<PAGE>
                                       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, 1996
         [   ] 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: (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 November 12, 1996 was approximately $1,384,000.

There were 114,141 shares of common stock outstanding at November 12, 1996.

<PAGE>
                                       2

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES

Consolidated Balance Sheet (Unaudited)
                                                      
                                                      September 30, December 31,
Dollars in thousands, except per share data                   1996         1995
================================================================================
Assets
Cash and due from banks ..............................     $  2,553     $  3,344
Federal funds sold ...................................       11,600        6,950
Interest bearing deposits with banks .................           66          321
Investment securities available for sale .............       39,471       30,609
Investment securities held to maturity
  (Market value of $29,603 at September
  30, 1996 and $24,434 at December 31,1995) ..........       30,200       24,494
Loans held for sale ..................................        1,466          555
Loans ................................................       55,265       44,739
Less: Reserve for possible loan losses ...............          725          650
                                                           --------     --------
Net loans ............................................       54,540       44,089
                                                           --------     --------
Premises and equipment ...............................        3,285        2,288
Accrued interest receivable ..........................          925          955
Other real estate owned ..............................          306          212
Other assets .........................................          346          593
                                                           --------     --------
Total assets .........................................     $144,758     $114,410
                                                           ========     ========
Liabilities and Stockholders' Equity

Deposits:
  Demand .............................................     $ 15,801     $ 12,925
  Savings ............................................       34,257       37,019
  Time ...............................................       75,449       50,945
                                                           --------     --------
Total deposits .......................................      125,507      100,889
Short-term borrowings ................................        8,000        3,661
Accrued expenses and other liabilities ...............        1,447        1,215
Long-term debt .......................................        1,749        1,749
                                                           --------     --------
Total liabilities ....................................      136,703      107,514

Commitments and contingencies

Stockholders' equity
  Preferred stock, no par value: Authorized
    100,000 shares; issued 128 shares in
    1996 and eight shares in 1995,
    outstanding 128 shares in 1966 and eight
    shares in 1995, ..................................          727          200
  Common stock, par value $10: Authorized
    400,000 shares; Issued 111,980 shares in
    1995 and 1994, outstanding 111,141 shares
    in 1995 and 111,941 shares in 1995 ...............        1,150        1,120
  Surplus ............................................          901          886
  Retained earnings ..................................        5,410        4,856
  Less:
    Net unrealized loss on investment
      securities available for sale ..................          108          141
    Treasury stock, at cost - 839 shares .............           25           25
                                                           --------     --------
Total stockholders' equity ...........................        8,055        6,896
                                                           --------     --------
Total liabilities and stockholders' equity ...........     $144,758     $114,410
                                                           ========     ========
See accompanying notes to consolidated financial statements.
<PAGE>
                                       3

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES
                                                                    
Consolidated Statement of Income (Unaudited)                                   

