CITIZENS FINANCIAL SERVICES INC, ARS, 2000-03-14

CITIZENS FINANCIAL SERVICES INC
ARS, 2000-03-14
STATE COMMERCIAL BANKS
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<B>Blueprints for a new century</B>
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<TD ALIGN="right" WIDTH="50%"><B><H3>FIRST CITIZENS<BR>NATIONAL BANK</H3></B></td>
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<H2>1999 Annual Report</H2>
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<H2>Blueprints for a<BR>new century</H2>
<B>Blueprints are documents of hope.

They convey confidence in the future.
They provide a plan for action.

Blueprints are created when<BR>
people put their heads together<BR>
 and say,<BR>
"Let's build something new.<BR>
Let's create our future."<BR>
<BR>
As we enter the new century,<BR>
the staff of First Citizens National Bank<BR>
and the communities we serve<BR>
have blueprints on our minds:<BR>
blueprints for brick-and-mortar,<BR>
blueprints for click-and-discover,<BR>
blueprints for community growth...</B></TD>
<TD><H2>A letter from the president</H2>
Dear shareholders, customers and employees:<P>
From a business perspective, the United States has been experiencing "the best of times."  Today's economy represents our nation's longest peacetime economic expansion, yet inflation and unemployment are at very low levels while worker productivity is
very high.  Against this background, significant change and innovation has occurred in all industries.  Every business must constantly adapt to be successful. It must re-examine its business model and ask if it is good enough to create tomorrow's success.<P>
This past year has been a unique one for this corporation and its subsidiary, First Citizens National Bank. We have been busy creating blueprints for a dynamic future.<P>
Let me set the stage for discussing our future by briefly highlighting the past year,  a year in which we achieved many new records.<P><BR>
<H3>Financial performance</H3>
In 1999, total assets grew $27.2 million or 8.7%, while total deposits and loans grew 3.7% and 12.4%, respectively.  In addition, over $98 million in loans were granted.  Net income was $3.6 million versus $3.5 million in 1998.  If you recall, in 1998 we
had two sources of unusual revenue and one unusual expense.  The unusual revenue was from significant securities gains ($457 thousand) and $112 thousand from an arbitration settlement.  The unusual expense was $141 thousand (net of income tax) from
extinguishing long-term debt.  Had it not been for these three unusual items, net income would have been $3.3 million.  In 1999, we had more modest securities gains ($279 thousand) and
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therefore net income without such gains would have approximated $3.4 million.  The net result is a modest increase in net income on a year-over-year basis.<P>
Of additional significance in comparing 1999 to 1998 is the following:<P>
- - a $451 thousand increase in service charge income (primarily related to overdraft and NSF charges).<BR>
- - a $360 thousand reduction in federal income tax expense (resulting from increased investments in municipal securities).<BR>
- - a $472 thousand increase in salary and employee benefit costs (associated with new positions and compensation adjustments in line with a tight labor market).<BR>
- - a $128 thousand increase in professional fees (associated with consultants assisting us in new strategic initiatives).<BR>
- - a $200 thousand increase in other operating expenses (influenced by Y2K expenses and costs associated with repossessions and foreclosures).<P>
Earnings in 1999 were negatively influenced by a significant increase in loan losses.  We incurred net chargeoffs of nearly $500 thousand, a level very uncharacteristic of us.  As a result, our provision for loan losses was $257,500 higher than 1998, a
significant reason why net income grew a modest $100 thousand.  We continue to believe the credit quality of our loan portfolio is strong.  Total non-performing loans were $2.4 million at the end of both 1999 and 1998.<P>
Our stock buy-back program initiated in July continues at a reasonably strong pace.  At this writing, we have acquired 43,999 shares toward our ultimate goal of 135,000 shares.  All shares have been acquired at a price of  $16.75-$17.50.<P>
Total stockholders equity declined from $28.6 million at year-end 1998 to $27.1 million at December 31, 1999.  In addition to the impact of the stock buy-back program, stockholders' equity declined by $3 million, the result of a market value reduction in
our available-for-sale investment portfolio, a byproduct of rising interest rate levels. <P>
<H3>Operating and strategic initiatives</H3>
Among the more significant efforts undertaken in 1999 was preparation for Y2K.  It almost seemed anti-climatic when the new year rolled around with no significant disruption.  We must recognize, however, that many dedicated employees worked over two years
to assure that Y2K was truly a non-event.  I am so pleased with their diligence.<p>
Numerous other strategic actions with longer-term ramifications were put in place last year.  We engaged a professional sales management consultant to help us strengthen our overall sales process.  We also used consulting services to build an incentive
model to more effectively align employees with shareholders' interests. Consultants also helped us implement a more effective performance management system, one built upon more refined job descriptions, clearly identified key accountabilities and a more
effective performance evaluation process.<P>
Other noteworthy accomplishments include a maturing of our debit card program, introduced in the latter part of 1998, and the introduction of Internet banking, called NetTeller.<P>
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 Not only are we offering Internet banking, but also ancillary services such as electronic bill payment and cash management services of special significance to commercial customers.  These programs have kept us on the leading edge of services typically
found in exceptionally large banks.  This technological capability is possible due to our partnership with Jack Henry & Associates, Inc., a premier bank software vendor.<P>
<h3>Building program</H3>
I am delighted to report that final drawings have been presented to Mansfield Borough authorities for construction of our new main office administration and financial center.  Our new facility will house the Mansfield banking office, the Trust and
Financial Services division, and the administrative offices of our corporation.  We will work with Mansfield Borough to convert Hoard Street to a two-way street and allow for greater ease when exiting our property.  <P>
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<TD>Numerous new concepts will be featured in this banking facility. These include a concierge desk for superior customer support and assistance,
a computer cafee and extensive video and merchandising displays to keep customers informed of events around the world in financial markets as well as more effectively highlight our products and services. This new  facility will present our Trust and
Financial Services division more prominently, increasing community awareness of the range of investment services we
<TD ALIGN="right"><h4>"The customer is the reason for our existence..."</H4></TD>
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Construction plans for the expansion of our Operations Center (adjacent to the Wal-Mart Store south of Mansfield) have been presented to Richmond Township.  We look forward to completion by this Fall.  This facility will provide our entire corporation
with lending, data processing, operations (previously known as bookkeeping) and telephone banking support services.  This facility will also house a central training room, a major benefit as our corporation continues to grow.<P>
While all of this construction is underway, we will also work with Wal-Mart to construct a banking facility within the Wal-Mart Supercenter.  This new office is scheduled to be finished in August  2000.<P>
<h3>Focus for future</H3>
In 2000 and beyond, we must continue that which has been the foundation to our success.  We must, first and foremost, recognize that the customer is the reason for our existence  -  we must serve them promptly, courteously and professionally.  At the same
time, we must deliver services through new means (such as telephone and personal computers) in order to meet customers' changing convenience expectations.  We must inform and educate our marketplace of the full range of services we now offer, while adaptin
of compensation, but also education and professional development.  We must have leadership in our corporation which not only sets an example for customer service, but also for employee development and coaching.<P>
Needless to say, we must have a commitment to shareholders.  Our nearly 1,500 shareholders must see financial performance that causes them to sustain their investment.  All industries, but especially banking, are operating on narrowing margins.  The
challenge to create incremental earnings increases each year.  I believe, however, that this challenge is a good thing.  We must embrace this challenge by seeking new ways, using our creativity and constantly adapting our business model.  This is what
