SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-Q

         (Mark One)
         [        X ]  QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
                  June 30, 1998
         [   ] 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 0-11535

                      CITY NATIONAL BANCSHARES CORPORATION
             (E0xact name of registrant as specified in its charter)

New Jersey                                                        22-2434751
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

900 Broad Street,                                                      07102
Newark, New Jersey                                                   (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (201) 624-0865

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Title of each class
Common stock, par value $10 per share

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

The  aggregate  market  value of  voting  stock  held by non  affiliates  of the
Registrant as of August 12, 1998 was approximately $1,614,150.

There were 114,141 shares of common stock outstanding at August 12, 1998.

<PAGE>
                                       1

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Balance Sheet (Unaudited)

                                                          June 30,  December 31,
Dollars in thousands, except per share data                 1998        1997
================================================================================
Assets
Cash and due from banks ..............................     $  3,259     $ 13,260
Federal funds sold ...................................       30,500         --
Interest bearing deposits with banks .................           40           40
Investment securities available for sale .............       30,684       32,694
Investment securities held to maturity
  (Market value of $27,567 at June 30,
  1998 and $29,638 at December 31,1997) ..............       27,675       29,666
Loans held for sale ..................................        1,683          807
Loans ................................................       56,377       56,947
Less: Reserve for possible loan losses ...............        1,275          825
                                                           --------     --------
Net loans ............................................       55,102       56,122
                                                           --------     --------
Premises and equipment ...............................        3,382        3,192
Accrued interest receivable ..........................        1,051        1,112
Other real estate owned ..............................          663          385
Other assets .........................................        1,830        1,590
                                                           --------     --------

Total assets .........................................     $155,869     $138,868
                                                           ========     ========
Liabilities and Stockholders' Equity
Deposits:
       Demand ........................................     $ 14,922     $ 24,789
       Savings .......................................       49,930       24,949
       Time ..........................................       60,223       69,979
                                                           --------     --------
Total deposits .......................................      125,075      119,717
Short-term borrowings ................................        6,000        4,213
Accrued expenses and other liabilities ...............        1,077        1,157
Long-term debt .......................................       13,749        3,749
                                                           --------     --------
Total liabilities ....................................      145,901      128,836

Commitments and contingencies

Stockholders' equity
  Preferred stock, no par value: Authorized
    100,000 shares; Series A , issued and
    outstanding 8 shares in 1998 and 1997 ............          200          200
    Series B , issued and outstanding 20 shares
     in 1998 and 1997 ................................          500          500
    Series C , issued and outstanding 108 shares
     in 1998 and 1997 ................................           27           27
    Series D , issued and outstanding 3,208
     shares in 1998 and 1997 .........................          820          820
    Common stock, par value $10: Authorized
     400,000 shares; 114,980 shares issued in
     1998 and 1997, 114,141 shares outstanding
     in 1998 and 1997 ................................        1,150        1,150
  Surplus ............................................          901          901
  Retained earnings ..................................        6,414        6,497
  Less:
    Accumulated other comprehensive income ...........           19           38
    Treasury stock, at cost - 839 shares .............           25           25
                                                           --------     --------
Total stockholders' equity ...........................        9,968       10,032
                                                           --------     --------
Total liabilities and stockholders' equity ...........     $155,869     $138,868
                                                           ========     ========
See accompanying notes to consolidated financial statements.

<PAGE>
                                       2

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARY
Consolidated Statement of Income (Unaudited) 
                                    
