<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 SEPTEMBER 30, 2004

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

                     FOR THE TRANSITION PERIOD FROM -- TO --

                         Commission file number 0-30665

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

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

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

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

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

                                YES [X] NO [ ]

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

                                YES [ ] NO [X]

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

  Common Stock $1 par value, 458,048 shares outstanding as of November 10, 2004



<PAGE>



                          CNB FINANCIAL SERVICES, INC.

                                TABLE OF CONTENTS

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

       Item 1. Financial Statements

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

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

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

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

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

     Item 2.     Management's Discussion and Analysis of Financial Condition and
                  Results of Operations for the Three and Nine Months ended September 30, 2004..................13

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

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

PART II:         OTHER INFORMATION

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

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

                 SIGNATURES....................................................................................26
</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>
                                                                                             SEPTEMBER 30,   DECEMBER 31,
                                  ASSETS                                                        2004             2003
                                                                                            -------------    -------------
                                                                                              (Unaudited)
<S>                                                                                         <C>              <C>
Cash and due from banks                                                                     $   8,700,922    $   7,641,280
Federal funds sold                                                                              5,533,000            3,000
Securities available for sale
   (at approximate market value)                                                               53,071,551       39,361,934
Federal Home Loan Bank (FHLB) stock, at cost                                                      963,100          865,700
Federal Reserve Bank stock, at cost                                                               129,650          129,650
Loans and lease receivable, net                                                               154,401,210      144,665,208
Accrued interest receivable                                                                       992,836          838,659
Premises and equipment, net                                                                     5,620,900        5,288,633
Cash surrender value of life insurance                                                          1,172,193        1,065,435
Deferred income taxes                                                                             283,220          352,405
Intangible assets                                                                                 767,423           23,795
Other assets                                                                                      842,984          820,052
                                                                                            -------------    -------------
         TOTAL ASSETS                                                                       $ 232,478,989    $ 201,055,751
                                                                                            =============    =============

                   LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
        Demand                                                                              $  34,804,073    $  29,485,097
        Interest-bearing demand                                                                51,363,361       34,042,317
        Savings                                                                                31,362,426       24,360,890
        Time, $100,000 and over                                                                36,804,658       36,642,560
        Other time                                                                             57,417,399       56,367,865
                                                                                            -------------    -------------
                                                                                            $ 211,751,917    $ 180,898,729
   Accrued interest payable                                                                       578,175          673,624
   FHLB borrowings                                                                                   --          1,200,000
   Securities sold under repurchase agreement                                                     211,475             --
   Accrued expenses and other liabilities                                                       1,642,254        1,714,457
                                                                                            -------------    -------------
         TOTAL LIABILITIES                                                                  $ 214,183,821    $ 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                                                                           14,073,902       12,460,556
   Accumulated other comprehensive income                                                        (100,374)        (213,255)
                                                                                            -------------    -------------
         TOTAL SHAREHOLDERS' EQUITY                                                         $  18,295,168    $  16,568,941
                                                                                            -------------    -------------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                         $ 232,478,989    $ 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           NINE MONTHS ENDED
                                                           SEPTEMBER 30,               SEPTEMBER 30,
                                                    -------------------------    -------------------------
                                                        2004          2003           2004          2003
                                                    -----------   -----------    -----------   -----------
<S>                                                 <C>           <C>            <C>           <C>
INTEREST INCOME
   Interest and fees on loans                       $ 2,523,826   $ 2,445,543    $ 7,337,321   $ 7,134,740
   Interest and dividends on securities
      U.S. Government agencies and
         corporations                                   314,847       316,991        809,716       993,924
      Mortgage backed securities                         94,657       109,466        261,151       432,353
      State and political subdivisions                   76,377        16,465        179,471        44,190
      Other                                               2,525         3,499         12,436        15,597
   Interest on federal funds sold                        18,933         3,500         26,539        16,481
                                                    -----------   -----------    -----------   -----------
                                                    $ 3,031,165   $ 2,895,464    $ 8,626,634   $ 8,637,285
                                                    -----------   -----------    -----------   -----------
INTEREST EXPENSE
   Interest on interest bearing demand,             $   805,898   $   969,351    $ 2,330,769   $ 3,258,959
     savings and time deposits
   Interest on federal funds purchased                     --             555           --             825
   Interest on borrowings                                   767         1,877          4,924         1,877
                                                    -----------   -----------    -----------   -----------
                                                    $   806,665   $   971,783    $ 2,335,693   $ 3,261,661
                                                    -----------   -----------    -----------   -----------
           NET INTEREST INCOME                      $ 2,224,500   $ 1,923,681    $ 6,290,941   $ 5,375,624

PROVISION FOR LOAN LOSSES                               102,000        57,000        283,000       194,000
                                                    -----------   -----------    -----------   -----------
           NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES            $ 2,122,500   $ 1,866,681    $ 6,007,941   $ 5,181,624
                                                    -----------   -----------    -----------   -----------
NONINTEREST INCOME
   Service charges on deposit accounts              $   318,885   $   255,337    $   862,918   $   693,431
   Other service charges, commissions
      and fees                                          117,472        90,042        308,092       277,472
   Insurance commissions                                 36,792        29,426        103,505        80,060
   Other operating income                                11,221        16,290         42,207        61,681
   Net gain on sale of securities                          --          63,981        135,546       161,073
   Income from title company                              4,380        16,500         32,000        40,050
   Gain (loss) on sale of other real estate owned          --            (876)          --            (876)
                                                    -----------   -----------    -----------   -----------
                                                    $   488,750   $   470,700    $ 1,484,268   $ 1,312,891
                                                    -----------   -----------    -----------   -----------
NONINTEREST EXPENSES
   Salaries                                         $   681,509   $   592,531    $ 1,897,930   $ 1,755,359
   Employee benefits                                    234,092       188,652        673,299       617,792
   Occupancy of premises                                 93,620        75,296        256,031       223,110
   Furniture and equipment expense                      219,626       165,621        632,636       468,056
   Other operating expenses                             456,172       387,628      1,404,490     1,299,865
                                                    -----------   -----------    -----------   -----------
                                                    $ 1,685,019   $ 1,409,728    $ 4,864,386   $ 4,364,182
                                                    -----------   -----------    -----------   -----------
            INCOME BEFORE INCOME TAXES              $   926,231   $   927,653    $ 2,627,823   $ 2,130,333