your corporation is doing as it strives to continue its success story.<P>
As a final thought, I have found shareholders to be great ambassadors of this corporation.  Such shareholder loyalty and support are instrumental to our success.  Please continue to encourage others to utilize First Citizens National Bank whenever the
opportunity arises.<P>
Sincerely,<BR>
<BR>
/s/ Richard E. Wilber<BR>
Richard E. Wilber<BR>
President<BR>
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<h2>Blueprints for new corporate and community facilities</H2>
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<TD ALIGN="right" WIDTH="33%"><H4>Bank launches major<BR>capital improvement<BR>program</H4></TD>
<TD>First Citizens National Bank begins the new century with the largest capital improvement program in the bank's history.<P>
A new 16,000-square foot brick building, designed to complement and enhance its surroundings, will be constructed in the heart of downtown Mansfield. The new facilities will house the corporate headquarters as well as the Mansfield community offices.  The
building will be located near the north side of the same lot as the current offices, which will be torn down to make room for improved landscaping and parking.<P>
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The bank will also double the size of its corporate operations center near the Mansfield Wal-Mart, and will open a new in-store office at the new Wal-Mart Supercenter in Mansfield. This latest addition will bring the number of community offices to 11,
nearly triple the number (4) that existed in the early 1970s.<P>
"This building program is our vote of confidence in the future, and a reflection of the strong vote of confidence our customers have given us," <BR>
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<TD ALIGN="right"><h3>Expansion shows<BR>bank's commitment<BR>to community growth</H3></TD>
<TD>says Richard E. Wilber, President of First Citizens. In 1999, the bank held an asset portfolio of $341 million, approximately 18 times the asset total in 1971, when the current Mansfield offices were constructed. <P>
A major feature of the new facilities is a separate area and separate entrance for the Trust and Investment Services Division. This will lend high visibility to the bank's emerging role as a one-stop provider of financial services, including estate
planning, mutual funds, annuities, insurance and other services and products related to personal and corporate financial management.<P>
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The tall narrow windows and other features of the brickwork architecture in the new Mansfield building combine smart commercial styling with strong evocation of an earlier era, exemplified by Mansfield University's North Hall and other buildings in the
borough. The design will make a strong visual statement about the bank's solid commitment to community growth, while at the same time enhancing the traditional flavor of its surroundings.<P>
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"High-tech, high-touch approach combines technology and customer service..."<BR>
Floor plan for new Mansfield offices<BR>
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<h2>Blueprints for a new way of banking</H2>
Even as First Citizens makes bold moves in capital improvement in 2000, blueprints are emerging for a new way of banking. Taking a cue from the hospitality industry, the bank will initiate a "concierge" role in its new Mansfield offices to deliver a new
kind of personalized customer service.<P>
Several staff members serving in this role will greet customers as they enter the bank, ready to provide a range of information and assistance as well as ensure that customers obtain whatever further help may be required. The expanded person-to-person
assistance comes at a time when the bank is expanding technology services such as Internet banking, bringing the speed and convenience of computer-based tools directly to customers.<p>
This "high-tech, high-touch" approach is designed to deliver the best possible service by embracing Internet and computer technology while strengthening
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the strong relationship the bank enjoys with its customers. A small "Computer Cafee" will be built in the lobby of the new Mansfield offices, giving staff a chance to introduce customers to the bank's NetTeller services.<p>
Response to the bank's Internet-based NetTeller services "has been extremely positive", President Richard E. Wilber said, with over 500 customers signing up in the first three months of operation. <p>
As further evidence of creative use of technology, the bank will install several "information monitors" in the lobby of its new Mansfield offices, displaying an interesting mix of financial information, national news, and community events. A similar
service will be launched in the future at other community offices.<P>
First Citizens intends to combine good old customer service with innovative banking services suitable for a new century. This year the bank will launch several new products and services designed to strengthen existing customer relationships and provide
additional benefits for users of online banking.<P>
As a community bank with strong roots in the communities it serves, First Citizens remains committed to excellence through an innovative and balanced combination of technology and personalized customer service.<P>
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<I>Third-grader Jessic Nowak checks her First Citizens balance as her mother, Susan, looks on.</I><BR>
<h3>NetTeller helps family track finances</H3>
Like many other busy people, Susan Nowak didn't always balance her checkbook in a timely fashion. As a result, she sometimes found it difficult to know what her current balance was.<P>
Then she signed up for First Citizens' Internet Banking service, NetTeller, and suddenly, this resident of Mansfield's Newtown Hill had an easy way to track her financial situation. Her checkbook is now more accurate than it used to be.<P>
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<TD WIDTH="30%" ALIGN="right"><H4>"I like the convenience of it,<BR>the privacy of it...<BR>You don't have to<BR>tell someone <BR>you forgot to record<BR>a transaction."</H4></TD>
<TD>"I like being able to go in there two or three mornings a week, to know exactly what checks have cleared and what my balance is," she says. "I like the convenience of it, the privacy of it. You don't have to go into the bank and tell someone you
forgot to record a check or ATM transaction."<P>
Susan's daughter, Veronica, who is in third grade, has an account at First Citizens, too, and she also uses NetTeller to check her balance. Her enthusiasm for the new technology, and the sense of independence and self-confidence it gives, is obvious as
she sits down at the keyboard to log on to the Internet.<P>
Susan and her husband, Dan, have several automatic payments that come out of their accounts. Through NetTeller, they can easily see when such payments have been deducted, and what the resulting balance is. One benefit of NetTeller, she says, is that it
"helps keep people from getting into trouble with an overdraft."<P></TD>
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<h2>Blueprints for community growth</H2>
First Citizens is committed to the economic wellbeing and quality of life of the communities it serves through its branches in Tioga, Bradford and Potter County.<P>
In this section, the bank puts the spotlight on several community leaders and organizations who are pursuing innovative blueprints for the future.<P>
<h3>Local opportunities in commerce</H3>
<I>A personal reflection by Tom Freeman</I>
<BLOCKQUOTE>Webster defines commerce as "the exchange of or buying and selling of commodities on a large scale involving transportation from place to place." If I could add one word to Webster's definition, it would be local. All commerce has its roots in
localities. The manufacturer, the shipper, the recipients are all local to their own communities.<P>
I have the privilege of being part of our local community as a businessman and as a member of several local economic development organizations. It is my belief that our region is prime for expansion. We owe a debt of gratitude to all of the people, many
of them unpaid volunteers, who helped sow the seeds of prosperity for our region. Today, it is our challenge to cultivate the growing crop that is arising from their careful planting, and assure the harvest will be plentiful. This will translate to local
prosperity.<P>
This careful planning has been fueled by the unforeseen expansion of the Internet. This combination poises us for accelerated, local business opportunities. Global markets are now accessible to anyone and everyone via E-commerce. Local products and
services are more marketable now than anytime in history. The keys to success, however, have not changed.<P>
Through the work of my colleagues and their predecessors on economic development organizations, our region has the beginning of a blueprint for success. We need to expand on that blueprint and build on it, using advanced tools that weren't envisioned by
the early planners and developers. What will we build? The answer lies in how well we follow the blueprints as we see them. Should the blueprints not accomplish our goals, we must move quickly to make appropriate changes.<P>
