      131,321       2,231     6.80
                                            ----------    --------    ------   ----------    --------   ------
         Total interest earning assets (1)  $  186,641    $  2,706      5.80%  $  180,109    $  2,759     6.13%
                                           -----------    --------    ------   ----------    --------   ------

Nonearning assets:
      Cash and due from banks               $    9,008                         $    6,485
      Bank premises and equipment, net           5,264                              4,798
      Other assets                               3,017                              3,254
      Allowance for loan losses                 (1,663)                            (1,496)
                                            ----------                          ---------
               Total assets                 $  202,267                          $ 193,150
                                            ==========                          =========

Interest bearing liabilities:
 Savings deposits                           $   25,197    $     31      0.49%  $   21,723    $     27     0.50%
 Time deposits                                  92,450         661      2.86       95,714       1,108     4.63
 NOW accounts                                   25,290          69      1.09       24,217          70     1.16
 Money market accounts                           9,082          18      0.79        6,157          11     0.71
 Borrowings                                        893           3      1.34            -           -
                                            ----------    --------    ------   ----------    --------   ------

     Total interest bearing liabilities     $  152,912    $    782      2.05%  $  147,811    $  1,216     3.29%
                                            ==========    ========    ======   ==========    ========   ======

Noninterest bearing liabilities:
      Demand deposits                       $   30,159                          $  26,475
      Other liabilities                          2,287                              2,381
      Shareholders' equity                      16,909                             16,483
                                            ----------                         ----------

               Total liabilities and
                  shareholders' equity      $  202,267                         $  193,150
                                            ==========                         ==========

                                                          --------                           --------
Net interest income (1)                                   $  1,924                           $  1,543
                                                          ========                           ========

Net interest spread (3)                                                 3.75%                             2.84%
                                                                      ======                            ======

Net interest income to average
      interest earning assets (1)                                       4.12%                             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 $62,000 in 2004 and $89,000 in
      2003.

(6)   Interest income on loans includes fees of $36,431 in 2004 and $30,893 in
      2003 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 March 31, 2004, and March 31, 2003,
amounted to $87,000 and $51,000, respectively. Loan quality remains stable and
past dues are minimal while nonaccruals have shown an increase. Nonaccruals have
increased primarily due to two borrowers with outstanding loan balances of
$409,000. Management believes these loans are sufficiently collateralized and
the Bank will not incur any loss. Management believes the allowance for loan
losses is adequate and is not aware of any information relating to the loan
portfolio which it expects will materially impact future operating results,
liquidity or capital resources. In addition, federal regulators may require
additional reserves as a result of their examination of the bank. See
"Nonperforming Assets and Allowance for Loan Losses" for further discussion.

NONINTEREST INCOME

      Noninterest income for the three months ended March 31, 2004 increased
$76,000 or 20.0% to $457,000 from $381,000 in the first quarter of 2003. The
increase in noninterest income is attributable, in general, to an increase in
service charge fees effective October 1, 2003 the bank assesses its customers.
Specifically, noninterest income increased due to fees generated from the Bounce
Protection program, insurance commissions and gain on sale of investment
securities offset by a decrease in overdraft fees and trust fees. The fees
related to the Bounce Protection program have a direct correlation to the
increased deposit base of the bank. Insurance commissions increased due to a
large group health account written in the third quarter of 2003 and general rate
increases from the insurance companies.

NONINTEREST EXPENSES

      Noninterest expenses for the three months ended March 31, 2004, increased
$26,000 or 1.8% primarily due to increases in occupancy expense and furniture,
fixtures and equipment expenses offset by decreases in salaries and employee
benefits expense. Salaries decreased, in part, due to additional compensation
paid in 2003 in connection with the conversion of the Bank's core processing
system. The increase in furniture and equipment expense was due to an increase
in depreciation expense relating to the new computer equipment, software and
peripherals associated with the upgrade of the Bank's technology systems.
Another factor relating to the increase in furniture and equipment expense was
an increase in the cost and number of equipment maintenance contracts the Bank
entered into. The increase in other operating expenses was due to an increase in
stationery, supplies & printing, telephone, legal fees, advertising and debit
card expense offset by a decrease in data processing, postage and bounce
protection expense. The increase in legal fees and advertising are a direct
result of the Bank's acquisition of the full service branch of Fidelity Bank in
Hancock, Maryland. Bounce protection expense decreased due to the Bank's
contract with Pinnacle Financial Strategies expired in February 2004.

