<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, 2001


 [ ] 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)




<TABLE>
<CAPTION>
<S>                                         <C>
    United States of America                               55-0773918
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>


<TABLE>
<S>                                                           <C>
101 S. Washington Street, Berkeley Springs, WV                  25411
  (Address of principal executive offices)                    (Zip Code)
</TABLE>


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

  Common Stock $1 par value, 458,048 shares outstanding as of November 13, 2001


<PAGE>

                          CNB FINANCIAL SERVICES, INC.

                                TABLE OF CONTENTS

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

   Item 1.  Financial Statements

<S>                                                                                                                      <C>
            Consolidated Statements of Financial Condition as of September 30, 2001 (Unaudited)
              and December 31, 2000........................................................................................3

            Consolidated Statements of Income for the Three and Nine Months ended September 30, 2001
              and  2000 (Unaudited)........................................................................................4

            Consolidated Statements of Changes in Shareholders' Equity for the Nine
              Months Ended September 30, 2001 (Unaudited) and the Year Ended December 31, 2000.............................5

            Consolidated Statements of Cash Flows for the Nine Months
              Ended September 30, 2001 and 2000 (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, 2001................................12

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


PART II:    OTHER INFORMATION

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

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

            SIGNATURES....................................................................................................21
</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; 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                                   2001                2000
                                                                 --------------     --------------
                                                                   (Unaudited)

<S>                                                              <C>                <C>
Cash and due from banks                                          $   4,250,210      $   3,739,854
Federal funds sold                                                   5,653,894          1,207,684
Securities available for sale
   (at approximate market value)                                    40,365,130         35,374,293
Loans and lease receivable, net                                    108,979,454        104,003,931
Accrued interest receivable                                          1,160,837          1,004,257
Premises and equipment, net                                          4,027,310          3,167,302
Deferred income taxes                                                  130,453            375,509
Cash surrender value of life insurance                                 875,206            790,807
Intangible assets                                                      107,339            113,853
Other assets                                                           273,695            204,877
                                                                 --------------     --------------
         TOTAL ASSETS                                            $ 165,823,528      $ 149,982,367
                                                                 =============      =============

            LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
     Demand                                                      $  17,913,657      $  16,164,702
     Interest-bearing demand                                        25,166,756         24,012,083
     Savings                                                        16,986,362         15,571,297
     Time, $100,000 and over                                        24,483,873         17,764,825
     Other time                                                     63,970,973         60,482,943
                                                                 --------------     --------------
                                                                 $ 148,521,621      $ 133,995,850
   Accrued interest payable                                          1,050,262          1,038,122
   Accrued expenses and other liabilities                            1,074,547          1,084,577
                                                                 --------------     --------------
         TOTAL LIABILITIES                                       $ 150,646,430      $ 136,118,549
                                                                 --------------     --------------
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                                                10,472,979          9,657,422
   Accumulated other comprehensive income                              382,479           (115,244)
                                                                 --------------     --------------
         TOTAL SHAREHOLDERS' EQUITY                              $  15,177,098      $  13,863,818
                                                                 --------------     --------------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $ 165,823,528      $ 149,982,367
                                                                 =============      =============
</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,
                                                             -------------------------------      ------------------------------
                                                                  2001              2000              2001              2000
                                                             ------------      -------------      ------------       -----------
INTEREST INCOME
<S>                                                          <C>                <C>                <C>               <C>
   Interest and fees on loans                                $ 2,399,242        $ 2,273,890        $ 7,068,503       $ 6,554,580
   Interest and dividends on securities
      United States Treasury securities                               --              6,342                274            18,925
      U.S. Government agencies and
         corporations                                            571,703            479,602          1,677,766         1,445,653
      State and political subdivisions                             7,363             10,361             22,088            52,640
      Other                                                        9,695                 --             42,654             3,890
   Interest on federal funds sold                                 41,190             24,358            130,560            41,561
                                                             -----------        -----------        -----------       -----------
                                                             $ 3,029,193        $ 2,794,553        $ 8,941,845       $ 8,117,249
                                                             -----------        -----------        -----------       -----------
INTEREST EXPENSE
   Interest on interest bearing demand,
     savings and time deposits                               $ 1,489,436        $ 1,381,440        $ 4,478,741       $ 3,891,912
   Interest on federal funds purchased                                --                385              2,291             5,051
                                                             -----------        -----------        -----------       -----------
                                                             $ 1,489,436        $ 1,381,825        $ 4,481,032       $ 3,896,963
                                                             -----------        -----------        -----------       -----------
           NET INTEREST INCOME                               $ 1,539,757        $ 1,412,728        $ 4,460,813       $ 4,220,286

PROVISION FOR LOAN LOSSES                                         57,000             30,000            169,000            90,000
                                                             -----------        -----------        -----------       -----------
           NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES                     $ 1,482,757        $ 1,382,728        $ 4,291,813       $ 4,130,286
                                                             -----------        -----------        -----------       -----------
NONINTEREST INCOME
   Service charges on deposit accounts                       $   159,370        $    66,889        $   377,998       $   213,551
   Other service charges, commissions
      and fees                                                    66,547             51,336            190,938           157,376
   Insurance commissions                                          34,940             23,687             93,720            71,134
   Other operating income                                         25,664             11,977             64,505            44,495
   Gain on demutualization of insurance company                       --                 --                 --           195,889
   Net gain (loss) on sale of securities                              --             (4,441)               833           (14,136)
   Gain on sale of other real estate owned                            --             12,177                 --            12,177
                                                             -----------        -----------        -----------       -----------
                                                             $   286,521        $   161,625        $   727,994       $   680,486
                                                             -----------        -----------        -----------       -----------
NONINTEREST EXPENSES
   Salaries                                                  $   519,594        $   441,358        $ 1,482,112       $ 1,320,577
   Employee benefits                                             149,898            127,910            455,079           418,773
   Occupancy of premises                                          72,623             56,641            201,383           204,924
   Furniture and equipment expense                                55,653             64,378            171,726           198,629
   Other operating expenses                                      424,885            333,673          1,194,354         1,052,401
                                                             -----------        -----------        -----------       -----------
                                                             $ 1,222,653        $ 1,023,960        $ 3,504,654       $ 3,195,304
                                                             -----------        -----------        -----------       -----------
            INCOME BEFORE INCOME TAXES                       $   546,625        $   520,393        $ 1,515,153       $ 1,615,468