We have blueprints, we have tools, we have people, we have the desire. We can see evidence of success in local commerce and will see many more signs as we commit ourselves to growth in the new century.<P>
<I><BLOCKQUOTE>Resident manager of Blue Ridge Communications, Tom Freeman serves as president of the Greater Mansfield Area Chamber of Commerce and president of the Betterment Organization of Mansfield (BOOM). He is also a director of the Tioga County
Development Corporation.</I></BLOCKQUOTE></BLOCKQUOTE>
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<h3>Flexibility brings success to Ward</H3>
Ward Manufacturing's blueprint for success has a lot to do with flexibility. Once a foundry making traditional foundry products, the Blossburg-based company has been enjoying major marketing success with its flexible stainless steel gas piping known as
WARDFLEX.<P>
In 2000, Ward will double the size of its Lawrence Township (Tioga County) plant, to keep up with demand for the innovative product. "We're simply responding to an opportunity in the marketplace," says Doyne Chartrau, Ward's president and chief operating
officer.<P>
The biggest selling point of WARDFLEX is that it can be installed much faster than conventional steel pipe because it eliminates elbows and joints. It was originally developed in Japan to reduce the earthquake damage to piping, but has proved attractive
for other reasons to American contractors and builders. More than 150 million feet of the corrugated WARDFLEX piping has been produced.<P>
WARDFLEX isn't Ward's only demonstration of commitment to flexibility and innovation. ACP Manufacturing, a related company also managed by Chartrau, embraced the "greenfield product line" of ductile iron automotive castings in March 1997. The ACP plant in
Blossburg now employs 340 people, helping to maintain Ward's standing as Tioga County's largest employer, with a payroll of 1200.<P>
What's the secret? Chartrau says it this way: "You have to be well-read. You have to listen to people. And you have to look for opportunities."<P>
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<H3>Creative change in accounting and payroll services</H3>
Don White is a public accountant who has been been serving clients from his Troy office for 22 years. Although he's quick to point out that he's no computer guru, his determination to respond to changing times and take advantage of new opportunities can
be seen in recent developments in his practice.<P>
White brought his son, Donnie, into his business in 1998, and together the Whites have embraced the new Cash Management services available through First Citizens' Internet banking facilities. They take advantage of Automatic Clearing House (ACH)
facilities to enable direct deposit of payroll wages they process for a number of commercial clients throughout the area, and they use the bank's Internet-based Cash Management services to transfer funds to cover the payrolls they process.<P>
Recently, as further demonstration of their commitment to creative change, the Whites merged their payroll processing services with those of LPW & Associates LLC, Columbia Cross Roads, to form a new specialty payroll processing company known on the
Internet as JustWages.com. The new firm has developed an innovative payroll service that allows employer clients to use one simple Web page to submit employee hours and related information.<P>
The web site stores the information in a secure fashion and makes it easy for clients to obtain reports as needed, with the complexities of payroll processing handled confidentially by JustWages staff. <P>
"It's certainly exciting," says Don White. "Payroll can be expensive and difficult for small businesses to manage on their own. JustWages reduces the whole process to one simple form on the Web."<P>
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<I>Don and Donnie White use Cash Management for their client services.</I>
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<H2><B>Financial Highlights</B><BR><BR>
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	<TD ALIGN="right"><FONT SIZE="-1"><I>in thousands, except<br>
	per share data</I></FONT></TD>
	<TH><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1999</FONT></TH>
	<TH WIDTH="10"></TH>
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1998</FONT></TD>
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	<TD COLSPAN="4"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>Balance Sheet</B></FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Assets</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>$340,779</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">$313,564</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Deposits</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>284,318</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">274,193</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Net Loans</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>229,159</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">203,583</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Investments</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>91,696</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">93,082</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Stockholders' Equity</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>27,082</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">28,598</FONT></TD>
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	<TD COLSPAN="4"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>Statement of Income</B></FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Interest Income</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>23,546</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">23,088</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Interest Expense</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>12,066</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">11,920</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Net Interest Income</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>11,480</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">11,168</FONT></TD>
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<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Net Income</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>3,553</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">3,489</FONT></TD>
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	<TD COLSPAN="4"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>Per Share Data</B></FONT></TD>
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</TR>
<TR>
<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Net Income     </FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>1.27</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.25</FONT></TD>
</TR>
<TR>
<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Cash Dividends</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>.56</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">.52</FONT></TD>
</TR>
<TR>
	<TD HEIGHT="20" COLSPAN="4"></TD>
</TR>
<TR>
	<TD COLSPAN="4"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>Trust and Investment Services</B></FONT></TD>
</TR>
<TR>
	<TD COLSPAN="4"><HR></TD>
</TR>
<TR>
<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Trust Assets Managed</FONT></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>73,012</B></FONT></TD>
<TD WIDTH="10"></TD>
<TD ALIGN="right"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">69,095</FONT></TD>
</TR>
</TABLE>
<!-- Page 12 -->
<PAGE>
<HR>
<SMALL>[PAGE 12]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Six bar charts depicting:  1.  total assets, 2.  net income, 3.  stockholders' equity, 4.  deposits, 5.  net loans, and 6.  cash dividends paid, each from 1995 to 1999.  Tabular representtion of those graphs are set forth as
follows:
<br>
<br>
TOTAL ASSETS
(Dollars in Thousands)
1995        1996        1997        1998        1999
247,094     282,810     294,811     313,564     340,779
<br>
<br>
NET INCOME
(Dollars in Thousands)
1995		1996		1997		1998		1999
2,834		3,003		3,832		3,489		3,553
<br>
<br>
STOCKHOLDERS' EQUITY
(Dollars in Thousands)
1995        1996        1997        1998        1999
21,297      22,904      25,923      28,598      27,082
<br>
<br>
DEPOSITS
(Dollars in Thousands)
1995        1996        1997		1998		1999
213,316     240,177     256,783      274,193            284,318
<br>
<br>
NET LOANS
(Dollars in Thousands)
1995		1996        1997        1998        1999
159,794      180,418     189,910     203,583     229,159
<br>
<br>
CASH DIVIDENDS PAID
(Dollars in Thousands)
1995        1996        1997        1998        1999
1,121       1,187       1,596       1,449       1,567]
<HR> </BLOCKQUOTE> 
<!-- Page 13 -->
<PAGE>
<HR>
<SMALL>[PAGE 13]</SMALL>
<H2>Consolidated Balance Sheet</H2>
<FONT SIZE="-1"><I>December 31, 1999 and 1998</I></FONT>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0">
<TR>
	<TD><FONT SIZE="-1"><I>(in thousands)</I></FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TH BGCOLOR="DDDDDD"><FONT SIZE="-1"><B>1999</B></FONT></TH>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD><FONT SIZE="-1">1998</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>ASSETS:</B><BR>
	Cash and due from banks:<BR>