                                     
                                   Six months ended       Three months ended
Dollars in thousands,                  June 30,                 June 30,        
 except per share data              1998        1997        1998         1997
================================================================================
Interest income
Interest and fees on loans .....  $   2,599   $   2,535   $   1,318    $   1,282
Interest on Federal funds sold
  and securities purchased under
  agreements to resell .........        314         243         178          122
Interest on other short term
  investments ..................       --            39        --             39
Interest on deposits with banks           1           1        --           --
Interest and dividends on
  investment securities:
  Taxable ......................      1,724       1,857         864          960
  Tax-exempt ...................        107          58          54           29
                                  ---------   ---------   ---------    ---------
Total interest income ..........      4,745       4,733       2,414        2,432
                                  ---------   ---------   ---------    ---------
Interest expense
Interest on deposits ...........      1,926       1,924         926        1,003
Interest on short-term
  borrowings ...................         96         116          54           68
Interest on long-term debt .....        240          91         185           55
                                  ---------   ---------    ---------   ---------
Total interest expense .........      2,262       2,131       1,165        1,126
                                  ---------   ---------   ---------    ---------
Net interest income ............      2,483       2,602       1,249        1,306
Provision for possible loan
  losses .......................        497          50         459           23
                                  ---------   ---------    ---------   ---------
Net interest income after
  provision for possible loan
  losses .......................      1,986       2,552         790        1,283
                                  ---------   ---------   ---------    ---------
Other operating income
Service charges on deposit
  accounts .....................        319         285         170          142
Other income ...................        366         304         179          146
Net gain on sales of investment
  securities available for sale           9          40           1           19
                                  ---------   ---------   ---------    ---------
Total other operating income ...        694         629         350          307
                                  ---------   ---------   ---------    ---------
Other operating expenses
Salaries and other employee
  benefits .....................      1,323       1,307         679          666
Occupancy expense ..............        168         165          88           78
Equipment expense ..............        183         190          95           93
Other expenses .................        757         727         431          358
                                  ---------   ---------   ---------    ---------
Total other operating expenses .      2,431       2,389       1,293        1,195
                                  ---------   ---------   ---------    ---------
Income (loss) before income tax
  expense ......................        249         792        (153)         395
Income tax expense (benefit) ...         51         287         (85)         143
                                  =========   =========   =========    =========

Net income (loss) ..............  $     198   $     505   ($     68)   $     252
                                  =========   =========   =========    =========
Net income (loss) per
  common share
Basic ..........................  $    1.51   $    4.04   ($   0.60)   $    2.21
Diluted ........................       1.38        3.65       (0.60)        1.99
                                  =========   =========   =========    =========
Basic average common shares
  outstanding ..................    114,141     114,141     114,141      114,141
Diluted average common shares
outstanding ....................    127,991     127,991     114,141      127,991
                                  =========   =========   =========    =========

See accompanying notes to consolidated financial statements.
<PAGE>
                                       3


CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Changes
in Stockholders' Equity
(Unaudited)  
<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                                    Other         
Dollars in thousands, Common                                          Preferred   Retained  Comprehensive   Treasury
except per share data                               Stock    Surplus      Stock   Earnings   Income (Loss)     Stock      Total
====================================================================================================================================
<S>                                              <C>        <C>        <C>        <C>           <C>         <C>         <C>     
     Balance, December 31, 1996 ..............   $  1,150   $    901   $    727   $  5,645      $   (111)   $    (25)   $  8,287
     Net income ..............................       --         --         --          505          --          --           505
     Unrealized gain, net of tax .............       --         --         --         --              41        --            41
                                                                                                                        --------
        Total comprehensive income, net of tax                                                                               546
     Proceeds from issuance of preferred stock       --         --          820       --            --          --           820
     Dividends paid on preferred stock .......       --         --         --          (45)         --          --           (45)
     Dividends paid on common stock ..........       --         --         --         (172)         --          --          (172)
                                                 --------   --------   --------   --------      --------    --------    --------
     Balance, June 30, 1997 ..................   $  1,150   $    901   $  1,547   $  5,933      $    (70)   $    (25)   $  9,436
                                                 ========   ========   ========   ========      ========    ========    ========

     Balance, December 31, 1997 ..............   $  1,150   $    901   $  1,547   $  6,497      $    (38)   $    (25)   $ 10,032
     Net income ..............................       --         --         --          198          --          --           198
     Unrealized gain, net of tax .............       --         --         --         --              19        --            19
                                                                                                                        -------- 
       Total comprehensive income, net of tax                                                                                217
     Dividends paid on preferred stock .......       --         --         --          (82)         --          --           (82)
     Dividends paid on common stock ..........       --         --         --         (199)         --          --          (199)
                                                 --------   --------   --------   --------      --------    --------    --------
     Balance, June 30, 1998 ..................   $  1,150   $    901   $  1,547   $  6,414      $    (19)   $    (25)   $  9,968
                                                 ========   ========   ========   ========      ========    ========    ========
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
                                       4

