1

                       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
                  September 30, 1997
         [   ] 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
             (Exact 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: (973) 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 November 12, 1997 was approximately $1,630,000.

There were 114,141 shares of common stock outstanding at November 12, 1997.

<PAGE>
                                       2
CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Balance Sheet (Unaudited)
                                                     September 30,  December 31,
Dollars in thousands, except per share data                   1997         1996
================================================================================
Assets
Cash and due from banks ............................      $  3,578      $  2,767
Federal funds sold .................................         7,300         8,900
Interest bearing deposits
  with banks .......................................            97            74
Investment securities available
  for sale .........................................        39,651        30,997
Investment securities held to
  maturity (Market value of $30,091
  at September 30, 1996 and $24,434
  at December 31,1995) .............................        30,146        29,866
Loans held for sale ................................           756           291
Loans ..............................................        57,908        57,128
Less: Reserve for possible loan
  losses ...........................................           825           750
                                                          --------      --------
Net loans ..........................................        57,083        56,378
                                                          --------      --------
Premises and equipment .............................         3,243         3,331
Accrued interest receivable ........................           955         1,078
Other real estate owned ............................           627           672
Other assets .......................................         1,654          597
                                                          --------      --------
Total assets .......................................      $145,090      $134,951
                                                          ========      ========
Liabilities and Stockholders' Equity
Deposits:
       Demand ......................................      $ 13,818      $ 13,699
       Savings .....................................        31,251        37,527
       Time ........................................        77,418        64,628
                                                          --------      --------
Total deposits .....................................       122,487       115,854
Short-term borrowings ..............................         7,779         5,175
Accrued expenses and other
  liabilities ......................................         1,326         3,886
Long-term debt .....................................         3,749         1,749
                                                          --------      --------
Total liabilities ..................................       135,341       126,664

Commitments and contingencies

Stockholders' equity
  Preferred stock, no par value:
    Authorized 100,000 shares;
    Series A , issued and outstanding
    8 shares in 1997 and 1996 ......................           200           200
    Series B , issued and outstanding
    20 shares in 1997 and 1996 .....................           500           500
    Series C , issued and outstanding
    108 shares in 1997 and 1996 ....................            27            27
    Series D , issued and outstanding
    3,208 shares in 1997 ...........................           820          --
  Common stock, par value $10:
    Authorized 400,000 shares;
    Issued 114,980 shares in 1997 and
    1996, outstanding 114,141 shares
    in 1997 and 1996 ...............................         1,150         1,150
  Surplus ..........................................           901           901
  Retained earnings ................................         6,188         5,645
  Less:
    Net unrealized loss on investment
      securities available for sale ................            12           111
      Treasury stock, at cost - 839 shares .........            25            25
                                                          --------      --------
Total stockholders' equity .........................         9,749         8,287
                                                          --------      --------
Total liabilities and stockholders' equity .........      $145,090      $134,951
                                                          ========      ========
See accompanying notes to consolidated financial statements.
<PAGE>
                                       3
                                                     
CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARY
                              
Consolidated Statement of Income (Unaudited)

                                     Nine months ended      Three months ended
                                        September 30,          September 30,
Dollars in thousands,                ------------------------------------------
except per share data                 1997        1996        1997         1996
================================================================================
Interest income
Interest and fees on loans ..... $   3,891   $   3,524   $   1,356    $   1,278
Interest on Federal funds
  sold and securities
  purchased under agreements
  to resell ....................       351         206         108           90
Interest on other short-term
  investments ..................        39         185           0           41
Interest on deposits with
  banks ........................         2           5           1            1
Interest and dividends on
  investment securities:
  Taxable ......................     2,787       2,621         930          905
  Tax-exempt ...................        87          87          29           31
                                 ---------   ---------   ---------    ---------
Total interest income ..........     7,157       6,628       2,424        2,346
                                 ---------   ---------   ---------    ---------
Interest expense
Interest on deposits ...........     2,948       2,452       1,024          929
Interest on short-term
  borrowings ...................       157         154          41           52
Interest on long-term debt .....       146          74          55           25
                                 ---------   ---------   ---------    ---------
Total interest expense .........     3,251       2,680       1,120        1,006
                                 ---------   ---------   ---------    ---------
Net interest income ............     3,906       3,948       1,304        1,340
Provision (credit) for
  possible loan losses .........        43          65          (7)          32
                                 ---------   ---------   ---------    ---------
Net interest income after
  provision (credit) for
  possible loan losses .........     3,863       3,883        1311         1308
                                 ---------   ---------   ---------    ---------
Other operating income
Service charges on deposit
  accounts .....................       420         419         135          140
Other income ...................       442         433         138          100
Net gain (loss) on sales of
  investment securities ........        19           8         (21)          (1)
                                 ---------   ---------   ---------    ---------
Total other operating income ...       881         860         252          239
                                 ---------   ---------   ---------    ---------
Other operating expenses
Salaries and other employee
  benefits .....................     1,979       1,982         672          672
Occupancy expense ..............       245         251          80          117
Equipment expense ..............       280         254          90           77
Other expenses .................     1,048       1,161         321          454
                                 ---------   ---------   ---------    ---------
Total other operating expenses .     3,552       3,648       1,163        1,320
                                 ---------   ---------   ---------    ---------
Income before income tax expense     1,192       1,095         400          227
Income tax expense .............       432         385         145           82
                                 =========   =========   =========    =========
Net income ..................... $     760   $     710   $     255    $     145
                                 =========   =========   =========    =========
Net income per common share
Primary ........................ $    6.27   $    6.27   $    2.22    $    1.25
Fully diluted ..................      5.66        5.66        2.00         1.12
                                 =========   =========   =========    =========
Primary average common shares
  outstanding ..................   114,111     112,855     114,141      114,141
Fully diluted average common
  shares outstanding ...........   127,991     126,705     127,991      127,991
                                 =========   =========   =========    =========
See accompanying notes to consolidated financial statements.
                                                                       