	  Noninterest-bearing</TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>8,364</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,175</TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Interest-bearing deposits with banks</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>158</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">130</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total cash and cash equivalents</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>8,522</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,305</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Available-for-sale securities</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>91,696</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">93,082</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Loans (net of allowance for loan losses
	<BR> 1999, $2,270; 1998, $2,292)</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>229,159</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">203,583</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Foreclosed assets held for sale</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>573</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">529</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Premises and equipment</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>5,942</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,606</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Accrued interest receivable</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,120</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,188</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Other assets</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,767</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,271</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>TOTAL ASSETS</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>340,779</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">313,564</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><BR><B>LIABILITIES:</B><BR>
	Deposits:<BR>
	  Noninterest-bearing</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>23,435</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">20,978</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Interest-bearing</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>260,883</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">253,215</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Total deposits</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>284,318</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">274,193</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Borrowed funds</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>25,853</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,334</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Accrued interest payable</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,557</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,363</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Other liabilities</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>969</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,076</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<B>TOTAL LIABILITIES</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>313,697</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">284,966</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<B>STOCKHOLDERS' EQUITY:</B><BR>
	Common Stock<BR>
	  $1.00 par value; authorized 10,000,000 shares; issued and <BR>
	  outstanding 2,800,563 and 2,773,434 shares in 1999 and <BR>
	  1998, respectively</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,800</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,773</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Additional paid-in capital</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>8,374</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,913</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Retained earnings</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>18,432</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">16,934</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Treasury stock, at cost (26,585 shares for 1999)</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(460)</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<B>TOTAL</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>29,146</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">27,620</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Accumulated other comprehensive (loss) income</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(2,064)</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">978</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<B>TOTAL STOCKHOLDERS' EQUITY</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>27,082</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">28,598</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<B>TOTAL LIABILITIES AND<BR>
	STOCKHOLDERS' EQUITY</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>340,779</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">313,564</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD COLSPAN="6"><FONT FACE="Arial,Helvetica" SIZE="-1"><I>See notes to consolidated financial statements.</I></TD>
</TR>
</TABLE>
<!-- Page 14 -->
<PAGE>
<HR>
<SMALL>[PAGE 14]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Consolidated Statement of Income</H2>
<FONT SIZE="-1"><I>Years Ended December 31, 1999, 1998 and 1997</I></FONT><BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD><I>(in thousands, except per share data)</I></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1997</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>INTEREST INCOME:</B><BR>
	Interest and fees on loans
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>18,318</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">17,652</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">17,174</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Interest-bearing deposits with banks</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>59</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">290</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">221</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Investment securities:<BR>
	  Taxable</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,051</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">4,550</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,250</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Nontaxable</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>942</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">492</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">52</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Dividends</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>176</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">104</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">82</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>TOTAL INTEREST INCOME</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>23,546</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">23,088</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">22,779</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>INTEREST EXPENSE:</B><BR>
	Deposits</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>11,410</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,482</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,107</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Borrowed funds</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>656</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">438</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">503</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>TOTAL INTEREST EXPENSE</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>12,066</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,920</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,610</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>NET INTEREST INCOME</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>11,480</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,168</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,169</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Provision for loan losses</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>475</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">218</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">210</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>NET INTEREST INCOME AFTER PROVISION<BR>
	  FOR LOAN LOSSES</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>11,005</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">10,950</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">10,959</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>OTHER OPERATING INCOME:</B><BR>