PROVISION FOR INCOME TAXES                              290,942       329,127        835,838       775,611
                                                    -----------   -----------    -----------   -----------
            NET INCOME                              $   635,289   $   598,526    $ 1,791,985   $ 1,354,722
                                                    ===========   ===========    ===========   ===========
BASIC EARNINGS PER SHARE                            $      1.39   $      1.31    $      3.91   $      2.96
                                                    ===========   ===========    ===========   ===========
</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 nine months
     ended September 30, 2004                         -               -          1,791,985             -          1,791,985
  Change in unrealized gains
    (losses) on securities
    available for sale (net of tax
    of $69,185)                                       -               -                  -       112,881            112,881
                                                                                                                -----------
Total Comprehensive Income                            -               -                  -             -          1,904,866
                                                                                                                -----------
Cash dividends ($0.39 per share)                      -               -           (178,639)            -           (178,639)
                                              ---------     -----------        -----------    ----------        -----------
BALANCE, SEPTEMBER 30, 2004 (unaudited)       $ 458,048     $ 3,863,592        $14,073,902    $ (100,374)       $18,295,168
                                              =========     ===========        ===========    ==========        ===========
</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>

                                                                                      NINE MONTHS ENDED
                                                                                         SEPTEMBER 30,
                                                                                  ----------------------------
                                                                                     2004            2003
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                        $  1,791,985    $  1,354,722
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                                     554,020         407,785
     Provision for loan losses                                                         283,000         194,000
     Net (gain) on sale of securities                                                 (135,546)       (161,073)
     Loss on sale of real estate owned                                                    --               876
     (Increase) decrease in accrued interest receivable                               (119,651)         35,500
     (Increase) in other assets                                                        (84,169)        (68,716)
     (Decrease) in accrued interest payable                                            (95,449)       (182,214)
     (Increase) in cash surrender value on life insurance in excess
          of premiums paid                                                             (47,936)        (15,000)
     Increase (decrease) in accrued expenses and other liabilities                     (78,784)        169,311
     Amortization of deferred loan (fees) cost                                          13,916           6,349
     Amortization (accretion) of premium and discount on investments                    53,266         127,613
                                                                                  ------------    ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                                $  2,134,652    $  1,869,153
                                                                                  ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Net (increase) in loans                                                      $ (1,612,945)   $(12,015,627)
     Proceeds from sales of securities                                               6,391,436      11,628,314
     Proceeds from maturities, repayments and calls of securities                   11,983,142      23,091,545
     Purchases of securities                                                       (31,819,849)    (35,181,253)
     Purchases of Federal Home Loan Bank stock                                        (561,100)       (211,800)
     Redemptions of Federal Home Loan Bank stock                                       463,700            --
     Purchases of premises and equipment                                              (461,757)       (478,324)
     Proceeds from sales of other real estate owned, net                                  --               924
     Net (increase) decrease in federal funds sold                                  (5,530,000)      3,561,674
     Premiums paid on life insurance                                                   (58,822)        (68,566)
     Cash from acquired branch                                                       5,020,017            --
                                                                                  ------------    ------------
         NET CASH (USED IN) INVESTING ACTIVITIES                                  $(16,186,178)   $ (9,673,113)
                                                                                  ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand and savings deposits                                   $ 21,432,367    $  7,546,479
    Net (decrease) in time deposits                                                 (5,154,035)       (582,766)
    Net increase in securities sold under repurchase agreement                         211,475            --
    Net increase (decrease) in FHLB borrowings                                      (1,200,000)      1,250,000
    Cash dividends paid                                                               (178,639)       (178,639)
                                                                                  ------------    ------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES                                $ 15,111,168    $  8,035,074
                                                                                  ------------    ------------
         NET INCREASE IN CASH AND CASH EQUIVALENTS                                $  1,059,642    $    231,114
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       7,641,280       7,832,735
                                                                                  ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $  8,700,922    $  8,063,849
                                                                                  ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period:
               Interest                                                           $  2,431,142    $  3,443,874
               Income taxes                                                       $    864,009    $    582,000
     Net transfer to foreclosed real estate, held for sale from loans
            receivable                                                            $       --      $    105,528

The Company acquired certain assets and liabilities associated with the Hancock
Branch of Fidelity Bank. In conjunction with the acquisition, the assets
acquired and liabilities assumed were as follows:
      Fair value of assets acquired                                               $  9,561,420
                                                                                  ------------
      Fair value of liabilities assumed                                           $ 14,581,437
                                                                                  ------------
      Liabilities assumed in excess of assets acquired                            $  5,020,017
                                                                                  ============
</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 September 30, 2004 and the results of operations for the three
         and nine months ended September 30, 2004 and 2003 and cash flows for
         the nine months ended September 30, 2004 and 2003.