                                     Nine months ended       Three months ended
Dollars in thousands,                  September 30,             September 30, 
  except per share data              1996        1995         1996          1995
================================================================================
Interest income
Interest and fees on loans ..   $   3,524   $   2,591    $   1,278    $     945
Interest on Federal funds
  sold and securities
  purchased under agreements
  to resell .................         206         259           90           57
Interest on other short-term
  investments ...............         185          87           41           61
Interest on deposits with
  banks .....................           5           6            1            4
Interest and dividends on
  investment securities:
  Taxable ...................       2,621       2,470          905          815
  Tax-exempt ................          87          84           31           29
                                ---------   ---------    ---------    ---------
Total interest income .......       6,628       5,497        2,346        1,911
                                ---------   ---------    ---------    ---------
Interest expense
Interest on deposits ........       2,452       1,939          929          676
Interest on short-term
  borrowings ................         154         128           52           47
Interest on long-term debt ..          74          16           25            5
                                ---------   ---------    ---------    ---------
Total interest expense ......       2,680       2,082        1,006          728
                                ---------   ---------    ---------    ---------
Net interest income .........       3,948       3,415        1,340        1,183
Provision (credit) for
  possible loan losses ......          65         151           32          (32)
                                ---------   ---------    ---------    ---------
Net interest income
  after provision (credit)
  for possible loan losses ..       3,883       3,264         1308         1151
                                ---------   ---------    ---------    ---------
Other operating income
Service charges on deposit
  accounts ..................         419         463          140          143
Other income ................         433         621          100          107
Net gain (loss) on sales
  of investment securities ..           8          (2)          (1)          (1)
                                ---------   ---------    ---------    ---------
Total other operating
  income ....................         860       1,082          239          249
                                ---------   ---------    ---------    ---------
Other operating expenses
Salaries and other
  employee benefits .........       1,982       1,842          672          644
Occupancy expense ...........         251         119          117           63
Equipment expense ...........         254         180           77           65
Other expenses ..............       1,161       1,044          454          361
                                ---------   ---------    ---------    ---------
Total other operating
  expenses ..................       3,648       3,185        1,320        1,133
                                ---------   ---------    ---------    ---------
Income before income
  tax expense ...............       1,095       1,161          227          267
Income tax expense ..........         385         421           82           90
                                =========   =========    =========    =========
Net income ..................   $     710   $     740    $     145    $     177
                                =========   =========    =========    =========
Net income applicable
  to common stock ...........   $     708   $     740    $     143    $     177
                                =========   =========    =========    =========
Net income per share
Primary .....................   $    6.27   $    6.66    $    1.25    $    1.59
Fully diluted ...............        5.66        5.99         1.12         1.44
                                =========   =========    =========    =========
Primary average
  shares outstanding ........     112,855     111,141      114,141      111,141
Fully diluted average
  shares outstanding ........     126,705     124,991      127,991      124,991
                                =========   =========    =========    =========
See accompanying notes to consolidated financial statements.
<PAGE>
                                       4

CITY NATIONAL BANCSHARES CORPORATION
AND SUBSIDIARIES
<TABLE>
Consolidated Statement of Changes
in Stockholders' Equity
(Unaudited)
<CAPTION>
                                                                               
                                                                                              Net Unrealized
                                                                                           Gain (Loss) on Invest-
Dollars in thousands, except                    Common                 Preferred    Retained  ment Securities   Treasury
  per share data                                 Stock      Surplus       Stock     Earnings Available for Sale  Stock        Total
===================================================================================================================================
<S>                                             <C>         <C>         <C>          <C>          <C>          <C>
Balance, December 31, 1994 ................     $ 1,120     $   886        --        $ 4,194      $  (587)     $   (25)     $ 5,588
Net income ................................        --          --          --            740         --           --            740
Change in net unrealized
  gain on investment
  securities available for sale ...........        --          --          --           --            223         --            223
Dividends paid on common stock ............        --          --          --           (140)        --           --           (140)
                                                -------     -------     -------      -------      -------      -------      -------
Balance, September 30, 1995 ...............     $ 1,120     $   886        --        $ 4,794      $  (364)     $   (25)     $ 6,411
                                                =======     =======     =======      =======      =======      =======      =======
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
                                                =======     =======     =======      =======      =======      =======      =======
</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                                                  1996         1995
===============================================================================
Operating activities
Net income ...........................................    $    710     $    740
Adjustments to reconcile net income
  to net cash from operating activities:
  Depreciation and amortization ......................         260          119
  Provision for possible loan losses .................          65          151
  Amortization of premium, net of
    discount accretion on investment
    securities .......................................          46          135
  Gains on calls of investment securities
     held to maturity ................................          (8)        --
  Gains and commissions on loans held for sale .......         (84)        (100)
Decrease in accrued interest receivable ..............          30          230
Deferred income tax expense ..........................         140           12
Decrease in other assets .............................         247        1,139
Increase (decrease) in accrued expenses and
  other liabilities ..................................          67          (73)
                                                           --------    --------
Net cash provided by (used in) operating
  activities .........................................       1,473        2,353
                                                           --------    --------
Investing activities 
Loans originated for sale ............................      (3,191)      (4,000)
Proceeds from sales of loans held for sale ...........       2,253        3,868
Increase in loans ....................................      (6,464)      (4,647)
Purchase of loans in conjunction with
  branch acquisitions ................................      (4,035)     (11,479)
Decrease (increase) in interest bearing
  deposits with banks ................................         255         (293)
Proceeds from maturities of investment
  securities available for sale,
  including principal payments and calls .............       5,749          271
Proceeds from maturities of investment
  securities held to maturity,
  including principal payments and calls .............       4,311        6,565
Purchases of investment securities
  available for sale .................................     (14,583)      (2,746)
Purchases of investment securities
  held to maturity ...................................     (10,025)      (5,445)
Purchases of premises and equipment ..................      (1,257)        (580)
                                                           --------    --------
Net cash used in investing activities ................     (26,987)     (18,486)
                                                           --------    --------
Financing activities
Deposits acquired in branch acquisition ..............       7,661         --
Increase (decrease) in deposits ......................      16,957       (2,724)
Increase in short-term borrowings ....................       4,339        4,343
Proceeds from issuance of common stock ...............          45         --
Proceeds from issuance of preferred stock ............         527         --
Dividends paid .......................................        (156)        (140)
                                                           --------    --------