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Cash Flows (Unaudited)
                                                          Six Months Ended
                                                               June 30, 
In thousands                                               1998          1997
================================================================================
Operating activities
Net income .........................................     $    198      $    505
Adjustments to reconcile net income
  to net cash from operating activities:
  Depreciation and amortization ....................          179           183
  Provision for possible loan losses ...............          497            50
  Writedown of other real estate owned
  Net (accretion of discount)
    amortization of premium ........................          (30)          (12)
    Net gain on sales of investment
      securities available for sale ................           (9)          (42)
    Gains and commissions on sales of
      loans held for sale ..........................         --             (12)
Decrease in accrued interest receivable ............           61            67
Deferred income tax benefit ........................          (12)          (26)
Increase in other assets ...........................         (240)       (1,078)
Decrease in accrued expenses and
  other liabilities ................................          (32)       (2,783)
                                                         --------      --------
Net cash provided by (used in)
  operating activities .............................          612        (3,148)
                                                         --------      --------
Investing activities
Loans originated for sale ..........................         (876)         (756)
Proceeds from sales of loans held for sale .........         --             480
Decrease in loans ..................................          196           170
Decrease in interest bearing deposits
  with banks .......................................         --              36
Proceeds from sales of investment securities
   available for sale ..............................          162         4,718
Proceeds from maturities of investment
  securities available for sale, including
  principal payments and calls .....................        7,146        18,625
Proceeds from maturities of investment
  securities held to maturity, including
  principal payments and calls .....................        8,543           604
Purchases of investment securities
  available for sale ...............................       (5,329)      (23,881)
Purchases of investment securities held
  to maturity ......................................       (6,499)         --
Purchases of premises and equipment ................         (369)         (170)
Decrease in other real estate owned ................           49            94
                                                         --------      --------
Net cash provided by (used in)
  investing activities .............................        3,023           (80)
                                                         --------      --------
Financing activities
Increase in long-term debt .........................       10,000         2,000
Increase (decrease) in deposits ....................        5,358       (10,357)
Increase in short-term borrowings ..................        1,787         2,825
Dividends paid on preferred stock ..................          (82)          (44)
Dividends paid on common stock .....................         (199)         (173)
                                                         --------       --------
Net cash provided by (used in)
  financing activities .............................       16,864        (5,749)
                                                         --------      --------
Net increase (decrease) in cash and
  cash equivalents .................................       20,499        (8,977)

Cash and cash equivalents at beginning
  of period ........................................       13,260        11,667
                                                         --------      --------
Cash and cash equivalents at end of period .........     $ 33,759      $  2,690
                                                         ========      ========
Cash paid during the year:
Interest ...........................................     $  2,001      $  1,982
Income taxes .......................................          424           303

See accompanying notes to consolidated financial statements.
<PAGE>
                                       5


CITY NATIONAL BANCSHARES CORPORATION
Notes to Consolidated Financial Statements (Unaudited)

1.  Principles of consolidation

The accompanying  consolidated financial statements include the accounts of City
National  Bancshares  Corporation (the  "Corporation") and its subsidiary,  City
National Bank of New Jersey (the "Bank"). All significant  intercompany accounts
and transactions have been eliminated in consolidation.

2.  Basis of presentation

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information.  Accordingly, they do not include all the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring  accruals)  considered  necessary for a fair presentation of
the  financial  statements  have been  included.  Operating  results for the six
months and three months ended June 30, 1998 are not  necessarily  indicative  of
the results that may be expected for the year ended December 31,1998.