INCOME TAXES

      The Bank's provision for income taxes increased $115,000 or 70.7% to
$278,000 for the three months ended March 31, 2004. The effective tax rates for
the first quarter of 2004 and 2003 were 32.8% and 34.0%, respectively. The
Bank's income tax expense differs from the amount computed at statutory rates
primarily due to the tax-exempt earnings from certain investment securities.

                                       15
<PAGE>

FINANCIAL CONDITION

      The Bank's total assets at March 31, 2004 increased $3.5 million or 1.7%
to $204.6 million from December 31, 2003 due primarily to a $2.7 million
increase in cash and due from banks, $3.9 million increase in federal funds sold
and a $3.2 million increase in loans, offset by a $5.7 million decrease in
investment securities and a $328,000 decrease in other assets. The decrease in
other assets is due to mortgage loan and ATM clearing for transactions in
process at December 31, 2003 were greater than March 31, 2004. The Bank's total
liabilities increased $2.7 million or 1.5% to $187.2 million at March 31, 2004,
consisting of deposit growth, which increased to $184.7 million and an increase
of $74,000 in accrued expenses and other liabilities offset by a decrease of
$1.2 million in borrowings. Shareholders' equity increased $813,000 to $17.4
million at March 31, 2004, primarily due to net income of $569,000 and a
$244,000 increase in accumulated other comprehensive income. The components of
accumulated other comprehensive income at March 31, 2004, were unrealized gains
and losses on available for sale securities, net of deferred income taxes and
minimum pension liability adjustment, net of deferred income taxes. The
unrealized gains and losses are primarily a function of available market
interest rates relative to the yield being generated on the available for sale
portfolio. No earnings impact results unless the securities are actually sold.

LOAN  PORTFOLIO

      At March 31, 2004, total loans increased $3.2 million or 2.2% to $147.9
million from $144.7 million at December 31, 2003. This increase is mainly a
result of an increase in real estate lending with a increased emphasis in
commercial real estate and land development. The Bank feels additional growth in
all lending areas is possible during the remainder of 2004.

NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

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

<TABLE>
<CAPTION>

                                                   MARCH 31,             DECEMBER 31,
                                          ----------------------------   ------------
                                              2004            2003          2003
                                          -----------      -----------   ------------
<S>                                       <C>              <C>           <C>
 Nonaccrual loans                         $   780,530      $    98,872   $   348,660

 Loans past due 90 days or more
    still accruing interest                         -          556,457        27,045
                                          -----------      -----------   -----------
 Total nonperforming loans                $   780,530      $   655,329   $   375,705
                                          -----------      -----------   -----------

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

 Total nonperforming assets               $   780,530      $   657,129   $   375,705
                                          ===========      ===========   ===========

 Nonperforming loans/Total loans                 0.53%            0.50%         0.26%
 Nonperforming assets/Total assets               0.38%            0.34%         0.19%
Allowance for loan losses/Total loans            1.13%            1.16%         1.11%
</TABLE>

      As of March 31, 2004, 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 $693,503. A
specific allowance of $50,000 related to these loans has been established as
part of the allowance for loan losses. The loans are collateralized and
management anticipates any additional potential loss would be minimal.

      The allowance for loan losses is the best estimate by management of the
probable losses which have been incurred as of a balance sheet date. Management
makes this determination

                                       16
<PAGE>

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 March 31, 2004, the allowance for loans
losses totaled $1.7 million compared to $1.6 million at December 31, 2003. The
allowance for loans losses as a percentage of loans was 1.1% as of March 31,
2004 and December 31, 2003.

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

<TABLE>
<CAPTION>
                                      MARCH 31,                   DECEMBER 31,
                              -----------------------     ---------------------------
                                       2004                         2003
                              -----------------------     ---------------------------
                                         PERCENT OF                      PERCENT OF
                                        LOANS IN EACH                  LOANS IN EACH
                                         CATEGORY TO                     CATEGORY TO
                              AMOUNT     TOTAL LOANS        AMOUNT      TOTAL LOANS
                              ------    -------------     -----------  -------------
<S>                           <C>       <C>               <C>          <C>
Commercial, financial         $  700              22%     $       782            21%
    and agriculture
Real estate - residential        394              67              401            67
     mortgage
Installment and other            291              11              274            12
Unallocated                      287             151                            N/A
                              ------    ------------      -----------  ------------
       Total                  $1,672             100%     $     1,608           100%
                              ======    ============      ===========  ============
</TABLE>


DEPOSITS

      The Bank's deposits increased $3.8 million or 2.1% during the three months
ended March 31, 2004. The Bank has experienced a slight change in the deposit
account mix during the first three months of 2004. Steady growth continues in
regular demand, interest-bearing demand and savings deposits. The increase is
primarily due to the continued customer growth in the Bank's market area of
Morgan and Berkeley Counties, West Virginia and also 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 three months of 2004. The decrease is primarily due to the maturity of the
36-month Ultimate Certificate of Deposit. Deposits, in general, have experienced
an increase due to customer's concerns with the weak economy and stock market.