<PAGE>
                                       4

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Changes
in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
                                                                                            Net Unrealized
                                                                                        Gain (Loss) on Invest-                     
Dollars in thousands,                    Common                    Preferred     Retained  ment Securities    Treasury
except per share data                     Stock         Surplus        Stock     Earnings Available for Sale    Stock          Total
====================================================================================================================================
<S>                                        <C>          <C>          <C>          <C>           <C>            <C>          <C>

Balance, December 31, 1995 ..........      $ 1,120      $   886      $   200      $ 4,856       $  (141)      $   (25)      $ 6,896
Net income ..........................         --           --           --            710          --            --             710
Proceeds from
 issuance of
 common stock .......................           30           15         --           --            --            --              45
Proceeds from
 issuance of
 preferred stock ....................         --           --            527         --            --            --             527
Change in net
 unrealized loss
 on investment
 securities available
 for sale ...........................         --           --           --           --              33          --              33
Dividends paid on
 common stock .......................         --           --           --           (154)         --            --            (154)
Dividends paid on
 preferred stock ....................         --           --           --             (2)         --            --              (2)
                                           -------      -------      -------      -------        -------       -------      -------
Balance,
 September 30, 1996 .................      $ 1,150      $   901      $   727      $ 5,410       $  (108)      $   (25)      $ 8,055
                                           =======      =======      =======      =======        =======       =======      =======
Balance,
 December 31, 1996 ..................      $ 1,150      $   901      $   727      $ 5,645       $  (111)      $   (25)      $ 8,287
Net income ..........................         --           --           --            760          --            --             760
Proceeds from issuance
 of preferred stock .................         --           --            820         --            --            --             820
Change in net unrealized
 loss on investment
 securities available for
 sale ...............................         --           --           --           --              99          --              99
Dividends paid on common
 stock ..............................         --           --           --           (173)         --            --            (173)
Dividends paid on
 preferred stock ....................         --           --           --            (44)         --            --             (44)
                                           -------      -------      -------      -------        -------       -------      -------
Balance,
 September 30, 1997 .................      $ 1,150      $   901      $ 1,547      $ 6,188       $   (12)      $   (25)      $ 9,749
                                           =======      =======      =======      =======        =======       =======      =======
</TABLE>