	Service charges</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,511</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,060</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">848</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Trust</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>410</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">362</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">339</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Realized securities gains, net</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>279</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">457</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">25</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Other</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>395</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">304</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">246</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Arbitration settlement</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>29</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">112</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">994</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>TOTAL OTHER OPERATING INCOME</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,624</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,295</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,452</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>OTHER OPERATING EXPENSES:</B><BR>
	Salaries and employee benefits</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,320</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,848</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,882</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Occupancy</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>532</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">522</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">519</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Furniture and equipment</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>706</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">713</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">706</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Professional fees</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>529</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">401</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">219</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Other</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,946</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,730</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,580</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>TOTAL OTHER OPERATING EXPENSES</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>9,033</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">8,214</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,906</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Income before provision for income taxes and extraordinary item</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,596</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,031</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,505</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Provision for income taxes</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,043</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,401</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,673</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Income before extraordinary item</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>3,553</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,630</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><BR><I>Extraordinary item:</I><BR>
	Loss on extinguishment of debt, net of related taxes of $72 in 1998</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">141</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>NET INCOME</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>3,553</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,489</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1.27</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1.30</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1.37</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>EARNINGS PER SHARE</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1.27</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1.25</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1.37</FONT></TD>
</TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>CASH DIVIDENDS PER SHARE</B></FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>0.560</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">0.520</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">0.355</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR>
	<TD COLSPAN="9"><FONT SIZE="-1"><I>See notes to consolidated financial statements.</I></FONT></TD>
</TR>
</TABLE>
<!-- Page 15 -->
<PAGE>
<HR>
<SMALL>[PAGE 15]</SMALL>
<H2>Consolidated Statement of Changes in Stockholders' Equity</H2>
<FONT SIZE="-1"><I>Years Ended December 31, 1999, 1998 and 1997</I></FONT><BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-2"><I>(in thousands,<BR>except per share data)  </I></FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Common<BR>
	<FONT SIZE="-2">Shares</FONT></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Stock<BR><FONT SIZE="-2">Amount</FONT></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Additional<BR>Paid-in<BR>Capital</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Retained<BR>Earnings</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Treasury<BR>Stock</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Accumulated<BR>Other<BR>Comprehensive<BR>(Loss) Income</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Total</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="20"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, December 31, 1996</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,360,228</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,360</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">6,828</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">14,544</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">172</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">22,904</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><BR>Comprehensive income:<BR>
	  Net income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Change in net unrealised gain on securities<BR>
	  available-for-sale, net of taxes of $88</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">171</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">171</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total comprehensive income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR>4,003</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Stock dividend</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">13,054</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">13</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">353</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(366)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Stock split in the form of a dividend</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,373,282</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,373</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,373)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Cash dividends, $.355 per share</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(984)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(984)</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="20"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, December 31, 1997</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,746,564</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,746</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,181</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">15,653</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">343</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">25,923</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><BR>Comprehensive income:<BR>
	  Net income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,489</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,489</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Change in net unrealised gain on securities<BR>
	  available-for-sale, net of taxes of $88</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">635</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">635</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total comprehensive income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR>4,124</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Stock dividend</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">26,870</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">27</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">732</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(759)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Cash dividends, $.52 per share</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,449)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,449)</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="20"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, December 31, 1998</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,773,434</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,773</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,913</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">16,934</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">978</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">28,598</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="20" HEIGHT="10"></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Comprehensive income:<BR>