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

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

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

Note 2.  Business Combinations

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

                  The following table provides information concerning the
         allocations of the purchase price and the fair values of the assets and
         liabilities acquired of the Hancock branch:
<TABLE>
<CAPTION>
                          AT JUNE 11, 2004
-----------------------------------------------------------------------

<S>                                                       <C>
Assets acquired:
     Loans                                              $   8,419,973
      Accrued interest receivable                              34,526
      Fixed assets                                            324,166
      Intangible asset-premium on deposits                    780,616
      Prepaid expenses                                          2,139
                                                        -------------
Total assets acquired                                   $   9,561,420
                                                        -------------
Liabilities assumed:
      Deposit accounts                                  $ (14,574,856)
      Accrued expenses                                         (6,581)
                                                        -------------
Total liabilities assumed                               $ (14,581,437)
                                                        -------------

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


                                       7
<PAGE>

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

Note 2.  Business Combinations (continued)

                  Citizens National Bank recorded $781,000 of core deposit
         intangible, which has a weighted-average useful life of 7 years.

Note 3.   Securities

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

                  Securities are summarized as follows:

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30, 2004                                   WEIGHTED
                                       --------------------------------------------------------------------------    AVERAGE
                                                              GROSS              GROSS             ESTIMATED           TAX
                                         AMORTIZED          UNREALIZED         UNREALIZED            FAIR           EQUIVALENT
                                            COST              GAINS              LOSSES              VALUE            YIELD
                                       ---------------    ---------------    ---------------    -----------------  -------------
<S>                                     <C>                <C>                 <C>                  <C>               <C>
Available for sale:
    U.S. Government agencies
      and corporations
      After 1 but within 5 years        $12,406,091        $   184,866         $    32,287          $12,558,670       3.87%
      After 5 but within 10 years        21,880,150            122,410             119,117           21,883,443       4.14
                                        -----------        -----------         -----------          -----------
                                        $34,286,241        $   307,276         $   151,404          $34,442,113       4.04%
                                        -----------        -----------         -----------          -----------
    States and political subdivisions
      Within one year                   $    25,000        $     1,832         $      --            $    26,832       4.50%
      After 1 but within 5 years          1,565,031             13,309                --              1,578,340       3.08
      After 5 but within 10 years         8,106,299            120,010              37,048            8,189,261       3.70
                                        -----------        -----------         -----------          -----------
                                        $ 9,696,330        $   135,151         $    37,048          $ 9,794,433       3.60%
                                        -----------        -----------         -----------          -----------
    Mortgage backed securities          $ 8,814,582        $    44,252         $    23,829          $ 8,835,005       4.49%
                                        -----------        -----------         -----------          -----------
Total securities available for sale     $52,797,153        $   486,679         $   212,281          $53,071,551       4.04%
                                        ===========        ===========         ===========          ===========
Restricted:
    Federal Reserve Bank stock          $   129,650        $      --           $      --            $   129,650       6.00%
    Federal Home Loan Bank stock            963,100               --                  --                963,100       1.60
                                        -----------        -----------         -----------          -----------
Total restricted investments            $ 1,092,750        $      --           $      --            $ 1,092,750       2.12%
                                        ===========        ===========         ===========          ===========
</TABLE>


                                       8
<PAGE>



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

         Note 3.   Securities (continued)

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

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

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


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

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




                  The carrying value of securities pledged to secure public
         deposits and for other purposes as required or permitted by law totaled
         $29,944,041 at September 30, 2004 and $15,337,515 at December 31, 2003.
         Also, a security with a carrying value of $248,985 is designated for
         customer repurchase agreements at September 30, 2004.

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



                                       9
<PAGE>



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

         Note 3.   Securities (continued)

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

<TABLE>
<CAPTION>
                                       LESS THAN 12 MONTHS                 12 MONTHS OR MORE                       TOTAL
                                 --------------------------------  ---------------------------------  -----------------------------
                                      FAIR          UNREALIZED          FAIR           UNREALIZED          FAIR       UNREALIZED
Description of Securities            VALUE            LOSSES            VALUE            LOSSES           VALUE         LOSSES
-------------------------------  ---------------  ---------------  ---------------------------------  -----------------------------
<S>                                 <C>                 <C>           <C>                  <C>           <C>             <C>
U.S. government agencies
   and corporations                 $12,114,050         $ 88,679      $ 2,434,720          $ 62,726      $14,548,770     $ 151,405

State and political subdivisions      1,933,548            8,415                -                 -        1,933,548         8,415

Mortgage backed securities            2,294,368           37,048          904,652            15,413        3,199,020        52,461
                                 ---------------  ---------------  ---------------   ---------------  --------------- -------------

Total temporarily impaired
   securities                       $16,341,966        $ 134,142      $ 3,339,372          $ 78,139      $19,681,338     $ 212,281
                                 ===============  ===============  ===============   ===============  =============== =============
</TABLE>

         Note 4.   Loans and Leases Receivable

                  Major classifications of loans at September 30, 2004 and
         December 31, 2003, were as follows:
<TABLE>
<CAPTION>
                                 SEPTEMBER 30,     DECEMBER 31,
                                     2004             2003
                                 -------------    -------------
<S>                              <C>              <C>
Loans:
  Real estate                    $ 109,109,789    $  98,404,610
  Commercial real estate            21,933,070       21,521,317
  Consumer                          16,314,697       16,852,449
  Commercial                         8,276,319        8,934,099
  Overdrafts                            80,499          135,958
                                 -------------    -------------
                                 $ 155,714,374    $ 145,848,433