PROVISION FOR INCOME TAXES                                       187,237            186,419            534,699           588,889
                                                             -----------        -----------        -----------       -----------
            NET INCOME                                       $   359,388        $   333,974        $   980,454       $ 1,026,579
                                                             ===========        ===========        ===========       ===========
BASIC EARNINGS PER SHARE                                     $      0.78        $      0.73        $      2.14       $      2.24
                                                             ===========        ===========        ===========       ===========
</TABLE>

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



                                       4
<PAGE>
                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

<TABLE>
<CAPTION>
                                                                                                ACCUMULATED
                                                                                                   OTHER              TOTAL
                                               COMMON            CAPITAL          RETAINED     COMPREHENSIVE       SHAREHOLDERS'
                                              STOCK (1)        SURPLUS (1)       EARNINGS (1)     INCOME              EQUITY
                                            -----------        -----------        ---------     -----------         -----------
<S>                                         <C>                <C>                <C>           <C>                 <C>
BALANCE, DECEMBER 31, 1999                  $   458,048        $ 3,863,592      $ 8,818,791     $  (891,710)         $12,248,721
   Issuance of common stock                      12,000
   Cancellation of stock                        (12,000)
Comprehensive income:
   Net income for 2000                               --                 --        1,305,840             --                   --
  Change in unrealized gains
    (losses) on securities
    available for sale
    (net of tax of $475,898)                         --                 --               --         776,466                  --
Total Comprehensive Income                           --                 --               --              --           2,082,306
Cash dividends ($1.02 per share)                                                   (467,209)                           (467,209)
                                            -----------        -----------       ----------     -----------         -----------
BALANCE, DECEMBER 31, 2000                  $   458,048        $ 3,863,592      $ 9,657,422     $  (115,244)        $13,863,818
Comprehensive income:
   Net income for nine months
      ended September 30, 2001                       --                 --          980,454              --                  --
  Change in unrealized gains
    (losses) on securities
    available for sale
    (net of tax of $305,056)                         --                 --               --         497,723                  --
Total Comprehensive Income                           --                 --               --              --           1,478,177
Cash dividends ($0.36 per share)                                                   (164,897)                           (164,897)
                                            -----------        -----------       ----------     -----------         -----------
BALANCE,  SEPTEMBER 30, 2001                $   458,048        $ 3,863,592      $10,472,979     $   382,479         $15,177,098
                                            ===========        ===========      ===========     ===========         ===========
</TABLE>


(1)  Restated to reflect the formation of CNB Financial Services, Inc. and the
     acquisition of Citizens National Bank and subsidiary on August 31, 2000 and
     accounted for as a pooling of interests.

  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,
                                                                                 ---------------------------------------
                                                                                      2001                         2000
                                                                                 -------------              ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>                        <C>
Net income                                                                       $    980,454               $  1,026,579
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                                    171,735                    191,409
     Provision for loan losses                                                        169,000                     90,000
     Deferred income taxes                                                            (60,000)                    50,000
     Net (gain) loss on sale of securities                                               (833)                    14,136
     (Gain) on sale of real estate owned                                                   --                    (12,177)
     (Gain) on demutualization of insurance company                                        --                   (195,889)
     Loss on abandonment of fixed assets                                                   --                     55,254
     Net decrease in loans held for sale                                                   --                     65,300
     (Increase) in accrued interest receivable                                       (156,580)                  (223,711)
     (Increase) in other assets                                                       (67,429)                  (101,602)
     Increase in accrued interest payable                                              12,140                    182,528
     (Increase) in cash surrender value on life insurance in excess
          of premiums paid                                                            (34,553)                   (48,000)
     Increase (decrease) in accrued expenses and other liabilities                    (10,030)                    75,465
     Amortization of deferred loan (fees) cost                                         39,426                     32,440
     (Accretion) of premium and discount on investments                               (25,690)                    (1,296)
                                                                                 -------------              ------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES                               $  1,017,640               $  1,200,436
                                                                                 -------------              ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Net (increase) in loans                                                     $ (5,196,547)              $ (7,515,531)
     Proceeds from sale of loans                                                           --                  1,027,345
     Proceeds from sales of securities                                                901,406                  2,659,593
     Proceeds from maturities of securities                                        36,472,222                    620,000
     Purchases of securities                                                      (41,535,163)                (2,683,992)
     Purchases of premises and equipment                                           (1,014,023)                   (74,283)
     Proceeds from sales of other real estate owned, net                                   --                     79,115
     Net (increase) in federal funds sold                                          (4,446,210)                (3,795,777)
     Premiums paid on life insurance                                                  (49,843)                   (49,893)
                                                                                 -------------              ------------
         NET CASH (USED IN) INVESTING ACTIVITIES                                 $(14,868,158)              $ (9,733,423)
                                                                                 -------------              ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand and savings deposits                                  $  4,318,693               $  1,181,648
    Net increase in time deposits                                                  10,207,078                  7,567,407
    Cash dividends paid                                                              (164,897)                  (164,897)
                                                                                 -------------              ------------
         NET CASH PROVIDED BY FINANCING ACTIVITIES                               $ 14,360,874               $  8,584,158
                                                                                 -------------              ------------
         NET INCREASE IN CASH AND CASH EQUIVALENTS                               $    510,356               $     51,171
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                      3,739,854                  4,035,293
                                                                                 -------------              ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $  4,250,210               $  4,086,464
                                                                                 ============               ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period:
               Interest                                                          $  4,491,253               $  3,710,564
               Income taxes                                                      $    539,500               $    481,000
</TABLE>