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

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Statement of Cash Flows (Unaudited)
                                                              Nine Months Ended
                                                               September 30,
                                                          ---------------------
In thousands                                                 1997          1996
===============================================================================
Operating activities
Net income .........................................     $    760      $    710
Adjustments to reconcile net income
  to net cash from operating activities:
  Depreciation and amortization ....................          274           260
  Provision for possible loan losses ...............           43            65
  Accretion of discount, net of premium
  amortization on investment securities ............           (1)           46
  Gains on sales and calls of investment
    securities .....................................          (19)           (8)
  Gains and commissions on loans held
    for sale .......................................          (28)          (84)
Decrease in accrued interest receivable ............          123            30
Deferred income tax expense ........................          100           140
(Increase) decrease in other assets ................       (1,224)          247
(Decrease) increase in accrued expenses
  and other liabilities ............................       (2,560)           67
                                                          --------     --------
Net cash (used in) provided by operating
  activities .......................................       (2,532)        1,473
                                                          --------     --------
Investing activities
Loans originated for sale ..........................       (1,393)       (3,191)
Proceeds from sales of loans held for sale .........          956         2,253
Increase in loans ..................................         (703)       (6,464)
Purchase of loans in conjunction with
  branch acquisitions ..............................         --          (4,035)
(Increase) decrease in interest bearing
  deposits with banks ..............................          (23)          255
Proceeds from maturities of investment
  securities available for sale,
  including principal payments and calls ...........       28,922         5,749
Proceeds from maturities of investment
  securities held to maturity, including
  principal payments and calls .....................        2,237         4,311
Purchases of investment securities
  available for sale ...............................      (37,379)      (14,583)
Purchases of investment securities
  held to maturity .................................       (2,528)      (10,025)
Purchases of premises and equipment ................         (186)       (1,257)
                                                          --------     --------
Net cash used in investing activities ..............      (10,097)      (26,987)
                                                          --------      --------
Financing activities
Deposits acquired in branch
  acquisition ......................................         --           7,661
Issuance of long term debt .........................        2,000          --
Increase in deposits ...............................        6,633        16,957
Increase in short-term borrowings ..................        2,604         4,339
Proceeds from issuance of common
  stock ............................................         --              45
Proceeds from issuance of
  preferred stock ..................................          820           527
Dividends paid on preferred stock ..................          (44)         --
Dividends paid on common stock .....................         (173)         (156)
                                                          --------     --------
Net cash provided by financing
  activities .......................................       11,840        29,373
                                                          --------     --------
Net (decrease) increase in cash
  and cash equivalents .............................         (789)        3,859

Cash and cash equivalents at
  beginning of period ..............................       11,667        10,294
                                                          --------     --------
Cash and cash equivalents at
  end of period ....................................     $ 10,878      $ 14,153
                                                         ========      ========

Cash paid during the year:
Interest ...........................................     $  3,146      $  2,602
Income taxes .......................................          385           199

Noncash investing activities:
Transfer of loans to other real
  estate owned .....................................           49            94

See accompanying notes to consolidated financial statements.
                                                              
<PAGE>
                                       6


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

1.  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 September 30, 1997 are not necessarily  indicative
of the results that may be expected for the year ended December 31,1997.

2.  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.

3. Net income per common share

Primary  income per common  share is  calculated  by  dividing  net income  less
dividends on preferred  stock by the weighted  average  number of common  shares
outstanding.   Common  shares  issuable  upon  conversion  of  the  subordinated
debentures  have been excluded from the primary  income per common share as they
are not  considered to be common stock  equivalents.  On a fully diluted  basis,
both net  income  and  common  shares  outstanding  are  adjusted  to assume the
conversion of the convertible subordinated debentures from the date of issue.

4. Recent accounting pronouncements

Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards  No. 128,  "Earnings per share" (SFAS 128)  establishes  standards for
computing and  presenting  earnings per share (EPS) and applies to entities with
publicly  held common stock or  potential  common  stock.  SFAS 128 replaces the
presentation  of primary EPS with a presentation  of basic EPS and requires dual
presentation  of basic and diluted EPS on the face of the income  statement  for
all  entities  with  complex  capital  structures.  SFAS  128 is  effective  for
financial  statements  issued  for  periods  ending  after  December  15,  1997,
including interim periods,  and earlier  application is not permitted.  SFAS 128
also requires  restatement of all prior period EPS data  presented.  SFAS 128 in
not  expected  to  have a  material  effect  on the  Corporation's  consolidated
financial statements.

FASB issued  Statement of Financial  Accounting  Standards No. 131,  Disclosures
about  Segments of an Enterprise and Related  Information.  SFAS No. 131 changes
the way public companies report  information about segments of their business in
their annual  financial  statements and require them to report selected  segment
information in their quarterly reports issued to shareholders.  It also requires
entity-wide  disclosures about the products and services an entity provides, the
foreign countries in which it holds assets and reports  revenues,  and its major
customers.  SFAS No. 131 is effective for fiscal year  beginning  after December
15,  1997,  but  does  not  apply  to  nonpublic  business   enterprises  or  to
not-for-profit organizations.

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

Results of operations

Net income for the first nine months of 1997 was  $760,000  compared to $710,000
for the similar 1996 period, an increase of 7%. Returns on average stockholders'
equity and  average  assets  were 12.37% and .69% for the 1997 first nine months
and 14.94% and .88% for the  corresponding  1996  period.  Related  earnings per
common share on a fully diluted basis were $5.66, unchanged from 1996.