Leases:                                172,172          186,318
                                 -------------    -------------
                                 $ 155,886,546    $ 146,034,751
Net deferred loan fees, costs,
    premiums and discounts             268,277          238,220
Allowance for loan losses           (1,753,613)      (1,607,763)
                                 -------------    -------------
                                 $ 154,401,210    $ 144,665,208
                                 =============    =============
</TABLE>


                                       10
<PAGE>



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

         Note 4.   Loans and Leases Receivable (continued)

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

<TABLE>
<CAPTION>
                                                     SEPTEMBER 30,                       DECEMBER 31,
                                            ---------------------------------            -----------
                                                2004                  2003                  2003
                                            -----------           -----------            -----------
<S>                                         <C>                   <C>                    <C>
Balance, Beginning                          $ 1,607,763           $ 1,484,448            $ 1,484,448
    Provision charged to
        operations                              283,000               194,000                312,000
    Recoveries                                  129,011                50,689                 80,626
    Loans charged off                          (266,161)             (177,789)              (269,311)
                                            -----------           -----------            -----------
Balance, Ending                             $ 1,753,613           $ 1,551,348            $ 1,607,763
                                            ===========           ===========            ===========
</TABLE>


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



<TABLE>
<CAPTION>
                                                     SEPTEMBER 30,                       DECEMBER 31,
                                            ---------------------------------            -----------
                                                2004                  2003                  2003
                                            -----------           -----------            -----------
<S>                                          <C>                   <C>                    <C>
Nonaccrual loans                              $ 436,162            $ 625,137              $ 348,660
Loans past due 90 days or more still
  accruing interest                                 -                 81,152                 27,045
                                            -----------           -----------            -----------
  Total                                       $ 436,162            $ 706,289              $ 375,705
                                            ===========           ===========            ===========
</TABLE>


Note 5.  Time Deposits

                  At September 30, 2004, the scheduled maturities of time
deposits are as follows:
<TABLE>
<CAPTION>
                                   TIME DEPOSITS            ALL TIME
                                 $100,000 AND OVER          DEPOSITS
                                 -----------------          --------
<S>                                <C>                    <C>
Within 3 months                    $ 4,989,050            $11,736,763
3 months thru 6 months               3,570,534              8,808,617
6 months thru 12 months              2,002,896              6,846,632
Over 12 months                      26,242,178             66,830,045
                                   -----------            -----------
                                   $36,804,658            $94,222,057
                                   ===========            ===========
</TABLE>




                                       11
<PAGE>



                          CNB FINANCIAL SERVICES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

Note 6.  Federal Home Loan Bank Borrowings
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,                   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 7.  Supplemental Retirement Plan

                           On January 2, 2004, the Bank entered into a
       nonqualified supplemental retirement benefit agreement with the President
       which when fully vested would pay the President or his beneficiary an
       amount of $30,000 per year for 10 years beginning June 11, 2011, if he
       retires on or after May 29, 2011. Termination of employment prior to that
       date other than by reasons of death or disability will result in a
       reduced benefit. The expense for the three and nine months ended
       September 30, 2004 was $8,160 and $24,480, respectively.



                                       12
<PAGE>



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

          GENERAL

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

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

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

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

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

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

         CRITICAL ACCOUNTING POLICIES

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


                                       13
<PAGE>

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

         EARNINGS SUMMARY

                  Net income for the three months ended September 30, 2004 was
         $635,000 or $1.39 per share compared to $599,000 or $1.31 per share for
         the same period in 2003. Annualized return on average assets and
         average equity were 1.1% and 14.8% respectively, for the three months
         ended September 30, 2004, compared with 1.2% and 14.1%, respectively,
         for the three months ended September 30, 2003.

                  Net income for the nine months ended September 30, 2004 was
         $1.8 million or $3.91 per share compared to $1.4 million or $2.96 per
         share for the same period in 2003. Annualized return on average assets
         and average equity were 1.1% and 13.9% respectively, for the nine
         months ended September 30, 2004, compared with .9% and 10.8%,
         respectively, for the nine months ended September 30, 2003.

                  Early in the year 2004, earnings projections for the second
         half of 2004 were for net income to show a decrease over the first half
         of 2004 due to the additional expenses related to the opening of the
         new branch facility and the slowing of the maturities of the higher
         interest bearing 36 month Certificate of Deposits causing interest
         expense to level out. However, actual net income results have exceeded
         projections due to the bank's investment capabilities of a large
         depositor's funds and the expenses related to the opening of the new
         branch facility being significantly lower than expected. Loan growth is
         expected to remain flat through the remainder of 2004. Due to the
         rising rate environment, net income and net interest income may be
         negatively impacted in the short term as a result of the increased cost
         of deposits.

         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 September 30,
         2004 increased by $301,000 or 15.6% over the same period in 2003.
         Interest income for the three months ended September 30, 2004 increased
         by $136,000 or 4.7% compared to the same period in 2003, while interest
         expense decreased by $165,000 or 17.0% during the three months ended
         September 30, 2004, as compared to the same period in the prior year.

                  Net interest income for the nine months ended September 30,
         2004 increased by $915,000 or 17.0% over the same period in 2003.
         Interest income for the nine months ended September 30, 2004 decreased
         by $11,000 or .1% compared to the same period in 2003, while interest
         expense decreased by $926,000 or 28.4% during the nine months ended
         September 30, 2004, as compared to the same period in the prior year.