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


                                       6
<PAGE>
                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1.   Formation of Holding Company

               In March 2000, Citizens National Bank's (Bank) Board of Directors
          approved the formation of CNB Financial Services, Inc., (CNB) a
          financial services holding company. A special meeting of the Bank's
          shareholders was held on August 4, 2000 and the shareholders approved
          the Agreement and Plan of Merger between the Bank and CNB, whereby the
          Bank became a wholly-owned subsidiary of CNB and the shareholders of
          the Bank became shareholders of CNB. The merger became effective on
          August 31, 2000. Each Bank shareholder received two shares of CNB
          stock for each share of the Bank's common stock. The Bank received
          approval of the reorganization from the Comptroller of the Currency
          and the Federal Reserve Bank of Richmond. Also, the Securities and
          Exchange Commission (SEC) declared the registration statement on Form
          S-4 related to the Agreement and Plan of Merger between the Bank and
          CNB effective on July 12, 2000. The Bank incurred and expensed all
          costs of start-up activities including activities related to
          organizing the new entity and filings with the SEC and Bank
          regulators. On August 31, 2000, CNB Financial Services, Inc.
          consummated its merger with the Bank and subsidiary, in a tax-free
          exchange of stock. Shareholders of the Bank received two shares of CNB
          Financial Services, Inc. common stock for each of the 229,024 shares
          of the Bank's common stock. The merger was accounted for as a pooling
          of interest.

Note 2.   Basis of Presentation

               In the opinion of CNB, the accompanying unaudited consolidated
          financial statements contain all adjustments (consisting of only
          normal recurring accruals) necessary for a fair presentation of CNB
          financial condition as of September 30, 2001 and the results of
          operations for the three and nine months ended September 30, 2001 and
          2000 and cash flows for the nine months ended September 30, 2001 and
          2000.

               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
          Financial Services, Inc.'s Annual Report for the year ended December
          31, 2000.

Note 3.   Securities Available for Sale

               The amortized cost and estimated market value of debt securities
          at September 30, 2001 and December 31, 2000 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.


                                       7
<PAGE>
                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 3.   Securities Available for Sale (continued)

                        Securities available for sale are summarized as follows:


<TABLE>
<CAPTION>

                                                                      SEPTEMBER 30, 2001                                 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                      $   999,966         $     1,909        $        --          $ 1,001,875       7.54 %
        After 1 but within 5 years             9,190,626             126,207                 --            9,316,833       5.86
        After 5 but within 10 years           28,252,477             487,272                 --           28,739,749       6.44
                                             -----------         -----------        -----------          -----------
                                             $38,443,069         $   615,388        $        --          $39,058,457       6.33
                                             -----------         -----------        -----------          -----------

     States and political subdivisions
        After 1 but within 5 years           $   350,000         $     1,079        $        --          $   351,079       6.75
        After 5 but within 10 years              200,000               1,559              1,115              200,444       8.02
                                             -----------         -----------        -----------          -----------
                                             $   550,000         $     2,638        $     1,115          $   551,523       7.21
                                             -----------         -----------        -----------          -----------
     Federal Reserve Bank stock              $   129,650         $        --        $        --          $   129,650       6.00
     Federal Home Loan Bank stock                625,500                  --                 --              625,500       6.75
                                             -----------         -----------        -----------          -----------
                                             $   755,150         $        --        $        --          $   755,150       6.62
                                             -----------         -----------        -----------          -----------
Total securities available for sale          $39,748,219         $   618,026        $     1,115          $40,365,130       6.34 %
                                             ===========         ===========        ===========          ===========
</TABLE>


                                       8
<PAGE>
                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 3.   Securities Available for Sale (continued)

<TABLE>
<CAPTION>

                                                                      DECEMBER 31, 2000                             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. Treasury securities
        After 1 but within 5 years          $   400,432       $     6,443         $        --       $   406,875        6.78 %
                                            -----------       -----------         -----------       -----------
     U.S. Government agencies
        and corporations
        After 1 but within 5 years          $18,597,039       $    15,689         $   179,645       $18,433,083        6.40
        After 5 but within 10 years          15,276,363            43,845              76,654        15,243,554        7.01
                                            -----------       -----------         -----------       -----------
                                            $33,873,402       $    59,534         $   256,299       $33,676,637        6.68
                                            -----------       -----------         -----------       -----------
     States and political subdivisions
        After 1 but within 5 years          $   350,000       $       810         $        --       $   350,810        6.75
        After 5 but within 10 years             100,000               907                  --           100,907        7.33
        After 10 years                          100,000             2,714                  --           102,714        8.72
                                            -----------       -----------         -----------       -----------
                                            $   550,000       $     4,431         $        --       $   554,431        7.21
                                            -----------       -----------         -----------       -----------
     Federal Reserve Bank stock             $   129,650       $        --         $        --       $   129,650        6.00
     Federal Home Loan Bank stock               606,700                --                  --           606,700        7.25
                                            -----------       -----------         -----------       -----------
                                            $   736,350       $        --         $        --       $   736,350        7.03
                                            -----------       -----------         -----------       -----------
Total securities available for sale         $35,560,184       $    70,408         $   256,299       $35,374,293        6.70 %
                                            ===========       ===========         ===========       ===========
</TABLE>



                    The carrying value of securities pledged to secure public
               deposits and for other purposes as required or permitted by law
               totaled $11,222,083 at September 30, 2001 and $10,591,329 at
               December 31, 2000.