3. Net income per common share

Basic  income  per common  share is  calculated  by  dividing  net  income  less
dividends  paid on  preferred  stock by the  weighted  average  number of common
shares  outstanding.  On a diluted  basis,  both net income  and  common  shares
outstanding are adjusted to assume the conversion of the convertible subordinate
debentures from the date of issue.

4. Recent accounting pronouncements

In June, 1997 the Financial  Accounting Standards Board ("FASB") issued SFAS No.
130,  "Reporting  Comprehensive  Income,"  effective for fiscal years  beginning
after  December 15, 1997.  SFAS 130  establishes  standards  for  reporting  and
displaying  of  comprehensive  income and its  components  (revenues,  expenses,
gains, and losses) in a full set of general-purpose  financial statements.  SFAS
130 requires that all items that are required to be recognized  under accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements. The Corporation adopted SFAS No. 130 in the first quarter of 1998.

Total comprehensive income consists of net income and other comprehensive income
which is comprised of unrealized  holding  gains (loss) on securities  available
for sale, net of tax.

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting standards for derivative instruments, and for hedging activities. SFAS
No. 133 supersedes the disclosure  requirements in SFAS No. 80, 105, and 119 and
is effective  for periods  after June 15, 1999.  The adoption of SFAS No. 133 is
not expected to have a material  impact on the financial  position or results of
operations of the Corporation.
<PAGE>
                                       6

Management's Discussion and Analysis of Results of Operations and Financial 
Condition

Results of operations

Net income for the first half of 1998 was $198,000  compared to $505,000 for the
similar 1997 period.  Related earnings per common share on a fully diluted basis
decreased to $1.38 from $3.65 a year earlier.  The 1998 second quarter reflected
a $65,000 net loss compared to net income of $255,000 for the second  quarter of
1997.  Related  diluted per common share (loss) earnings were $(.51) compared to
$1.99. A $405,000  provision for possible loan losses was recorded in the second
quarter of 1998 in  connection  with an overdraft  incurred  during that quarter
which is more fully discussed under "Nonperforming  loans" below. This increased
provision was the primary reason for the negative earnings performance.

Net interest income

For the  first  half of 1998,  net  interest  income on a tax  equivalent  basis
decreased 5.2%, to $2,467,000 from $2,603,000 in the comparable 1997 period. The
related net interest  margin  declined to 3.94% from 4.09% due to higher cost of
deposits. Tax equivalent interest income was relatively unchanged as was the mix
in earning assets and the average rate earned on earning assets,  which rose two
basis  points to 7.42% from 7.40%.  Interest  expense  rose 6.14% on  relatively
unchanged interest bearing  liabilities due to an increase in April, 1998 of $10
million in Federal Home Loan Bank  advances,  which were used in part to replace
municipal time deposits.  The average rate paid to fund interest  earning assets
rose from 3.31% to 3.51%.

Management has been actively reducing municipal time deposit levels by utilizing
these  advances,  which are  included  in  long-term  debt and have  allowed the
Corporation  to obtain more stable  funding  for longer  terms at no  additional
cost.

For the second  quarter of 1998, net interest  income on a tax equivalent  basis
declined 3.3%, to $1,277,000 from $1,321,000 in the comparable 1997 period.  The
related net interest  margin  decreased to 3.86% from 4.15% due to a higher cost
of  funding  interest  earning  assets.  Tax  equivalent   interest  income  was
relatively  unchanged  as was the mix in  earning  assets and the  average  rate
earned on earning assets.  Interest expense rose 3.46% due to the aforementioned
Federal Home Loan Bank advances, while the average rate to fund interest earning
assets rose from 3.39% to 3.52%.

Provision and reserve for possible loan losses

Changes in the reserve for possible loan losses are set forth below.