	  Net income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>3,553</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>3,553</B></FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Change in net unrealised gain on securities<BR>
	  available-for-sale, net of taxes of $88</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(3,042)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(3,042)</B></FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total comprehensive income</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><HR><B>511</B></FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Stock dividend</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>27,129</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>27</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>461</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(488)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Purchase of treasury stock (26,585 shares)</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(460)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(460)</B></FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Cash dividends, $.56 per share</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,567)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,567)</FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD">
	<TD COLSPAN="20"><HR></TD>
</TR>
<TR BGCOLOR="DDDDDD" VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, December 31, 1999</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,800,563</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,800</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">8,374</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">18,432</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(460)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(2,064)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">27,082</FONT></TD>
</TR>
<TR BGCOLOR="DDDDDD">
	<TD COLSPAN="20"><HR></TD>
</TR>
</TABLE>
<BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR VALIGN="bottom">
	<TD></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1997</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Components of comprehensive income:<BR>
	    Change in net unrealized (loss) gain on<BR>
	      investment securities available-for-sale  </FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(2,858)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>937 </B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>188 </B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">    Realized gains included in net income,<BR>
	      net of taxes of $95, $155 and $8</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(184)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(302)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"></FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(17)</B></FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Total</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(3,042)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>635 </B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>171 </B></FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR>
	<TD COLSPAN="9"><FONT SIZE="-1"><I>See notes to consolidated financial statements.</I></FONT></TD>
</TR>
</TABLE>
<!-- Page 16 -->
<PAGE>
<HR>
<SMALL>[PAGE 16]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Consolidated Statement of Cash Flows</H2>
<FONT SIZE="-1"><I>Years Ended December 31, 1999, 1998 and 1997</I></FONT><BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD><I>(in thousands)</I></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1997</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>Cash Flows from Operating Activities:</B><BR>
	  Net income
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>3,553</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,489</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Adjustments to reconcile net income to net<BR>
	    cash provided by operating activities:<BR>
	      Provision for loan losses
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>475</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">218</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">210</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Provision for depreciation and amortization
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>775</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">761</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">588</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Amortization and accretion on investment securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>359</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">358</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">368</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Deferred income taxes
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(27)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(4)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">59</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Realized gains on securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(279)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(475)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(25)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Realized gains on loans sold
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(21)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(63)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(19)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Originations of loans held for sale
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(2,558)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(3,817)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,152)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Proceeds from sales of loans held for sale
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,537</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">3,880</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,171</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Gains on sales or disposals of premises and equipment
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(7)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      (Gains) losses on sales of foreclosed assets held for sale
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(62)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(10)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Decrease in accrued interest receivable<BR>
	        and other assets
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>57</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">436</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">859</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Increase (decrease) in accrued interest payable and<BR>
	        other liabilities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>87</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(147)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(40)</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	        Net cash provided by operating activities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,889</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">4,637</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,841</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  <B>Cash Flows from Investing Activities</B><BR>
	    Available-for-sale securities:<BR>
	      Proceeds from sales of securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>24,225</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">23,243</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,588</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Proceeds from maturities of securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>12,934</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">8,786</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,900</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Purchases of securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(40,460)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(35,444)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(7,503)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Held-to-maturity securities:<BR>
	      Proceeds from maturities and<BR>
	        principal repayments of securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,440</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,716</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	      Purchases of securities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(9,445)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(12,311)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Net increase in loans
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(26,348)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(14,242)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(9,914)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Capital expenditures
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(1,036)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(504)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,638)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Proceeds from sale of premises and equipment