Net cash provided by financing activities ............      29,373        1,479
                                                           --------    --------

Net increase (decrease) in cash and cash
  equivalents ........................................       3,859      (14,655)

Cash and cash equivalents at beginning of period .....      10,294       27,131
                                                           --------    --------

Cash and cash equivalents at end of period ...........    $ 14,153     $ 12,476
                                                          ========     ========

Cash paid during the year:
Interest .............................................    $  2,602     $  1,939
Income taxes .........................................         199          734

Noncash investing activities:
Transfer of loans to other real estate owned .........          94          212

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

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 nine
months ended  September  30,1996 are not  necessarily  indicative of the results
that may be expected for the year ended December 31,1996.

3. Earnings per common share

Earnings  per common  share is  calculated  by  dividing  net  income,  less the
dividends on preferred stock, by the average number of common shares outstanding
during the period.

4. Reclassifications

Certain  reclassifications  have  been made to the 1996  consolidated  financial
statements in order to conform to the 1995 presentation.

<PAGE>
                                       7

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

On March 8,1996 City National Bank acquired a branch office,  assuming  deposits
totalling  $7.6 million in exchange for  $500,000 of the  Corporation  preferred
stock,  continuing a trend  established  in 1994 of  selectively  expanding into
urban  areas  where  the Bank  believes  it can  provide  a need for its  unique
personalized  type of service.  During the third  quarter of 1996,  the Bank was
assessed  $96,000 by the FDIC  representing  its share to replenish  the Savings
Association Insurance Fund.

Results of operations

Net income for the first nine months of 1996 was $710,000,  compared to $740,000
for the similar 1995 period, which included the benefits of $198,000 of proceeds
received  from the  Resolution  Trust  Corporation  ("RTC") in  February,  1995,
representing  earnings on funds allocated to purchase loans from the RTC, offset
in part by a special  addition of $115,000 to the  provision  for possible  loan
losses.  Returns on average  stockholders' equity and average assets were 12.36%
and .73% for the first nine  months  and 16.44 % and .90% for the  corresponding
1995 period.  Related  earnings per share on a fully diluted basis rose to $5.57
from $5.92.

1996 third  quarter  net  income  decreased  to  $145,000  from  $177,000 a year
earlier.  Returns on average shareholders' equity and average assets were 12.90%
and .88% for the 1996 second quarter,  while the corresponding 1995 returns were
12.90% and .63%. Related fully diluted per share earnings were $1.12 compared to
$1.42. The FDIC assessment was the primary reason for the decrease in earnings.

Excluding  the  nonrecurring  items in  both1996  and 1995,  1996 third  quarter
year-to-date earnings were $773,000, 12.7% greater than the $686,000 earnings in
the corresponding 1995 period,  while 1996 third quarter earnings were $208,000,
or 17.5% higher than the 1995 third quarter.

Net interest income

For the first nine months of 1996, net interest income rose 15.68% to $3,948,000
from $3,415,000 for the same 1995 period. Higher earning asset levels, resulting
primarily  from  increased  loan  volume,   was  the  primary  reason  for  this
improvement.  Related net interest  margins on a tax equivalent basis were 4.36%
compared to 4.47%,  as higher  rates  derived  from  increased  loan volume were
offset by increased deposit costs. Average interest earning assets for the first
nine months of 1996 rose to $122.1 million from $103.4 million in 1995.  Most of
this growth  occurred  within the loan  portfolio,  which averaged $52.4 million
compared to $37.5 million , a 39.7 % increase, due in part to the purchase of $4
million in residential mortgage loans in conjunction with the March, 1996 branch
acquisition.  Average  short-term  earning assets rose from $8.3 million for the
1995 first  nine-month  period to $10 million for the similar 1996  period.  The
average  investment  portfolio  increased  from $57.6 million for the first nine
months  of 1995 to $59.6  million  for the  similar  1996  period.  This  growth
occurred primarily in U.S. Government agency securities.