                    Proceeds from sales of securities available for sale
               (excluding maturities) during the nine months ended September 30,
               2001 and the year ended December 31, 2000 were $901,406 and
               $2,659,593, respectively. Gross gains (losses) of $7,071 and
               $(6,238) during the nine months ended September 30, 2001 and
               $7,115 and $(21,106) for the year ended December 31, 2000 were
               realized on the respective sales.


                                       9
<PAGE>
                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 4. Loans and Lease Receivable

                  Major classifications of loans at September 30, 2001 and
         December 31, 2000, were as follows:


<TABLE>
<CAPTION>
                                                     SEPTEMBER 30,      DECEMBER 31,
                                                         2001               2000

                                                   -------------       --------------
<S>                                                <C>                 <C>
      Loans:
         Real estate                               $  68,379,026       $  65,278,200
         Commercial real estate                       10,485,571           9,944,333
         Consumer                                     24,401,261          23,707,840
         Commercial                                    6,703,832           6,036,583
         Overdrafts                                       52,088              20,441
                                                   -------------       -------------
                                                   $ 110,021,778       $ 104,987,397
       Lease:                                            140,239             143,000
                                                   -------------       -------------
                                                   $ 110,162,017       $ 105,130,397
       Net deferred loan fees, costs,
           premiums and discounts                        134,975              89,867
       Allowance for loan losses                      (1,317,538)         (1,216,333)
                                                   -------------       -------------
                                                   $ 108,979,454       $ 104,003,931
                                                   =============       =============
</TABLE>

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


<TABLE>
<CAPTION>
                                                     SEPTEMBER 30,               DECEMBER 31,
                                            ------------------------------      -------------
                                                2001              2000              2000
                                            -----------       ------------      -------------
<S>                                          <C>               <C>               <C>
       Balance, Beginning                    $ 1,216,333       $ 1,147,846       $ 1,147,846
           Provision charged to
               operations                        169,000            90,000           170,000
           Recoveries                             24,090            13,901            19,494
           Loans charged off                     (91,885)          (83,455)         (121,007)
                                             -----------       -----------       -----------
       Balance, Ending                       $ 1,317,538       $ 1,168,292       $ 1,216,333
                                             ===========       ===========       ===========
</TABLE>


                  Loans are placed in nonaccrual status when, in the judgement
         of management, the probability of collection of interest is deemed to
         be insufficient to warrant further accrual. A summary of nonaccrual
         loans is as follows:


<TABLE>
<CAPTION>
                                            SEPTEMBER 30,                  DECEMBER 31,
                                    -----------------------------         -------------
                                     2001                 2000                 2000
                                    --------             --------         -------------
<S>                                 <C>                  <C>                  <C>
        Consumer loans              $ 7,315              $ 9,706              $22,125
                                    =======              =======              =======
</TABLE>


                  Proceeds from sale of loans during the nine months ended
         September 30, 2001 and the year ended December 31, 2000 were $0 and
         $1,027,345, respectively. There were no gains or losses on sale of
         loans.


                                       10
<PAGE>
                          CNB FINANCIAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 5.  Time Deposits

                  At September 30, 2001, 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                      $ 2,174,880              $11,472,579
       3 months thru 6 months                 3,622,076               12,100,426
       6 months thru 12 months                2,961,059               14,675,836
       Over 12 months                        15,725,858               50,206,005
                                             ----------               ----------
                                            $24,483,873              $88,454,846
                                            ===========              ===========
</TABLE>


Note 6. Shareholders' Equity

                  On August 31, 2000, CNB consummated its merger with the Bank,
         and the shareholders received two shares of CNB stock with a $1 par
         value for each share of Bank stock with a $10 par value. Common stock,
         capital surplus and retained earnings have been restated to reflect the
         change in par value and the shares issued due to the formation of CNB.

                  CNB initially issued 12,000 shares of common stock, which were
         redeemed and canceled on August 31, 2000, concurrent with the closing
         of the merger with the Bank.

                  All references in the accompanying consolidated financial
         statements and notes to per share amounts have been restated to reflect
         shares issued in the acquisition of the Bank by CNB. Basic earnings and
         dividends per share have been computed based on 458,048 weighted
         average number of shares outstanding in 2001 and 2000.

Note 7.  Gain on Demutualization of Insurance Company

                  The Bank owns several life insurance policies which were
         issued by a mutual insurance company. In January 2000, the insurance
         company demutualized and converted to a stock company. The Bank
         received stock from the insurance company as part of the
         demutualization. There was no direct effect on the Bank's interest as a
         policy holder. The receipt of the stock was accounted for at fair value
         with a gain recognized in income from continuing operations.