                  Increased net interest income for the three and nine 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 investment
         securities to


                                       14
<PAGE>

        higher yielding loans due to the continued steady loan growth. 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.

                  During the third quarter of 2004 compared to the same period
         in 2003, average net interest earning assets increased $24.5 million or
         13.3% and average net interest bearing liabilities increased $21.1
         million or 13.9% contributed to increased net interest income. CNB
         experienced a 19 basis point increase in the ratio of net interest
         income to average interest earning assets. The 70 basis point decrease
         in rates paid on average interest bearing liabilities offset by a 37
         basis point decrease in rates earned on average interest earning assets
         resulted in the increase in the net interest margin.

                  During the first nine months of 2004 compared to the same
         period in 2003, average net interest earning assets increased $14.2
         million or 7.8% and average net interest bearing liabilities increased
         $10.9 million or 7.3% contributed to increased net interest income. CNB
         experienced a 43 basis point increase in the ratio of net interest
         income to average interest earning assets. The 97 basis point decrease
         in rates paid on average interest bearing liabilities offset by a 37
         basis point decrease in rates earned on average interest earning assets
         resulted in the increase in the net interest margin.

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

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



                                       15
<PAGE>



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

<TABLE>
<CAPTION>

                                                          SEPTEMBER 30, 2004                           SEPTEMBER 30, 2003
                                               ---------------------------------------      -------------------------------------
                                                 QTR                                              QTR
                                                AVERAGE           QTR           YIELD/           AVERAGE          QTR      YIELD/
                                                BALANCE         INTEREST       RATE (4)          BALANCE       INTEREST    RATE (4)
                                               ---------------------------------------      -------------------------------------
                                                                        (IN THOUSANDS OF DOLLARS)
<S>                                               <C>           <C>              <C>            <C>             <C>         <C>
Interest earning assets:
    Federal funds sold                            $   5,161     $    19          1.33%          $   1,785       $     3     0.90%
    Securities:
      Taxable                                        38,858         412          4.24              42,980           434     4.04
      Tax-exempt (1)                                  8,729          76          5.28               1,526            13     5.16
    Loans (net of unearned interest) (2)(5)(6)      156,359       2,453          6.28             138,341         2,334     6.75
                                               ---------------------------------------      -------------------------------------
        Total interest earning assets (1)         $ 209,107     $ 2,960          5.66%          $ 184,632       $ 2,784     6.03%
                                               ---------------------------------------      -------------------------------------
Nonearning assets:
    Cash and due from banks                       $   9,661                                     $   7,193
    Bank premises and equipment, net                  5,595                                         4,674
    Other assets                                      4,480                                         3,061
    Allowance for loan losses                        (1,760)                                       (1,553)
                                               -------------                                --------------
        Total assets                              $ 227,083                                     $ 198,007
                                               =============                                ==============
Interest bearing liabilities:
    Savings deposits                              $  30,829     $    42          0.54%          $  23,211       $    29     0.50%
    Time deposits                                    95,126         622          2.62              94,107           854     3.63
    NOW accounts                                     35,727         121          1.35              25,775            72     1.12
    Money market accounts                            10,205          21          0.82               7,276            14     0.77
    Borrowings                                          293           1          1.37                 747             2     1.07
                                               ---------------------------------------      -------------------------------------
        Total interest bearing liabilities        $ 172,180     $   807          1.87%          $ 151,116       $   971     2.57%
                                               ---------------------------------------      -------------------------------------
Noninterest bearing liabilities:
    Demand deposits                               $  35,529                                     $  27,359
    Other liabilities                                 2,242                                         2,610
    Shareholders' equity                             17,132                                        16,922
                                               -------------                                --------------
        Total liabilities and
           shareholders' equity                   $ 227,083                                     $ 198,007
                                               =============                                ==============
                                                              ----------                                    ------------
Net interest income (1)                                         $ 2,153                                         $ 1,813
                                                              ==========                                    ============
Net interest spread (3)                                                          3.79%                                      3.46%
                                                                          ============                                  =========
Net interest income to average                                                   4.12%                                      3.93%
                                                                          ============                                  =========
    interest earning assets (1)
</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 $71,000 in 2004 and $111,000 in
    2003.

(6) Interest income on loans includes fees of $18,343 in 2004 and $41,255 in
    2003 from the Business Manager Program, student loans and lease receivables.