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>40</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Proceeds from sale of foreclosed assets held for sale
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>356</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">59</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">148</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	          Net cash used in investing activities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(30,289)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(20,106)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(12,014)</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  <B>Cash Flows from Financing Activities</B><BR>
	    Net increase in deposits
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>10,125</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">17,410</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">16,606</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Proceeds from long-term borrowings
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,482</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">956</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,056</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Repayments of long-term borrowings
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(400)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(2,850)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(2,146)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Net increase (decrease) in short-term borrowed funds
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>14,437</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,364</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(8,863)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Dividends paid
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(1,567)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,449)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(1,596)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Acquisition of treasury stock
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(460)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	          Net cash provided by financing activities
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>26,617</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">16,431</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">6,057</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	          Net increase (decrease) in cash and cash equivalents
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,217</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">962</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(116)</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  <B>Cash and Cash Equivalents at Beginning of Year</B>
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>7,305</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">6,343</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">6,459</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  <B>Cash and Cash Equivalents at End of Year</B>
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>8,522</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,305</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">6,343</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><BR>
	  <B>Supplemental Disclosures of Cash Flow Information</B><BR>
	  Interest paid
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>11,872</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,889</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">11,572</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Interest taxes paid
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,060</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,380</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,645</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Noncash activities:<BR>
	    Real estate acquired in settlement of loans
	</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>338</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">351</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">212</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR>
	<TD COLSPAN="9"><FONT SIZE="-1"><I>See notes to consolidated financial statements.</I></FONT></TD>
</TR>
</TABLE>
<!-- Page 17 -->
<PAGE>
<HR>
<SMALL>[PAGE 17]</SMALL>
<H2>Notes to Consolidated Financial Statements</H2>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></FONT></TD>
</TR>
</TABLE>
<P>  Citizens Financial Services, Inc. (individually and collectively, the "Company") is
a Pennsylvania corporation organized as the holding company of its
wholly-owned subsidiary, First Citizens National Bank (the "Bank").  The Bank is a national
banking association headquartered in Mansfield, Pennsylvania and operating ten
full-service banking offices in Potter, Tioga and Bradford counties.  The Bank provides a
comprehensive range of services including consumer loans, residential real estate
loans, commercial loans, and loans to various state and municipal entities.  Deposit
programs encompass the full range of consumer as well as commercial checking and
savings accounts.  Deposit products also include certificates of deposit and individual
retirement accounts.  A comprehensive menu of trust and investment services are
also available.  The Company's principal sources of revenue are derived from its loan
and investment portfolios.  The Company is supervised by the Board of Governors of
the Federal Reserve System, while the Bank is subject to regulation and supervision by
the Office of the Comptroller of the Currency.
<P>  A summary of significant accounting and reporting policies applied in the
presentation of the accompanying financial statements follows:
<P>
<P><B><I>BASIS OF PRESENTATION </I></B>
<P>  The accounting policies followed by the Company and the methods of applying
these principles conform with generally accepted accounting principles and with
general practice within the banking industry.  All material intercompany balances and
transactions have been eliminated in consolidation.  In preparing the consolidated
financial statements, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period.  Actual results could differ significantly
from those estimates.
<P>
<P><B><I>INVESTMENT SECURITIES</I></B>
<BR>  Investment securities are classified as one of the three following types:
<P>
<P><B><I><U>Held-to-Maturity Securities</U></I></B> - includes securities that the Company has the positive
intent and ability to hold to maturity. These securities are reported at amortized cost. The
Company had no held-to-maturity securities as of December 31, 1999 and 1998.
<P>
<P><B><I><U>Trading Securities</U></I></B> - includes debt and equity securities bought and held principally for
the purpose of selling them in the near term. Such securities are reported at fair value
with unrealized holding gains and losses included in earnings. The Company had no
trading securities as of December 31, 1999 and 1998.
<P>
<P><B><I><U>Available-for-Sale Securities</U></I></B> - includes debt and equity securities not classified as
held-to-maturity or trading securities. Such securities are reported at fair value, with
unrealized holding gains and losses excluded from earnings and reported as a separate component
of stockholders' equity, net of estimated income tax effect.
<P>
<P>  The amortized cost of investment in debt securities is adjusted for amortization of
premiums and accretion of discounts, computed by a method that approximates the
effective interest method. Gains and losses on the sale of investment securities are computed on
the basis of specific identification of the adjusted cost of each security.
<P>  Common stock of the Federal Reserve Bank and Federal Home Loan Bank
represents ownership in institutions which are wholly owned by other financial institutions.
These equity securities are accounted for at cost and are classified as restricted equity
securities available-for-sale.
<P>  The fair value of investments, except certain state and municipal securities, is
estimated based on bid prices published in financial newspapers or bid quotations received
from securities dealers. The fair value of certain state and municipal securities is not
readily available through market sources other than dealer quotations, so fair value estimates
are based on quoted market prices of similar instruments, adjusted for differences between
the quoted instruments and the instruments being valued.
<!-- Page 18 -->
<PAGE>
<HR>
<SMALL>[PAGE 18]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P><B><I>LOANS</I></B>
<BR>  Interest on installment loans originated after 1992 is recognized on the accrual
basis based upon the principal amount outstanding. Interest on installment loans
originated before 1993 is recognized on the accrual basis using a method which approximates
the interest method. Interest income on all other loans is recognized on the accrual
basis based upon the principal amount outstanding. The accrual of interest income on loans
is discontinued when, in the opinion of management, there exists doubt as to the ability
to collect such interest. Loans are returned to the accrual status when factors
indicating doubtful collectibility cease to exist.