1997 third  quarter net income rose to $255,000  from  $145,000 a year  earlier.
Returns on average  stockholders' equity and average assets were 12.80% and .74%
for the 1997 third quarter, while the corresponding 1996 returns were 15.34% and
 .88%.  Related  fully diluted per common share  earnings were $2.00  compared to
$1.12.
<PAGE>
                                       7

Both year-to  -date and third  quarter 1996 results  included an  assessment  of
$96,000  by the  FDIC to  replenish  the  Savings  Association  Insurance  Fund.
Excluding this assessment from both periods, net income would have been $744,000
and $180,000, respectively.

Lower other operating expenses, primarily the aforementioned assessment, was the
primary reason for the improved earnings in both periods.

Net interest income

For the first nine months of 1997, net interest income was relatively  unchanged
from the same 1996 period,  although the related net interest margin declined to
4.02% from to 4.36%. The decreased margin resulted  primarily from a higher cost
of funds.  Average  interest  earning  assets for the first half of 1997 grew to
$138.6 million from $122.1 million in 1996.  Most of this growth occurred within
the loan portfolio,  which averaged $57.6 million  compared to $52.4 million , a
9.9 % increase.  Most of this  increase  resulted from greater  commercial  real
estate loan activity.

Interest  income  was  higher  due to the  increase  in  earning  assets and the
increase in loan volume contributed to an increase in the average rate earned on
earning assets to 7.46% from 7.30%. Interest expense rose as well, due primarily
to the higher cost of time deposits, which rose from 4.06% to 4.55%.

Net interest income for the third quarter of 1997 was also relatively  unchanged
from a year  earlier,  decreasing  slightly,  by 2.7%,  due  primarily to higher
deposit costs.

Provision and reserve for possible loan losses

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




                                                  Nine Months       Three Months
                                                 Ended Sept. 30, Ended Sept. 30,

(Dollars in thousands) ..........................   1997   1996   1997   1996
                                                   -----   ----   ----   ----
Balance at beginning
  of period .....................................  $ 750  $ 650  $ 800  $ 700
Provision for possible
 loan losses ....................................     43     65     (7)    32
Recoveries of previous
 charge-offs ...................................      63     94     34     10
-------------------------------------------------  -----  -----  -----   -----
                                                     856    809    827    742
Less: Charge-offs ...............................     31     84      2     17
-------------------------------------------------  -----  -----  -----  -----
Balance at end of period ........................  $ 825  $ 725  $ 825  $ 725

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 within
the Bank's market area,  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.

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.
Non-accrual  loans include loans where principal or interest  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.
<PAGE>
                                       8


(Dollars in thousands)                         Sept. 30, December 31, Sept. 30,
                                                  1997        1996      1996  
--------------------------------------------------------------------------------
Non-accrual loans
Commercial ....................................   $  654     $  423     $  350
Installment ...................................        7          4          6
Real estate ...................................      616        598        738
-----------------------------------------------   ------     ------     ------ 
Total .........................................    1,277      1,025      1,094
-----------------------------------------------   ------     ------     ------ 
Loans past due 90
  days or more and
  still accruing
Commercial ....................................     --           14         57
Installment ...................................     --         --         --
Real estate ...................................       76         19        165
-----------------------------------------------   ------     ------     ------ 
Total .........................................       76         33        212
-----------------------------------------------   ------     ------     ------ 
Total nonperforming
  loans .......................................   $1,353     $1,058     $1,306


Nonperforming  assets  are  generally  well  secured  by real  estate  and small
commercial  buildings.  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 prices  considered  reasonable
under the circumstances.

Other operating income

Other  operating  income,   including  the  results  of  investment   securities
transactions,  rose  slightly in both the first nine months and third quarter of
1997 compared to the similar 1996 periods,  due primarily to a $26,000 award for
the Bank's community lending efforts received in the 1997 third quarter from the
U.S. Treasury Department under its Bank Enterprise Award program.

Other operating expenses

Other  operating  expenses  declined  for both the first  nine  months and third
quarter of 1997 compared to the similar 1996 periods.  Both  decreases  resulted
primarily from the nonrecurrence of the $96,000 FDIC assessment  recorded in the
1996 third quarter.

Income tax expense

Income tax expense as a percentage of pretax income rose from 35.2% in the first
three  quarters  of 1996 to 36.2%  for the  similar  1997  period as a result of
higher levels of income subject to state income tax. Third-quarter effective tax
rates were relatively unchanged between 1997 and 1996.

Short-term interest earning assets

Short-term interest earning assets declined slightly, averaging $9.7 million for
the first nine months of 1997  compared  to $10  million  for the  similar  1996
period.