CAPITAL RESOURCES

      Shareholders' equity increased $813,000 or 4.9% during the first three
months of 2004 due to $569,000 in net income and a $244,000 increase 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

                                       17
<PAGE>

substantially in excess of the minimum regulatory requirements, and, by
definition was "well capitalized" at March 31, 2004. The following table
summarized, as of March 31, 2004, the Bank's capital ratios.

<TABLE>
<CAPTION>
                            Components    Actual    Required
                            of Capital    Ratio      Ratio
                            ----------    -----      -----
<S>                         <C>           <C>       <C>
Tier 1 Capital               $17,062        8.4%     4.0%
Total Risk Based Capital     $18,623       14.9%     8.0%
</TABLE>

RECENTLY ISSUED ACCOUNTING STANDARDS

      In March 2004, the SEC issued Staff Accounting Bulletin ("SAB") No. 105,
"Application of Accounting Principles to Loan Commitments." SAB No. 105
clarifies certain provisions of SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," which amended portions of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" and is
effective for periods following March 31, 2004. Together, SAB No. 105 and SFAS
No. 149 provide guidance with regard to accounting for loan commitments. Under
SAB No. 105 and SFAS No. 149, loan commitments relating to the origination of
mortgage loans that will be held for sale shall be accounted for as derivative
instruments by the issuer of the commitment. The adoption of these
pronouncements subsequent to March 31, 2004 is not anticipated to have a
material impact on the Company's consolidated financial statements.

                                       18
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

      The objective of the Bank's liquidity management program is to ensure the
continuous availability of funds to meet the withdrawal demands of depositors
and the credit needs of borrowers. The basis of the Bank's liquidity comes from
the stability of its core deposits. Liquidity is also available through the
available for sale securities portfolio and short-term funds such as federal
funds sold which totaled $37.6 million, or 18.4% of total assets at March 31,
2004. In addition, liquidity may be generated through loan repayments and over
$3.0 million of available borrowing arrangements with correspondent banks. At
March 31, 2004, management considered the Bank's ability to satisfy its
anticipated liquidity needs over the next twelve months. Management believes
that the Bank is well positioned and has ample liquidity to satisfy these needs.
The Bank generated $1.2 million of cash from operations in the first three
months of 2004, which compares to $935,000 during the same time period in 2003.
Additional cash of $2.6 million was generated through net financing activities
through March 31, 2004, which compares to $781,000 for the first three months of
2003. These proceeds along with proceeds from the sales and calls of investment
securities were used to fund loans and purchase securities during each year. Net
cash used in investing activities totaled $1.1 million during the first three
months of 2004 compared to $3.3 million during the same time period in 2003.
Details on both the sources and uses of cash are presented in the Consolidated
Statements of Cash Flows contained in the financial statements.

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

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

                                       19
<PAGE>

The Bank's base-line scenario holds the prime rate constant at 4.00 percent
through March 2005. Based on the April 2004 outlook, if interest rates increased
or decreased by 200 basis points, the model indicates that net interest income
during the policy measurement period would be affected by less than 10 percent,
in both an increasing or decreasing interest rate scenario.

ITEM 4. CONTROLS AND PROCEDURES

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

      There have been no changes in the Company's internal controls over
financial reporting in the fiscal quarter ended March 31, 2004, that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.

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

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

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

                                       20
<PAGE>

      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.

                                       21
<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 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:

<TABLE>
<CAPTION>
 Date of Report           Item                    Description
 --------------           ----                    -----------
<S>                       <C>           <C>
January 26, 2004           5            The Company issued a press
                                        release that announced the
                                        signing of a definitive agreement
                                        providing for the purchase of
                                        of certain assets and liabilities
                                        associated with the Hancock,
                                        Maryland branch office of Fidelity
                                        Bank.
</TABLE>

                                       22
<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   May 13, 2004                 /s/ Thomas F. Rokisky, President/CEO
                                    ------------------------------------

Date   May 13, 2004                /s/ Rebecca S. Stotler, Vice President/CFO
                                   ------------------------------------------

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