Note 8.  New Branch

                  On January 13, 2001, CNB Financial Services, Inc. entered into
         an exclusive option to purchase a parcel of land in Berkeley County,
         West Virginia for $450,000. CNB exercised the option to purchase the
         parcel on April 20, 2001. CNB intends to construct a full-service
         branch location on this site. The company entered into a contract with
         a builder to construct the building at an approximate cost of $484,000.


                                       11
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

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

                  The bank held a special meeting of its shareholders on August
         4, 2000, and the shareholders approved the Agreement and Plan of Merger
         between the bank and the company, whereby the bank became a
         wholly-owned subsidiary of the company and the shareholders of the bank
         became shareholders of the company. The merger became effective on
         August 31, 2000. Each bank shareholder received two shares of the
         company's stock for each share of the bank's common stock. On August
         31, 2000, the company consummated its merger with the bank and
         subsidiary, in a tax-free exchange of 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, 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
         three full-service offices and four automated teller machines located
         in Morgan and Berkeley Counties, West Virginia. The bank formed CNB
         Insurance Services, Inc., a wholly owned subsidiary, which is a
         property and casualty insurance agency selling primarily personal lines
         of insurance.

                  The bank exercised an option to purchase a parcel of land in
         Martinsburg, Berkeley County West Virginia for the future site of a
         full-service branch. The bank expects the branch to open in the first
         quarter of 2002. The bank opened a temporary banking facility near the
         location in August 2001. The company entered into a contract with a
         builder to construct the building at an approximate cost of $484,000.

                  The company is a fifty percent (50%) member/owner of Morgan
         County Title Insurance Agency, LLC, (MCTIA), a West Virginia limited
         liability company, which was formed in the first quarter of 2001. MCTIA
         is managed by the law firm of Trump and Trump, which also serves as
         general counsel for the company. MCTIA was formed for the purpose of
         operating a title insurance agency, which earns commissions on premiums
         collected for title insurance policies sold to the public. Profits of
         MCTIA are distributed to the MCTIA's members/owners in the form of
         dividends. There are two other members/owners of MCTIA, both of which
         are partners of the law firm of Trump and Trump, and one of whom is a
         director of CNB Financial Services, Inc., as well as its subsidiaries.
         MCTIA was capitalized with a total of $10,000, half of which ($5,000)
         was contributed by the company, and the other half of which was
         contributed by the other members.

                  The following discussion and analysis presents the significant
         changes in financial condition and results of operations of CNB for the
         three and six months ended June 30, 2001 and 2000. 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 monthly averages.

EARNINGS SUMMARY

                  Net income for the three months ended September 30, 2001 was
         $359,000, or $0.78 per share compared to $334,000 or $0.73 per share
         for the same period in 2000. Annualized return on average assets and
         average equity were .91% and 9.95% respectively, for the three months
         ended September 30, 2001, compared with .93% and 10.31%, respectively,
         for the three months ended September 30, 2000.


                                       12
<PAGE>
                  Net income for the nine months ended September 30, 2001 was
         $980,000, or $2.14 per share compared to $1.03 million or $2.24 per
         share for the same period in 2000. Annualized return on average assets
         and average equity were .83% and 9.19% respectively, for the nine
         months ended September 30, 2001, compared with .97% and 10.78%,
         respectively, for the nine months ended September 30, 2000.

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,
         2001 increased by $127,000 or 9.0% over the same period in 2000.
         Interest income for the three months ended September 30, 2001 increased
         by $235,000 or 8.4% compared to the same period in 2000, while interest
         expense increased by $108,000 or 7.8% during the three months ended
         September 30, 2001, as compared to the same period in the prior year.

                  Net interest income for the nine months ended September 30,
         2001 increased by $241,000 or 5.7% over the same period in 2000.
         Interest income for the nine months ended September 30, 2001 increased
         by $825,000 or 10.2% compared to the same period in 2000, while
         interest expense increased by $584,000 or 15.0% during the nine months
         ended September 30, 2001, as compared to the same period in the prior
         year.

                  Increased net interest income for the three and nine month
         periods is attributable to a higher level of net interest earning
         assets and a slight increase in the net interest margin. Total interest
         income increased for the three and nine month periods in 2001 compared
         to the same periods in 2000 as a result of an increase in the average
         balance of federal funds sold, loans and investment securities. Total
         interest expense increased for the three and nine month periods in 2001
         compared to the same periods in 2000 as a result of an increase in the
         average balance of savings deposits, time deposits and NOW accounts.

                  The net interest margin is impacted by the change in the
         spread between yields on earning assets and rates paid on interest
         bearing liabilities. Net interest margin decreased in 2001 from 2000.
         See Table 1 and Table 2 - Distribution of Assets, Liabilities, and
         Shareholders' Equity; Interest Rates and Interest Differential.


                                       13
<PAGE>
     TABLE 1. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30, 2001                       SEPTEMBER 30, 2000
                                                  ------------------------------------     ----------------------------------------
                                                     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                             $  4,408       $     41       3.40 %      $  1,443         $     24      6.15 %
    Securities:
        Taxable                                      38,159            585       6.13          30,109              490      6.51
        Tax-exempt(1)                                   295              4       8.22             534                6      6.81
    Loans (net of unearned interest)(2)(5)          107,647          2,399       8.91         103,137            2,274      8.82
                                                   --------       --------       ----        --------         --------      ----
           Total interest earning assets(1)        $150,509       $  3,029       8.05 %      $135,223         $  2,794      8.26 %
                                                   --------       --------       ----        --------         --------      ----
Nonearning assets:
    Cash and due from banks                         $ 3,567                                  $ 3,736
    Bank premises and equipment, net                  3,872                                    3,201
    Other assets                                      2,166                                    2,280
    Allowance for loan losses                        (1,274)                                  (1,167)
                                                  ---------                                ---------
           Total assets                           $ 158,840                                $ 143,273
                                                  =========                                =========
Interest bearing liabilities:
Savings deposits                                   $ 16,781       $     68       1.62 %     $ 15,720         $     78      1.98 %
Time deposits                                        84,778          1,289       6.08         74,611            1,131      6.06
NOW accounts                                         18,630            109       2.34         17,936              145      3.23
Money market accounts                                 4,595             23       2.00          4,920               28      2.28
Borrowings                                               --             --         --             15               --        --