Investment securities

The available for sale portfolio rose $8.6 million,  totalling  $39.7 million at
September  30, 1997  compared to $31 million at the end of 1996,  an increase of
27.9% due to the  short-term  investment of the proceeds from a large  municipal
deposit received just prior to quarter-end.  Related unrealized appreciation was
$37,000 compared to $108,000 of unrealized depreciation at 1996 year-end.

The held to maturity  portfolio  changed  nominally,  rising by .9%,  from $29.9
million at December  31, 1996 to $30.1  million at September  30, 1997.  Related
unrealized  depreciation  was  down,  declining  from  $349,000  to  $55,000  at
September 30, 1997 due to the strong bond market down in the 1997 third quarter.
<PAGE>
                                       9


At September 30, 1997, included in both the aforementioned  portfolios were five
structured  notes with a carrying value of $4,250,000 and a related market value
of  $4,185,000,  reflecting  unrealized  depreciation  of  $65,000,  compared to
$143,000 of unrealized  depreciation  at 1996  year-end.  These notes consist of
step-up,  dual-index and  deleveraged  notes,  the market values of which do not
necessarily  move in the same  direction  as  general  changes  in bond  prices.
Management  believes that holding these notes will not have a significant impact
on the financial condition or operations of the Corporation.

Loans

Loans  held for sale rose from  $291,000  at  December  31,1996 to  $756,000  at
September  30, 1997 while loans  originated  for sale during the 1997 first nine
months of 1997 totalled $1.4 million  compared to $3.2 million  during the first
three quarters of 1996. This decline in originations resulted primarily from the
discontinuance  by the  Department  of Housing  and Urban  Development  of their
investor  residential  rehabilitation  loan program.  These loans  represented a
significant part of the Bank's loan  originations.  Loans totalled $57.9 million
at September 30, 1997 compared to $57.1 million at December 31, 1996.

Deposits

Average deposits for the first nine months of 1997 rose 7.2 %, to $120.2 million
compared to $115.1  million  for the first nine months of 1996,  with the growth
occurring  in  certificates  of  deposits  of  $100,000  or more issued to local
municipalities.  While these large time deposits represent a substantial part of
total deposits, they represent a relatively stable funding source as part of the
Bank's overall municipality deposit relationship. Short-term borrowings

Average short-term borrowings was virtually unchanged from the first nine months
of 1996 to the corresponding 1997 period.

Long-term debt

Long-term debt increased $2 million in the nine months of 1997 from December 31,
1996, as a result of $2 million in Federal Home Loan Bank  advances  incurred in
February, 1997.

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.

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 major  contribution  during the first three  quarters of 1997 from operating
activities to the Corporation's liquidity came from higher net earnings, while a
decrease in accrued expenses and other  liabilities  represented the highest use
of cash.

Net cash used in investing  activities  was primarily the result of the purchase
of investment securities available for sale, which totalled $37.4 million, while
sources of cash provided by investing  activities  were derived  primarily  from
proceeds from maturities, principal payments and early redemptions of investment
securities available for sale, which amounted to $28.9 million.

The primary source of funds from financing  activities resulted from an increase
in  deposits  of $6.6  million,  while  the  highest  use of  cash in  financing
activities resulted from the payment of dividends, which amounted to $217,000.
<PAGE>
                                       10


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 September 30,1997,  the Corporation had a cumulative one-year static gap of a
negative  $14.4  million,  representing  9.96% of  total  assets  compared  to a
negative $12.4 million gap at December 31,1996, which represented 9.19% 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 300 basis points,  which is the maximum change
that  management  uses to measure the  Corporation's  exposure to interest  rate
risk.

Capital

On June 28, 1997 the Corporation issued $820,000 of 6.5% noncumulative preferred
stock in a private placement.  Stockholders'  equity amounted to $9.7 million at
September 30, 1997 compared to $8.3 million to December 31, 1996.  Stockholders'
equity as a percentage  of total assets was 6.72% at September 30, 1997 compared
to 6.14% at December 31, 1996.

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 September 30,1997, the Corporation's core capital (Tier 1 ) and total (Tier 1
plus Tier 2) risked-based capital ratios were 15.22% and 19.21%, respectively.

Part II. Other information
Item 6(a). Exhibits


                  (11)     Statement Regarding Calculation of Per Share Earnings
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)

         November 12, 1997          ____________________
                                    Edward R. Wright
                                    Senior Vice President and Chief Financial
                                    Officer (Principal Financial and Accounting
                                    Officer)
<PAGE>
                                       11