                                       16
<PAGE>

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

                                                            SEPTEMBER 30, 2004                           SEPTEMBER 30, 2003
                                                    ------------------------------------      --------------------------------------
                                                      YTD                                         YTD
                                                    AVERAGE          YTD        YIELD/           AVERAGE          YTD       YIELD/
                                                    BALANCE       INTEREST     RATE (4)          BALANCE        INTEREST    RATE (4)
                                                    ------------------------------------      --------------------------------------
                                                                          (IN THOUSANDS OF DOLLARS)
<S>                                               <C>           <C>              <C>           <C>             <C>          <C>
Interest earning assets:
   Federal funds sold                             $   2,677     $    27          1.05%         $   1,894       $    16      1.07%
   Securities:
     Taxable                                         34,439       1,083          4.19             44,660         1,453      4.34
     Tax-exempt (1)                                   7,049         180          5.16              1,201            33      5.55
   Loans (net of unearned interest) (2)(5)(6)       152,103       7,125          6.25            134,290         6,817      6.77
                                               --------------------------------------      -------------------------------------
        Total interest earning assets (1)         $ 196,268     $ 8,415          5.72%         $ 182,045       $ 8,319      6.09%
                                               --------------------------------------      -------------------------------------
Nonearning assets:
   Cash and due from banks                        $   8,975                                    $   6,695
   Bank premises and equipment, net                   5,403                                        4,731
   Other assets                                       3,488                                        3,090
   Allowance for loan losses                         (1,709)                                      (1,527)
                                               -------------                               --------------
        Total assets                              $ 212,425                                    $ 195,034
                                               =============                               ==============
Interest bearing liabilities:
   Savings deposits                               $  27,674     $   107          0.52%         $  22,590       $    84      0.50%
   Time deposits                                     93,299       1,907          2.73             94,779         2,924      4.11
   NOW accounts                                      29,000         260          1.20             24,861           213      1.14
   Money market accounts                              9,461          57          0.80              6,643            38      0.76
   Borrowings                                           553           5          1.21                257             3      1.56
                                               --------------------------------------      -------------------------------------
        Total interest bearing liabilities        $ 159,987     $ 2,336          1.95%         $ 149,130       $ 3,262      2.92%
                                               --------------------------------------      -------------------------------------
Noninterest bearing liabilities:
   Demand deposits                                $  32,924                                    $  26,794
   Other liabilities                                  2,277                                        2,446
   Shareholders' equity                              17,237                                       16,664
                                               -------------                               --------------
        Total liabilities and
           shareholders' equity                   $ 212,425                                    $ 195,034
                                               =============                               ==============
                                                              ----------                                    -----------
Net interest income (1)                                         $ 6,079                                        $ 5,057
                                                              ==========                                    ===========
Net interest spread (3)                                                          3.77%                                      3.17%
                                                                        =============                                  =========
Net interest income to average
   interest earning assets (1)                                                   4.13%                                      3.70%
                                                                        =============                                  =========
</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 $212,000 in 2004 and $318,000 in
    2003.

(6) Interest income on loans includes fees of $84,031 in 2004 and $110,594 in
    2003 from the Business Manager Program, student loans and lease receivables.



                                       17
<PAGE>



         PROVISION FOR LOAN LOSSES

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

                  The provision for loan losses is a charge to earnings which is
         made to maintain the allowance for loan losses at a sufficient level.
         The provision for loan losses for the three months ended September 30,
         2004, and September 30, 2003, amounted to $102,000 and $57,000,
         respectively. The provision for loan losses for the nine months ended
         September 30, 2004, and September 30, 2003, amounted to $283,000 and
         $194,000, respectively. Loan quality remains stable, past dues are
         minimal and nonaccruals have decreased for the same period; however,
         nonaccruals have increased slightly from December 31, 2003 to September
         30, 2004. 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 September 30,
         2004 increased $18,000 or 3.8% to $489,000 from $471,000 in the third
         quarter of 2003. Noninterest income for the nine months ended September
         30, 2004 increased $171,000 or 13.1% to $1.5 million from $1.3 million
         during the first nine months of 2003. The increase in noninterest
         income is attributable, in general, to an increase in service charge
         fees effective October 1, 2003 the bank assesses its customers.
         Specifically, noninterest income increased due to fees generated from
         the Bounce Protection program, insurance commissions, ATM and debit
         card fees and offset by a decrease in gain on sale of investment
         securities. This increase for the first nine months of 2004 was offset
         by a decrease in overdraft fees, travel club fees and miscellaneous
         customer service fees. The fees related to the Bounce Protection
         program, ATM and debit card fees 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 September 30,
         2004, increased $275,000 or 19.5% and for the nine months ended
         September 30, 2004, increased $500,000 or 11.5%. Salaries increased due
         to normal merit increases, several new hires, salaries for employees of
         the acquired Hancock branch and additional payroll expenses related to
         the conversion of the Hancock branch. The increase in furniture and
         equipment expense was due to an increase in software amortization
         associated with the 2003 upgrade of the Bank's technology systems.
         Another factor relating to the increase in furniture and equipment
         expense was an increase in the cost and number of equipment maintenance
         contracts the Bank entered into primarily due to the 2003 technology
         system upgrade. The increase in other operating expenses was due to an
         increase in stationery, supplies & printing, telephone, legal fees and
         advertising expense offset by a decrease in postage, data processing
         expense and bounce protection expense. The increase in stationery,
         supplies and printing, 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
         expiration of the Bank's contract with Pinnacle Financial Strategies in
         February 2004.


                                       18
<PAGE>

         INCOME TAXES

                  The Bank's provision for income taxes decreased $38,000 or
         11.6% to $291,000 for the three months ended September 30, 2004 and
         increased $60,000 or 7.8% to $836,000 for the nine months ended
         September 30, 2004. The effective tax rates for the second quarter of
         2004 and 2003 were 31.4% and 35.5%, respectively and for the first nine
         months of 2004 and 2003 were 31.8% and 36.4%, respectively. The Bank's
         income tax expense differs from the amount computed at statutory rates
         primarily due to the tax-exempt earnings from certain investment
         securities.

         FINANCIAL CONDITION

                  The Bank's total assets as of September 30, 2004 increased
         $31.4 million or 15.6% to $232.5 million from December 31, 2003 due in
         part to the acquisition of the Hancock branch. In particular, $8.4
         million in loans, $324,000 in premises and equipment were acquired
         along with $781,000 in core deposit intangible assets. The Bank's total
         liabilities increased $29.7 million or 16.1% to $214.2 million. The
         total liabilities which were assumed were $14.6 million in deposits and
         $6,600 in other accrued expenses.