For the third quarter of 1996, net interest  income rose to 13.27% to $1,340,000
from  $1,183,000  in the third quarter of 1995 also due primarily to higher loan
volume.

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)                    1996       1995       1996        1995
--------------------------------------------------------------------------------
Balance at
  beginning of period .............      $ 650      $ 625      $ 700      $ 700
Provision (credit) for
  possible loan losses ............         65        151         32        (32)
Recoveries of previous
  charge-offs .....................         94         29         10          6
                                         -----      -----      -----      -----
                                           809        805        742        674
Less: Charge-offs .................         84        180         17         49
                                         -----      -----      -----      -----
Balance at end of period ..........      $ 725      $ 625      $ 725      $ 625
                                         =====      =====      =====      =====

The higher provision in the first half of 1995 resulted from a special charge in
the first quarter of 1995 of $115,000,  representing  an addition to the reserve
for possible  loan losses of 1 % of the balance of the loan  portfolio  acquired
from the RTC.
<PAGE>
                                       8

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.
                                             Sept. 30,  December 31,   Sept. 30,
(Dollars in thousands)                            1996         1995         1995
--------------------------------------------------------------------------------
Reserve for possible loan
  losses as a percentage of:
  Total loans .............................       1.31%        1.45%       1.50%
  Total nonperforming loans ...............      55.51%       74.71%      72.92%
  Total nonperforming assets
  (nonperforming loans and OREO) ..........      44.98%       60.07%      53.69%
Net charge-offs (recoveries)
  as a percentage of average
  loans (year-to-date) ....................       (.02)%       1.43%        .04%

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  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.

                                            Sept. 30,   December 31,   Sept. 30,
(Dollars in thousands)                          1996          1995          1995
--------------------------------------------------------------------------------

Nonaccrual loans
 Commercial ..........................        $  350        $   68        $ --
 Installment .........................             6             2             6
 Real estate .........................           738           800           507
                                              ------        ------        ------
Total ................................         1,094           839           513
                                              ------        ------        ------
Loans past due 90 days
 or more and accruing
 Commercial ..........................            57             1          --
 Installment .........................          --            --            --
 Real estate .........................           165            30           344
                                              ------        ------        ------
Total ................................           212            31           344
                                              ------        ------        ------
Total nonperforming loans ............        $1,306        $  870        $  857
                                              ======        ======        ======

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,  decreased  from  $1,082,000  for the first nine months of 1995 to
$860,000  for the similar  period in 1996 due  primarily  to the  aforementioned
$198,000  received  from the RTC in 1995.  Third  quarter  1996 other  operating
income was slightly less than the similar 1995 quarter.

Other operating expenses

Other  operating  expenses  rose 14.5% for the first  three  quarters of 1996 to
$3,648,000  from  $3,185,000  in the  first  three  quarters  of 1995,  with the
greatest  increase arising from higher occupancy and equipment  expense,  due to
increased  costs  attributable to the renovation of the  administrative  office,
along with the branch  acquisition.  Third quarter 1996 other operating expenses
rose 16.5%  compared to the 1995 third quarter for the same reasons.  Additional
staffing  costs  incurred  in  connection  with  the  branch   acquisition  also
contributed to higher operating expenses in both 1996 periods.
<PAGE>
                                       9

Income tax expense

Income tax expense as a percentage  of pretax  income  decreased  slightly  from
36.3% to 35.2% for the first three  quarters of 1996 compared to the first three
quarters of 1995 as a result of lower  levels of income  subject to state income
tax.

Short-term interest earning assets

Short-term  interest  earning  assets  averaged  $9.9 million for the first nine
months of 1996 compared to $8.1 million for the similar 1996 period,  reflecting
the additional liquidity resulting from the branch acquisition.

Investment securities available for sale

Investment  securities  available  for sale  increased to $39.5  million at June
30,1996 from $30.6 million at 1995 year-end,  while  unrealized  depreciation in
the portfolio declined to $108,000 from $141,000 at those dates.