                                                   --------       --------       ----       --------         --------      ----
       Total interest
        bearing liabilities                        $124,784       $  1,489       4.77 %     $113,202         $  1,382      4.88 %
                                                   --------       --------       ----       --------         --------      ----
Noninterest bearing liabilities:
    Demand deposits                                $ 17,715                                 $ 15,849
    Other liabilities                                 1,899                                    1,267
    Shareholders' equity                             14,442                                   12,955
                                                  ---------                                ---------
           Total liabilities and
              shareholders' equity                $ 158,840                                $ 143,273
                                                  =========                                =========
                                                                   -------                                     -------
Net interest income(1)                                             $ 1,540                                     $ 1,412
                                                                   =======                                     =======
Net interest spread(3)                                                            3.28 %                                    3.38 %
                                                                                  ====                                      ====
Net interest income to average                                                    4.09 %                                    4.18 %
    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 includes fees on loans.



                                       14
<PAGE>
     TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30, 2001                 SEPTEMBER 30, 2000
                                                  ----------------------------------     -------------------------------------
                                                      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                            $  3,974       $    131     4.38 %      $    589      $     42        5.84 %
    Securities:
       Taxable                                      36,812          1,732     6.27          30,373         1,480        6.50
       Tax-exempt (1)                                  302             11     7.36           1,001            41        8.27
    Loans (net of unearned interest) (2)(5)        107,533          7,068     8.76         101,385         6,554        8.62
                                                  --------       --------     ----        --------      --------        ----
          Total interest earning assets (1)       $148,621       $  8,942     8.02 %      $133,348      $  8,117        8.12 %
                                                  --------       --------     ----        --------      --------        ----
Nonearning assets:
    Cash and due from banks                        $ 3,613                                 $ 3,340
    Bank premises and equipment, net                 3,559                                   3,252
    Other assets                                     2,153                                   2,245
    Allowance for loan losses                       (1,259)                                 (1,169)
                                                 ---------                               ---------
          Total assets                           $ 156,687                               $ 141,016
                                                 =========                               =========
Interest bearing liabilities:
    Savings deposits                              $ 16,513          $ 225     1.82 %      $ 16,250         $ 243         1.99 %
    Time deposits                                   83,111          3,800     6.10          72,441         3,162         5.82
    NOW accounts                                    18,794            377     2.67          17,530           403         3.07
    Money market accounts                            4,847             77     2.12           4,972            84         2.25
    Borrowings                                          59              2     4.52              92             5         7.25
                                                  --------       --------     ----        --------      --------        ----
          Total interest bearing liabilities     $ 123,324        $ 4,481     4.84 %     $ 111,285       $ 3,897         4.67 %
                                                  --------       --------     ----        --------      --------        ----
Noninterest bearing liabilities:
    Demand deposits                               $ 17,082                                $ 15,848
    Other liabilities                                1,923                                   1,184
    Shareholders' equity                            14,358                                  12,699
                                                 ---------                               ---------
          Total liabilities and
             shareholders' equity                $ 156,687                               $ 141,016
                                                 =========                               =========
                                                                 -------                                 --------
Net interest income (1)                                           $ 4,461                                $ 4,220
                                                                 ========                                ========
Net interest spread (3)                                                        3.18 %                                    3.45 %
                                                                               ======                                    ======
Net interest income to average                                                 4.00 %                                    4.22 %
    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 includes fees on loans.


                                       15
<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,
          2001, and September 30, 2000, amounted to $57,000 and $30,000,
          respectively. The provision for loan losses for the nine months ended
          September 30, 2001, and September 30, 2000, amounted to $169,000 and
          $90,000, respectively. 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, 2001
          increased $125,000 or 77.3% to $287,000 from $162,000 in the third
          quarter of 2000. In April 2001, the Bank began offering a new service
          to checking deposit account holders. Bounce Protection is a form of
          overdraft protection which enables the customer to have their
          insufficient funds checks paid instead of returned. The customer is
          charged a fee for each check paid. Fees generated from the Bounce
          Protection program and debit cards were the primary reasons for the
          increase in noninterest income. Noninterest income for the nine months
          ended September 30, 2001 increased $48,000 or 6.9% to $728,000 from
          $680,000 for the same period in 2000. The increase in noninterest
          income was attributable to fees generated from the Bounce Protection
          program and debit card income offset by the decrease in gain on stock
          received from the demutualization of an insurance company. In the
          first quarter of 2000, the Bank recognized a gain on stock received
          from the demutualization of an insurance company of $196,000. The Bank
          received the stock in exchange for its previous membership interest as
          a participating policyholder.