                  The following discussion of the financial condition of the
         Bank excludes the acquisition of the Hancock branch assets and
         liabilities. The Bank's assets also increased due primarily to a $1.1
         million increase in cash and due from banks, $5.5 million increase in
         federal funds sold, $13.7 million increase in investment securities and
         a $1.3 million increase in loans. The Bank's liabilities also increased
         $16.3 million due to deposit growth, offset by a decrease of $1.2
         million in borrowings and an additional $65,000 in accrued expenses and
         other liabilities. Shareholders' equity increased $1.7 million to $18.3
         million at September 30, 2004, primarily due to net income of $1.8
         million and $113,000 increase in accumulated other comprehensive income
         offset by the semi-annual cash dividend of $179,000. The components of
         accumulated other comprehensive income at September 30, 2004, were
         unrealized gains and losses on available for sale securities, net of
         deferred income taxes and minimum pension liability adjustment, net of
         deferred income taxes. The unrealized gains and losses are primarily a
         function of available market interest rates relative to the yield being
         generated on the available for sale portfolio. No earnings impact
         results unless the securities are actually sold.

         LOAN PORTFOLIO

                  At September 30, 2004, total loans increased $9.7 million or
         6.7% to $154.4 million from $144.7 million at December 31, 2003. This
         increase is mainly a result of the purchase of $8.4 million in loans
         from the Hancock branch acquisition. The Bank experienced steady loan
         growth in the first half of 2004 offset by a $3.0 million decrease in
         loans during the third quarter of 2004 due in part to three large
         commercial lines of credit being reduced resulting in a net increase in
         loans of $1.3 million for the year. The Bank expects loan growth to
         remain flat through the remainder of 2004.



                                       19
<PAGE>



         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>
                                                    SEPTEMBER 30,                 DECEMBER 31,
                                         ------------------------------------   ----------------
                                              2004                2003               2003
                                         ----------------    ----------------   ----------------
<S>                                            <C>                 <C>                <C>
 Nonaccrual loans                              $ 436,162           $ 625,137          $ 348,660

 Loans past due 90 days or more
    still accruing interest                            -              81,152             27,045
                                         ----------------    ----------------   ----------------
 Total nonperforming loans                     $ 436,162           $ 706,289          $ 375,705
                                         ----------------    ----------------   ----------------
 Other real estate owned                       $       -           $ 107,619          $       -
                                         ----------------    ----------------   ----------------
 Total nonperforming assets                    $ 436,162           $ 813,908          $ 375,705
                                         ================    ================   ================
 Nonperforming loans/Total loans                   0.28%               0.50%              0.26%
 Nonperforming assets/Total assets                 0.19%               0.41%              0.19%
Allowance for loan losses/Total loans              1.14%               1.11%              1.11%
</TABLE>

                  As of September 30, 2004, the Bank has no loans which
         management considers to be impaired. Management is aware of three
         borrowers who have exhibited weaknesses. Their loans have aggregate
         uninsured balances of $998,000. A specific allowance of $80,000 related
         to these loans has been established as part of the allowance for loan
         losses. The loans are collateralized and management anticipates any
         additional potential loss would be minimal.

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

                  The unallocated portion of the allowance for loan losses
         represents the results of analyses that measure probable losses
         inherent in the portfolio that are not adequately captured in the
         allocated allowance analyses. These analyses include consideration of
         unidentified losses inherent in the portfolio resulting from changing
         underwriting criteria, changes in the types and mix of loans
         originated, industry concentrations and evaluations, allowance levels
         relative to selected overall credit criteria and other economic
         indicators used to estimate probable incurred losses. At September 30,
         2004, the allowance for loans losses totaled $1.8 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 September 30, 2004 and December 31,
         2003.



                                       20
<PAGE>



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

<Table>
<Caption>
In thousands                               SEPTEMBER 30,                                DECEMBER 31,
                              ---------------------------------------     ------------------------------------------
                                               2004                                        2003
                              ---------------------------------------     ------------------------------------------
                                                      PERCENT OF                                  PERCENT OF
                                                     LOANS IN EACH                               LOANS IN EACH
                                                      CATEGORY TO                                 CATEGORY TO
                                   AMOUNT             TOTAL LOANS              AMOUNT             TOTAL LOANS
                              ------------------   -----------------------------------------   ---------------------
<S>                                   <C>                     <C>                 <C>                     <C>
Commercial, financial                     $ 843                   19%               $   782                   21%
    and agriculture
Real estate - residential                   466                   70                    401                   67
     mortgage
Installment and other                       274                   11                    274                   12
Unallocated                                 170                  N/A                    151                  N/A
                              ------------------   --------------------   ------------------   ---------------------
       Total                            $ 1,753                  100%               $ 1,608                  100%
                              ==================   ====================   ==================   =====================
</TABLE>




         DEPOSITS

                  The Bank's deposits increased $30.9 million or 17.1% during
         the nine months ended September 30, 2004. This increase is mainly a
         result of the assumption of $14.6 million in deposits from the Hancock
         acquisition. The breakdown of the assumed deposits are $8.2 million in
         demand and savings and $6.4 million in certificates of deposit. The
         Bank continues to experience a change in the deposit account mix
         through the first nine months of 2004. Steady growth continues in
         regular demand, interest-bearing demand and savings deposits due to the
         continued customer growth in all the Bank's branches. The change in the
         deposit account mix is attributable to the continued maturity of rate
         sensitive certificate of deposits and customers temporarily placing
         their money in demand or savings accounts. The Bank experienced an
         overall increase of $1.2 million in other time deposits and rate
         sensitive jumbo certificate of deposits during the first nine months of
         2004. This increase is attributable to the $6.4 million in certificates
         of deposit acquired from the Hancock branch acquisition offset by a
         decrease of $5.2 million, which is primarily due to the maturities of
         the 36-month Ultimate Certificate of Deposits. Deposits, in general,
         have experienced an increase due to customer's concerns with the weak
         economy and stock market.