Investment securities held to maturity

Investment  securities  held to maturity  increased  from $24.5  million at 1995
year-end to $30.2 million at September 30, 1996  reflecting the purchase of $8.7
million  of  fixed-rate   medium-term  U.S.  agency  callable  securities.   The
unrealized  depreciation in the held to maturity  portfolio rose from $60,000 at
December  31,1995  to  $597,000  at  September  30,  1996 due  primarily  to the
sensitivity  to interest  rate changes in both  direction of the  aforementioned
agency securities.

Loans

Loans held for sale rose from  $555,000 at  December  31,1995 to  $1,466,000  at
September  30,1996 while loans  originated for sale declined  slightly from $3.3
million  during the first nine months of 1995 to $3.2 million for the first nine
months of 1996. For the third quarter of 1996, loan  originations  totalled $1.8
million, slightly less than the $1.9 million originated during the third quarter
of 1995.  Loans sold during the first three  quarters of 1996  decreased to $2.1
million  compared to $3.8  million for the first three  quarters of 1995,  while
sales in the 1996 third quarter were  $896,000  compared to $1.4 million for the
similar  1995  quarter.  The  increase  in loans from $44.7  million at December
31,1995 to $55.3 million at September 30, 1996  resulted  primarily  from the $4
million  in loans  purchased  along  with an  increase  in the  commercial  loan
portfolio.

Deposits

Average  deposits  for the first  three  quarters  of 1996 and 1995 were  $115.1
million and $99.4 million, respectively, a 15.7% increase, approximately half of
which  resulted  from the branch  acquisition.  The  balance  was  derived  from
increased time deposits.

Short-term borrowings

Average  short-term  borrowings rose 31.2% from the first three quarters of 1995
to the corresponding 1996 period,  reflecting higher levels of U.S. Treasury tax
and loan note option balances.

Long-term debt

Long-term debt averaged  $1,749,000 million for the first three quarters of 1996
compared to $249,000  for the first three  quarters of 1995 as the result of the
issuance during the fourth quarter of 1995 of $1.5 million in capital notes.

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
deposits and credit customers.  Liquidity needs arise principally to accommodate
possible deposit outflows and to meet customers'  request for loans.  Such needs
can be satisfied by maturing loans and investments, short-term liquid assets and
the ability to raise short-term funds from external sources.

The  Corporation  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,
borrowings under the U.S.  Treasury tax and loan note option program and Federal
Home Loan Bank advances.
<PAGE>
                                       10

It is the  responsibility  of senior  management  to  monitor  and  oversee  all
activities  relating to liquidity  management and the protection of net interest
income from fluctuations in interest rates. The major contribution for the first
nine months of 1996 from  operating  activities to the  Corporation's  liquidity
came from net income.  Most of the cash received from investing  activities came
from proceeds from  maturities of  investment  securities,  including  principal
payments and calls, which totalled $10.1 million.  The primary use for investing
activities was the $24.6 million purchase of investment securities.

An increase  in deposits  provided  the  largest  source of cash from  financing
activities, while cash dividends represented the greatest outlay.

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-sensitvity  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 30,1996,  the Corporation had a cumulative one-year static gap of a
negative  $13.5  million,  representing  10.96% of total  assets  compared  to a
negative  $13.5 million gap at December  31,1995,  which  represented  11.74% 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

Consolidated  stockholders'  equity  amounted to $8.1  million at Sept.  30,1996
compared to $6.9 million to December  31,1995.  In addition to the increase from
earnings,  the  Corporation  issued  $527,000 of preferred  stock and $45,000 of
common stock during 1996.  Stockholders'  equity as a percentage of total assets
was 5.56% at Sept.  30,1996,  while the  consolidated  leverage ratio was 5.78%,
which compares with existing guidelines  established by the Federal Reserve Bank
for bank holding companies of 3%.

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 30,1996, the Corporation's core capital (Tier 1 ) and total (Tier 1
plus Tier 2) risked-based capital ratios were 13.84% and 18.08%, respectively.
<PAGE>
                                       11


PART II Other information

Item 6a. Exhibits

         (11 ) Statement re computation 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 14,1996           ____________________
                                    Edward R. Wright
                                    Senior Vice President and Chief Financial
                                    Officer Principal Financial and Accounting
                                    Officer)