                                        Six Months              Three Months
                                       Ended June 30,           Ended June 30,
                                  ----------------------------------------------
(Dollars in thousands)               1998        1997        1998        1997
--------------------------------------------------------------------------------
Balance at beginning of period      $ 825       $ 750       $ 825      $  760

Provision for possible loan
  losses                              497          50         459          23

Recoveries of previous charge-offs     53          29           7          17
                                    -----       -----       -----       -----
                                    1,375         829       1,291         800

Less: Charge-offs                      29         100          16          -
                                    -----       -----       -----       -----
Balance at end of period           $1,275      $  800      $1,275      $  800 
                                    =====       =====       =====       =====

Management  believes that the reserve for possible loan losses is adequate based
on an  ongoing  evaluation  of the  loan  portfolio.  This  evaluation  includes
consideration  of past  loan loss  experience,  the  level  and  composition  of
nonperforming  loans,  collateral  adequacy,  and general  economic  conditions,
including the effect of such conditions on particular industries.

While  management  uses  available  information to determine the adequacy of the
reserve,  future  additions  may be  necessary  based  on  changes  in  economic
conditions  or in  subsequently  occurring  events  unforeseen  at the  time  of
evaluation.
<PAGE>
                                       7

                                    June 30,         March 31,      December 31,
(Dollars in thousands)                1998              1998               1997
--------------------------------------------------------------------------------
Reserve for possible loan 
  losses as a percentage of:

Total loans                          2.26%              1.32%              1.45%

Total nonperforming loans           53.04%             62.31%             59.10%

Total nonperforming assets
  (nonperforming loans and OREO)    41.57%             41.52%             53.78%

Net charge-offs (recoveries) as a
  percentage of average loans 
  (year-to-date)                     0.08%              0.02%              0.15%

Nonperforming loans

Nonperforming  loans  include  loans on which the accrual of  interest  has been
discontinued  or loans  which are  contractually  past due 90 days or more as to
interest or principal  payments on which interest income is still being accrued.
Nonaccrual loans include loans where principal or interest income is still being
accrued Delinquent  interest payments are credited to income when received.  The
following table presents the principal  amounts of nonperforming  loans past due
90 days or more and accruing.



                                June 30,          March 31,         December 31,
(Dollars in thousands)           1998               1998               1997
--------------------------------------------------------------------------------
Nonaccrual loans
Commercial                    $ 1,489             $  827            $   568
Installment                         1                 11                  1
Real estate                       310                186                597
                               ------             ------             ------
Total                           1,800              1,024              1,166
                               ------             ------              -----

Loans past due 90 days
  or more and still accruing
Commercial                        230                -                   46
Installment                       -                  -                  -
Real estate                       374                300                184
                               ------             ------             ------
Total                             604                300                230
                               ------             ------             ------
Total nonperforming loans       2,404              1,324              1,396
                               ------             ------             ------
Troubled debt restructurings    1,261              1,261              1,261
                               ------             ------             ------
Total nonperforming loans and
  troubled debt restructurings $3,665             $2,585             $2,657
                               ======             ======             ======

During  April,  1998 a  customer  of  City  National  Bank  incurred  overdrafts
aggregating  approximately $805,000,  exceeding the customer's authorized limit.
This customer sells money orders issued by City National Bank as an agent of the
Bank. No further deposits have been made and the Bank has commenced legal action
to collect the overdraft,  and has made claims against a $300,000  fidelity bond
maintained by the customer, as well as its own blanket bond.

The customer has filed a defense against the claims made by the Bank, along with
a  counterclaim,  which  was  dismissed  but may be  resubmitted  if  additional
information is provided. While the Bank is confident of its claims, the ultimate
outcome of these actions cannot be determined and the complete collection of the
overdraft is uncertain.

Based on an  evaluation  of the  information  currently  available,  the  second
quarter  and first half of 1998  include a $405,000  addition to the reserve for
possible loan losses to provide for a possible loss on this overdraft,  which is
included with nonaccrual commercial loans at June 30, 1998.