         CAPITAL RESOURCES

                  Shareholders' equity increased $1.7 million or 10.4% during
         the first nine months of 2004 due to $1.8 million in net income and
         $113,000 increase in accumulated other comprehensive income offset by
         the semi-annual cash dividend of $179,000. 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 September
         30, 2004. The following table summarized, as of September 30, 2004, the
         Bank's capital ratios.
<TABLE>
<CAPTION>

                                                     Components                Actual             Required
                                                     of Capital                Ratio                Ratio
                                                     ----------                -----                -----
<S>                                                     <C>                     <C>                  <C>
         Tier 1 Capital                                 $18,088                  8.0%                4.0%
         Total Risk Based Capital                       $19,770                 14.7%                8.0%
</TABLE>

         RECENTLY ISSUED ACCOUNTING STANDARDS

                  On March 9, 2004, the SEC staff issued Accounting Bulletin No.
         105, "Application of Accounting Principles to Loan Commitments", which
         provides guidance regarding mortgage loan interest rate lock
         commitments related to loans held for sale as written options,
         effective for


                                       21
<PAGE>

        commitments entered into after March 31, 2004. This Statement had no
        material effect on the Company's consolidated financial statements.

                  In November 2003, the EITF reached consensus on Issue 03-1,
         "The Meaning of Other-Than-Temporary Impairment and Its Application to
         Certain Investments." Issue 03-1 provides guidance in the recognition
         and measurement of other-than-temporary impairment for certain
         securities, including:

                -   All debt securities and equity securities that are subject
                    to the scope of SFAS No. 115, "Accounting for Certain
                    Investments in Debt and Equity Securities"; and

                -   Equity securities that are not subject to the scope of SFAS
                    No. 115 and that are accounted for under the cost method of
                    accounting, or cost method investments.

                  Issue 03-1 also provides guidance on disclosure requirements
         for other-than-temporary impairment for cost method investments. The
         guidance in these areas of Issue 03-1 is effective for fiscal years
         ending after June 15, 2004. The implementation of these areas of Issue
         03-1 is not anticipated to have a material impact on our financial
         statements. We have previously adopted the disclosure provisions of
         Issue 03-1 for debt and equity investments that are accounted for under
         SFAS No. 115. Those requirements were effective for fiscal years ending
         after December 15, 2003.

                  On September 30, 2004, the FASB issued a final FSP EITF Issue
         03-1-1 that delays the effective date for the measurement and
         recognition guidance contained within Issue 03-1. Disclosures required
         by Issue 03-1 have not been deferred. The FASB noted that this delay
         does not suspend existing accounting requirements for assessing whether
         impairments of held to maturity and available for sale securities are
         other-than-temporary, including current guidance for cost method
         investments.

         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
         $58.6 million, or 25.2% of total assets at September 30, 2004. In
         addition, liquidity may be generated through loan repayments and over
         $3.0 million of available borrowing arrangements with correspondent
         banks. At September 30, 2004, management considered the Bank's ability
         to satisfy its anticipated liquidity needs over the next twelve months.
         Management believes that the Bank is well positioned and has ample
         liquidity to satisfy these needs. The Bank generated $2.1 million of
         cash from operations in the first nine months of 2004, which compares
         to $1.9 million during the same time period in 2003. Additional cash of
         $15.1 million was generated through net financing activities through
         September 30, 2004, which compares to $8.0 million for the first nine
         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 $16.2 million during the first nine months of 2004 compared to
         $9.7 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



                                       22
<PAGE>

        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
         4.75 percent through September 2005. Based on the October 2004 outlook,
         if interest rates increased or decreased by 200 basis points, the model
         indicates that net interest income during the policy measurement period
         would be affected by less than 10 percent, in both an increasing or
         decreasing interest rate scenario.

         CONTRACTUAL OBLIGATIONS

                  During the quarter and nine months ended September 30, 2004,
         the Bank entered into contracts related to the construction of the
         Spring Mills Branch facility in north Berkeley County, West Virginia
         totaling $893,656. There were no other material changes outside the
         normal course of business to the quantitative and qualitative
         disclosures about contractual obligations previously reported on Form
         10-K for the year ended December 31, 2003. See Item 7, "Management's
         Discussion and Analysis of Financial Condition and Results of
         Operations - Contractual Obligations" in the Form 10-K for December 31,
         2003 for a detailed discussion.

         ITEM 4.  CONTROLS AND PROCEDURES

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

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

                  Presently, the Bank is planning to engage consultants to
         assist in the documentation of internal controls and make
         recommendations for improvements, if necessary, as part of the
         compliance with Section 404 of the Sarbanes-Oxley Act.

                  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.



                                       23
<PAGE>

                  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.

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



                                       24
<PAGE>



         PART II:  OTHER INFORMATION

         Item 1.   Legal Proceedings

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

         Item 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 9, 2004      7, 9 & 12     The Company issued a press
                                                    release that announced
                                                    operating results of its
                                                    first six months ended
                                                    June 30, 2004.


                                       25
<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  November 12, 2004     /s/ Thomas F. Rokisky, President/CEO
               -----------------     ------------------------------------

         Date  November 12, 2004     /s/ Rebecca S. Stotler, Vice President/CFO
               -----------------     ------------------------------------



                                       26