          NONINTEREST EXPENSES

               Noninterest expenses for the three months ended September 30,
          2001, increased $199,000 or 19.4% primarily due to increases in
          salaries and benefits, occupancy expense and other operating expenses
          offset by a decrease in furniture and equipment expense. The increase
          in salaries and benefits was due to normal recurring merit increases
          and increased health insurance costs. Other occupancy expense
          increased due to preparations to open the temporary banking facility
          and outside painting at the Main Office building. Expenses associated
          with the Bounce Protection program, advertising, stationery, printing
          and supplies, postage and data processing attributed to the increase
          in other operating expenses.

               Noninterest expenses for the nine months ended September 30,
          2001, increased $309,000 or 9.7% to $3.5 million from $3.2 million for
          the first nine months of 2000. The increases were primarily due to
          higher costs associated with salaries and benefits and other operating
          expenses, offset by a decrease in furniture, fixture and equipment
          expense. Salaries and employee benefits increases were the result of
          normal recurring merit increases, increased health insurance costs and
          additional hiring for the South Martinsburg branch facility. Higher
          advertising, postage, data processing and Business Manager expenses
          offset by decreases in professional fees and fixed asset abandonment
          costs accounted for the increase in other operating expenses. In
          addition, expenses associated with the new Bounce Protection program
          affected other operating expenses in 2001. Also in 2000, CNB's other
          operating expenses were higher due to non-recurring expenses such as
          the abandonment of fixed assets and professional fees associated with
          the formation of the holding company. The decrease in furniture and
          equipment expense was due to a decrease in depreciation expense
          related to furniture and equipment for 2001.


                                       16
<PAGE>
          INCOME TAXES

               The Bank's provision for income taxes increased $1,000 or 0.4%
          for the three months ended September 30, 2001 and decreased $54,000 or
          9.2% to $535,000 for the nine months ended September 30, 2001. The
          effective tax rates for the third quarter of 2001 and 2000 were 34.3%
          and 35.8%, respectively and for the first nine months of 2001 and 2000
          were 35.3% and 36.5%, respectively. The decrease in the income tax
          provision for the six months ended September 30, 2001 is attributable
          to lower taxable income. The Bank's income tax expense differs from
          the amount computed at statutory rates primarily due to the tax-exempt
          earnings from certain investment securities.

          FINANCIAL CONDITION

               The Bank's total assets increased $15.8 million or 10.5% to
          $165.8 million from December 31, 2000, to September 30, 2001, due
          primarily to a $510,000 increase in cash and due from banks, a $5.0
          million increase in loans, a $5.0 million increase in investment
          securities and a $4.4 million increase in federal funds sold. The
          Bank's total liabilities increased $14.5 million or 10.7% to $150.6
          million at September 30, 2001. The increase consisted entirely of
          deposit growth. Shareholders' equity increased $1.3 million to $15.2
          million at September 30, 2001, primarily due to net income of $980,000
          and a $498,000 increase in accumulated other comprehensive income
          offset by the semi-annual cash dividend of $165,000. The only
          component of accumulated other comprehensive income at September 30,
          2001, was unrealized gains on available for sale securities, net of
          deferred income taxes. The unrealized gains 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, however, unless the securities are actually sold.

          LOAN PORTFOLIO

               At September 30, 2001, total loans increased $5.0 million or 4.8%
          to $109.0 million from $104.0 million at December 31, 2000. The loan
          mix did not change in any material respect compared with December 31,
          2000. The loan portfolio increase is the result of new installment
          loans generated by new dealer auto loans and loans with higher
          individual dollar volume, new mortgage loans with refinancing and debt
          consolidation and, especially in the Berkeley County market area, new
          commercial floor plan loans. Included in the increase in loans is an
          increase in overdrafts. The increase in overdrafts is the result of
          the new Bounce Protection program the Bank began in April 2001. The
          Bank feels additional growth in all lending areas is possible during
          the remainder of 2001, especially in the Berkeley County market area.

          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,
                                              -------------------------------     -------------
                                                 2001                   2000          2000
                                              ---------             ---------     -------------
<S>                                           <C>                    <C>            <C>
 Nonaccrual loans                             $  7,315               $  9,706       $ 22,125

 Loans past due 90 days or more
    still accruing interest                    207,335                161,547        359,890
                                              --------               --------       --------
 Total nonperforming loans                    $214,650               $171,253       $382,015
                                              --------               --------       --------
 Other real estate owned                      $ 12,599               $     --       $     --
                                              --------               --------       --------
 Total nonperforming assets                   $227,249               $171,253       $382,015
                                              ========               ========       ========
 Nonperforming loans/Total loans                  0.20%                  0.17%          0.37%
 Nonperforming assets/Total assets                0.14%                  0.12%          0.25%
Allowance for loan losses/Total loans             1.19%                  1.13%          1.16%
</TABLE>


                                       17
<PAGE>
               As of September 30, 2001, the Bank has no loans which management
          considers to be impaired and is not aware of any potential problem
          loans other than those which are on nonaccrual status or past due
          ninety days or more and still accruing interest.

               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 with 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. The Bank has no
          loans which it considers to be impaired as of September 30, 2001, and
          December 31, 2000. At September 30, 2001, and December 31, 2000, the
          allowance for loans losses totaled $1.3 million and $1.2 million,
          respectively. The allowance for loans losses as a percentage of loans
          was 1.19% and 1.16% as of September 30, 2001 and December 31, 2000.