Troubled  debt  restructurings  includes  two loans to one  commercial  borrower
totaling $1.3 million. A $1 million  construction loan was originated in August,
1996 and subsequently  increased by $200,000.  Payments remained current thought
June,  1997 when  construction  was  completed  and the loan was  converted to a
permanent commercial  mortgage,  at which time principal paydowns were scheduled
to  commence.  Prior to  becoming  90 days past due,  the terms of the loan were
modified to continue  interest only payments for a specified period of time. The
loan is  secured  by a  leasehold  mortgage  on the  financed  property  and the
borrower's  principals have provided joint and several personal  guarantees.  In
addition,  a $100,000 working capital loan secured by receivables was originated
in July, 1997.
<PAGE>
                                       8

The loan is currently performing in accordance with the modified terms while the
working  capital loan is currently  performing  in  accordance  with it original
terms.  Management  believes that both of these loans are adequately secured and
fully collectible.

Nonperforming  assets  are  generally  well  secured  by  residential  and small
commercial real estate. It is the Bank's intent to move nonperforming loans into
other real estate  owned  ("OREO") as rapidly as possible  and to dispose of all
OREO properties at the earliest possible date at or near current market value.

At June  30,  1998,  there  were no  commitments  to lend  additional  funds  to
borrowers for loans that were on nonaccrual or contractually  past due in excess
of 90 days and still accruing  interest,  or to borrowers  whose loans have been
restructured.

Other operating income

Other  operating  income,   including  the  results  of  investment   securities
transactions,  rose  slightly in both the first half and second  quarter of 1998
compared to the similar 1997  periods due to higher  service  charges  resulting
from increased transaction volume along with higher loan syndication fees.

Other operating expenses

Other  operating  expenses  rose 1.8% for the first half of 1998 and 8.2% in the
second  quarter of 1998 compared to the similar 1997 periods.  Both periods were
affected by costs  incurred  in  connection  with the opening  during the second
quarter of 1998 of a new branch office.

Income tax expense

Income tax expense as a percentage of pretax income declined to 33.8% from 36.3%
for the first  quarter of 1998 compared to the first quarter of 1997 as a result
of higher levels of income subject to lower state income tax rates.

Investment securities

There was little  activity in either the held to maturity or available  for sale
portfolio during the first quarter of 1998.

Loans

Loans  held for sale rose to $1.7  million  at June 30,  1998 from  $807,000  at
December  31, 1997  reflecting  a 15.9%  increase in loans  originated  for sale
during the 1998 first quarter  compared to the first three months of 1997. Loans
totaled $56.4 million at June 30, 1998 compared to $56.9 million at December 31,
1997, as payoffs exceeded originations.


Deposits

Average  deposits for the first half of 1998 totaled $115.3 million  compared to
$120.4 million for the first half of 1997, while total deposits rose from $119.7
million at 1997  year-end to $125.1  million at June 30,  1998.  The decrease in
average  deposits  resulted from  management's  decision to reduce the levels of
municipal time deposits through more stable funding sources. Total deposits were
higher due to a nonrecurring $12 million  municipal savings deposit which was on
hand at June 30, 1998,  while  December  31, 1997  included a similar $8 million
nonrecurring demand deposit from a U.S. Government agency.

The Bank's  deposit  levels may change  significantly  on a daily basis  because
deposit accounts  maintained by  municipalities  represent a significant part of
the Bank's deposits and are more volatile than commercial or retail deposits.

Total  certificates  of deposit  decreased  from $70 million at 1997 year-end to
$66.1  million  at the end of the  1998  first  quarter  due to a  reduction  in
certificates  of  deposit  of  $100,000  or more,  most of which  are  municipal
deposits,  which declined from $51 million at December 31, 1997 to $45.5 million
at March 31, 1998.

Short-term borrowings

Average  short-term  borrowings  declined  17.7%  from  the  first  half of 1997
compared to the  corresponding  1998  period,  reflecting  lower  levels of U.S.
Treasury tax and loan note option balances, while the average rate paid on these
borrowings rose by seven basis points.

Liquidity

The  liquidity  position  of the  Corporation  is  dependent  on the  successful
management of its assets and liabilities so as to meet the needs of both deposit
and credit  customers.  Liquidity needs arise primarily to accommodate  possible
deposit  outflows and to meet borrowers'  requests for loans.  Such needs can be
satisfied by investment and loan maturities and payments, along with the ability
to raise short-term funds from external sources.
<PAGE>
                                       9

It is the responsibility of the Asset/Liability Management Committee ("ALCO") to
monitor and oversee all  activities  relating to  liquidity  management  and the
protection of net interest income from fluctuations in interest rates.

The Bank depends  primarily  on deposits as a source of funds and also  provides
for a portion  of its  funding  needs  through  short-term  borrowings,  such as
Federal  Funds  purchased,  securities  sold  under  repurchase  agreements  and
borrowings  under the U.S.  Treasury tax and loan note option program.  The Bank
also  utilizes  the Federal  Home Loan Bank  advance  program for its  liquidity
needs.

The major contribution  during the first half of 1998 from operating  activities
to the Corporation's  liquidity come from net income, while an increase in other
assets represented the highest use of cash.

Sources of cash provided by investing  activities  were derived  primarily  from
proceeds from maturities, principal payments and early redemptions of investment
securities held to maturity, which amounted to $8.5 million, while net cash used
in investing  activities  was primarily the result of the purchase of investment
securities held to maturity, which totaled $8.5 million.

The primary source of funds from financing  activities resulted from an increase
in  long-term  debt,  which rose $10  million,  while the highest use of cash in
financing activities resulted from dividend payments.

Interest rate sensitivity

The management of interest rate risk is also important to the  profitability  of
the Corporation. Interest rate risk arises when an earning asset matures or when
its interest rate changes in a time period  different  from that of a supporting
interest bearing  liability,  or when its interest rate changes in a time period
different  from that of an interest  earning  asset that it supports.  While the
Corporation  does not match  specific  assets and  liabilities,  total  earnings
assets and interest  bearing  liabilities  are grouped to determine  the overall
interest rate risk within a number of specific time frames.

Interest  sensitivity  analysis  attempts to measure the  responsiveness  of net
interest  income to changes in interest  rate  levels.  The  difference  between
interest sensitive assets and interest  sensitive  liabilities is referred to as
the interest sensitivity gap. At any given point in time, the Corporation may be
in an asset-sensitive position, whereby its interest-sensitive assets exceed its
interest-sensitive liabilities or in a liability-sensitive position, whereby its
interest-sensitive  liabilities exceed its interest-sensitive  assets, depending
on management's judgment as to projected interest rate trends.

One measure of interest rate risk is the  interest-sensitivity  analysis,  which
details the repricing  differences for assets and liabilities for given periods.
The primary  limitation  of this  analysis is that it is a static (i.e,  as of a
specific  point in time)  measurement  which does not  capture  risk that varies
nonproportionally  with changes in interest rates.  Because of this  limitation,
the  Corporation  uses a  simulation  model as its primary  method of  measuring
interest rate risk.  This model,  because of its dynamic  nature,  forecasts the
effects of different  patterns of rate  movement and variances in the effects of
rate  changes  on  the  Corporations'  mix  of  interest-sensitive   assets  and
liabilities.

At June  30,1998,  the  Corporation  had a cumulative  one-year  static gap of a
negative $12.8 million, representing 8.2% of total assets compared to a negative
$12.9 million gap at December 31,1997,  which represented 9.29% of total assets.
Utilizing a dynamic simulation model, management believes that this amount would
not result in a significant  change in net interest income should interest rates
rise or fall up to 200 basis points, which is the maximum change that management
uses to measure the Corporation's exposure to interest rate risk.

Capital

Stockholders'  equity amounted to approximately $10 million at both June 30,1998
and December 31, 1997.  Stockholders' equity as a percentage of total assets was
6.55% at June 30,1998 compared to 7.22% at December 31, 1997.

Risk-based capital ratios are expressed as a percentage of risk-adjusted assets,
and  relate  capital  to the risk  factors  of a bank's  asset  base,  including
off-balance  sheet risk  exposures.  Various  weights are  assigned to different
asset  categories as well as off-balance  sheet exposures  depending on the risk
associated with each. In general, less capital is required for less risk.

At June 30,1998 the  Corporation's  core capital (Tier 1) and total (Tier 1 plus
Tier 2) risked-based capital ratios were 14.81% and 18.55%, respectively.