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


<TABLE>
<CAPTION>
                                      SEPTEMBER 30,            DECEMBER 31,
                            ----------------------------      --------------
                               2001                2000            2000
                            -----------       ----------      --------------
<S>                         <C>               <C>              <C>
Balance, Beginning          $ 1,216,333       $ 1,147,846      $ 1,147,846
    Provision charged to
        operations              169,000            90,000          170,000
    Recoveries                   24,090            13,901           19,494
    Loans charged off           (91,885)          (83,455)        (121,007)
                            -----------       -----------      -----------
Balance, Ending             $ 1,317,538       $ 1,168,292      $ 1,216,333
                            ===========       ===========      ===========
</TABLE>


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

<TABLE>
<CAPTION>
In thousands                               SEPTEMBER 30,                          DECEMBER 31,
                                    ---------------------------------     -------------------------------
                                               2001                                 2000
                                    ----------------------------------    -------------------------------
                                                       PERCENT OF                            PERCENT OF
                                                     LOANS IN EACH                         LOANS IN EACH
                                                      CATEGORY TO                            CATEGORY TO
                                    AMOUNT            TOTAL LOANS          AMOUNT            TOTAL LOANS
                                   -----------       ------------        ---------          -------------
<S>                                <C>               <C>                 <C>                <C>
Commercial, financial
    and agriculture                 $  241                 6 %             $  206                  6 %
Real estate - mortgage                 270                 72                 257                 72
Installment and other                  392                 22                 351                 22
Uallocated                             414                N/A                 402                N/A
                                   -----------       ------------        ---------          -------------
       Total                        $1,317              100 %              $1,216              100 %
                                   ===========       ============        =========          =============
</TABLE>


                                       18
<PAGE>
          DEPOSITS

               The Bank's deposits increased $14.5 million or 10.8% during the
          nine months ended September 30, 2001. The deposit mix remained stable
          during the first nine months of 2001. However, steady growth continues
          in savings deposits, rate sensitive jumbo certificates of deposit and
          other certificates of deposit. The growth in savings accounts is
          partially due to the continued market expansion at the Hedgesville
          location in Berkeley County. The increase in jumbo certificates of
          deposit and other certificates of deposit are primarily due to the
          continued growth in the 36-month Ultimate Certificate of Deposit. The
          Bank's 36-month Ultimate Certificate of Deposit allows the customer to
          withdraw all or a portion of the CD on the first or second year
          anniversary date without penalty. Deposits may also be made to this CD
          at any time.

          CAPITAL RESOURCES

               Shareholders' equity increased $1.3 million or 9.5% during the
          first nine months of 2001 due to $980,000 in net income and an
          increase in accumulated comprehensive income of $498,000 offset by the
          semi-annual dividend of $165,000. 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, 2001. The
          following table summarized, as of September 30, 2001, the Bank's
          capital ratios.

<TABLE>
<CAPTION>
                                           Components      Actual      Required
                                           of Capital      Ratio         Ratio
                                           ----------      ------      --------
<S>                                        <C>             <C>         <C>
          Tier 1 Capital                    $14,779         9.3%        4.0%
          Total Risk Based Capital          $15,983        16.6%          8.0%
</TABLE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

               The objective of the Bank's liquidity management program is to
          ensure the continuous availability of funds to meet the withdrawal
          demands of depositors and the credit needs of borrowers. The basis of
          the Bank's liquidity comes from the stability of its core deposits.
          Liquidity is also available through the available for sale securities
          portfolio and short-term funds such as federal funds sold. At
          September 30, 2001, these totaled $46.0 million, or 27.8% of total
          assets. In addition, liquidity may be generated through loan
          repayments and over $7.0 million of available borrowing arrangements
          with correspondent banks. At September 30, 2001, management considered
          the Bank's ability to satisfy its anticipated liquidity needs over the
          next twelve months. Management believes that the Bank is well
          positioned and has ample liquidity to satisfy these needs. The Bank
          generated $1.0 million of cash from operations in the first nine
          months of 2001, which compares to $1.2 million during the same time
          period in 2000. Additional cash of $14.4 million was generated through
          net financing activities through September 30, 2001, which compares to
          $8.6 million for the first nine months of 2000. These proceeds along
          with proceeds from the sales and maturities of investment securities
          were used to fund loans and purchase securities during each year. Net
          cash used in investing activities totaled $14.9 million during the
          first nine months of 2001 compared to $9.7 million during the same
          time period in 2000. Details on both the sources and uses of cash are
          presented in the Consolidated Statements of Cash Flows contained in
          the financial statements.

               The objective of the Bank's interest rate sensitivity management
          program, also known as asset/liability management, is to maximize net
          interest income while minimizing the risk of adverse effects from
          changing interest rates. This is done by controlling the mix and
          maturities of interest sensitive assets and liabilities. The Bank has
          established an asset/liability committee for this purpose. Daily
          management of the Bank's sensitivity of earnings to changes in
          interest rates within the Bank's


                                       19
<PAGE>
          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 and the Chief Financial
          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
          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 assume a 200 basis point increases or decreases in the prime
          rate from 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.

               Based on the October 2001 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.


                                       20
<PAGE>
                           PART II: OTHER INFORMATION

Item 1:   Legal Proceedings

          CNB is involved in various legal proceedings occurring in the ordinary
          course of business. There are no legal proceedings to which CNB or its
          subsidiary is a party, or to which any of their property is subject,
          the outcome of which are likely to have a material impact on CNB's
          financial statements.

Item 6:   Exhibits and Reports on Form 8-K

          None

                                   SIGNATURES

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

          CNB Financial Services, Inc.
                (Registrant)

          Date  November 13, 2001       /s/ Rebecca S. Brock, Vice President/CFO
                -----------------       ----------------------------------------

          Date  November 13, 2001       /s/ Thomas F. Rokisky, President/CEO
                -----------------       ----------------------------------------





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