<PAGE>
                                       10

PART II Other information

Item 5. Other Matters

              a)  On February 26, 1998, the Board approved the  declaration of a
                  $1.75 per share  dividend to common  stockholders,  payable on
                  April 6, 1998 to stockholders of record on March 4, 1998.

Item 6a. Exhibits

         (3)(a)   The   Corporation's   Restated   Articles   of   Incorporation
                  (incorporated  herein by  reference  to Exhibit  (3)(d) of the
                  Corporation's Current Report on Form 8-K dated July 28, 1992).

         (3)(b)   Amendments  to the  Corporation's  Articles  of  Incorporation
                  establishing  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock, Series A (incorporated herein by reference to
                  Exhibit (3)(b) of the Corporation's Annual Report on Form 10-K
                  for the year ended December 31, 1995).

         (3)(c)   Amendments  to the  Corporation's  Articles  of  Incorporation
                  establishing  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock, Series B (incorporated herein by reference to
                  Exhibit (3)(c) of the Corporation's Annual Report on Form 10-K
                  for the year ended December 31, 1995).

         (3)(d)   Amendments  to the  Corporation's  Articles  of  Incorporation
                  establishing  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock, Series C (incorporated herein by reference to
                  Exhibit (3)(i) to the Corporation's Annual Report on Form 10-K
                  for the year ended December 31, 1996).

         (3)(e)   Amendments  to the  Corporation's  Articles  of  Incorporation
                  establishing  the   Corporation's   Non-cumulative   Perpetual
                  Preferred Stock, Series D (incorporated herein by reference to
                  Exhibit filed with the  Corporation's  current  report on Form
                  10-K dated July 10, 1997).

         (3)(f)   The amended By-Laws of the Corporation (incorporated herein by
                  reference to Exhibit (3)(c) of the Corporation's Annual Report
                  on Form 10-K for the year ended December 31, 1991).

         (4)(a)   The  Debenture  Agreements  between  the  Corporation  and its
                  Noteholders  (incorporated  herein  by  reference  to  Exhibit
                  (4)(a) of the Corporation's Annual Report on Form 10-K for the
                  year ended December 31, 1993).

         (4)(b)   Note  Agreement  dated  December  28,  1995 by and between the
                  Corporation and the Prudential Foundation (incorporated herein
                  by reference to Exhibit (4)(b) to the Company's  Annual Report
                  on Form 10-K for the year ended December 31, 1995).

         (10)(a)  The  Employee's  Profit  Sharing Plan of City National Bank of
                  New Jersey  (incorporated  herein by reference to Exhibit (10)
                  of the  Corporation's  Annual Report on Form 10-K for the year
                  ended December 31, 1988).

         (10)(b)  The Employment  Agreement among the Corporation,  the Bank and
                  Louis E. Prezeau dated May 24, 1997 (incorporated by reference
                  to Exhibit 10 to the  Corporation's  Quarterly  Report on Form
                  10-Q for the quarter ended June 30, 1997).

         (10)(c)  Lease and option Agreement dated  may 6, 1995  by and  between
                  the RTC  and City  National  Bank of New Jersey  (incorporated
                  herein by reference to  Exhibit (10)(d) to  the  Corporation's
                  Annual Report on Form 10-K for  the  year  ended  December 31,
                  1995).

         (10)(d)  Asset Purchase and Sale Agreement  between the Bank and Carver
                  Federal   Savings   Bank   dated  as  of  January   26,   1998
                  (incorporated  herein by  reference  to  Exhibit  10(d) to the
                  Corporation's  Annual  Report on Form 10-K for the year  ended
                  December 31, 1997).

         (11) Statement re computation of per share earnings

         (27) Financial Data Schedule
<PAGE>
                                       11

SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

         CITY NATIONAL BANCSHARES CORPORATION
         (Registrant)

         August 12, 1998            ____________________
                                    Edward R. Wright
                    Senior Vice President and Chief Financial
              Officer (Principal Financial and Accounting Officer)