<P>  The Company recognizes nonrefundable loan origination fees and certain direct
loan origination costs over the life of the related loan as an adjustment of loan yield using
the interest method.
<P>
<P><B><I>ALLOWANCE FOR LOAN LOSSES</I></B>
<BR>  The allowance for loan losses represents the amount which management estimates
is adequate to provide for potential losses in its loan portfolio. The allowance method
is used in providing for loan losses. Accordingly, all loan losses are charged to the
allowance and all recoveries are credited to it. The allowance for loan losses is
established through a provision for loan losses which is charged to operations. The provision
is based upon management's periodic evaluation of individual loans, the overall
risk characteristics of the various portfolio segments, past experience with losses, the
impact of economic conditions on borrowers, and other relevant factors. The estimates used
in determining the adequacy of the allowance for loan losses are particularly susceptible
to significant change in the near term.
<P>  Impaired loans are commercial and commercial real estate loans for which it
is probable that the Company will not be able to collect all amounts due according to
the contractual terms of the loan agreement. The Company individually evaluates such
loans for impairment and does not aggregate loans by major risk classifications. The
definition of "impaired loans" is not the same as the definition of "nonaccrual loans," although
the two categories overlap. The Company may choose to place a loan on nonaccrual
status due to payment delinquency or uncertain collectibility, while not classifying the loan
as impaired if the loan is not a commercial or commercial real estate loan. Factors
considered by management in determining impairment include payment status and
collateral value. The amount of impairment for these types of impaired loans is determined by
the difference between the present value of the expected cash flows related to the loan,
using the original interest rate and its recorded value, or, as a practical expedient in the case
of collateralized loans, the difference between the fair value of the collateral and
the recorded amount of the loans. When foreclosure is probable, impairment is measured
based on the fair value of the collateral.
<P>  Mortgage loans on one- to four-family properties and all consumer loans are
large groups of smaller balance homogeneous loans and are measured for impairment
collectively. Loans that experience insignificant payment delays, which is defined as 90
days or less, generally are not classified as impaired. Management determines the
significance of payment delays on a case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the delay,
the borrower's prior payment record, and the amount of shortfall in relation to the
principal and interest owed.
<P>
<P><B><I>FORECLOSED ASSETS HELD FOR SALE</I></B>
<BR>  Foreclosed assets acquired in settlement of foreclosed loans are carried at the
lower of fair value minus estimated costs to sell or cost. Prior to foreclosure, the value of the
underlying loan is written down to fair market value of the real estate or other assets to
be acquired by a charge to the allowance for loan losses, if necessary. Any
subsequent write-downs are charged against operating expenses. Operating expenses of
such properties, net of related income and losses on disposition, are included in other
expenses and gains are included in other income.

<P ALIGN="RIGHT">Citizens Financial Services, Inc.
<!-- Page 19 -->
<PAGE>
<HR>
<SMALL>[PAGE 19]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P><B><I>PREMISES AND EQUIPMENT </I></B>
<BR>  Premises and equipment are stated at cost, less accumulated depreciation. Repair
and maintenance expenditures which extend the useful life of an asset are capitalized
and other repair expenditures are expensed as incurred.
<BR>  When premises or equipment are retired or sold, the remaining cost and
accumulated depreciation are removed from the accounts and any gain or loss is credited or charged
to income. Depreciation expense is computed on the straight-line and accelerated
methods over the estimated useful lives of the assets.
<P>
<P><B><I>OTHER ASSETS</I></B>
<BR>  Goodwill is the excess of the purchase price over the fair value of net assets
of companies acquired through business combinations accounted for as purchases.
 Included in other assets at December 31, 1999 and 1998 is $460,000 and
$500,000, respectively, of goodwill that is being amortized using the straight-line method
over 15 years.
<P>  Core deposit intangibles are a measure of the value of consumer demand
and savings deposits acquired in business combinations accounted for as purchases.
 Included in other assets at December 31, 1999 and
1998 is $159,000 and $227,000, respectively, of core deposit intangibles which are being amortized
on a straight-line basis over 6 years.
<P>  The recoverability of the carrying value of intangible assets is evaluated on
an ongoing basis and permanent declines in value, if any, are charged to expense.
<P>
<P><B><I>INCOME TAXES</I></B>
<BR>  The Company and the Bank file a consolidated federal income tax return.
Deferred tax assets and liabilities are computed based on the difference between the
financial statement and income tax basis of assets and liabilities using the enacted marginal
tax rates.  Deferred income tax expenses or benefits are based on the changes in the
net deferred tax asset or liability from period to period.
<P>
<P><B><I>EMPLOYEE BENEFIT PLANS</I></B>
<BR>  The Company has a noncontributory pension plan covering substantially all
employees. It is the Company's policy to fund pension costs on a current basis to the
extent deductible under existing tax regulations. Such contributions are intended to provide
not only for benefits attributed to service to date, but also for those expected to be earned
in the future.
<P>  The Company also has a profit-sharing plan which provides tax-deferred
salary savings to plan participants.
<P>
<P><B><I>MORTGAGE SERVICING RIGHTS (MSR's)</I></B>
<BR>  The Company has loan agreements for the express purpose of selling these loans in
the secondary market.  The Company maintains all servicing rights for these loans.
The loans are carried at cost.  Originated MSR's are to be recorded by allocating total
costs incurred between the loan and servicing rights based on their relative fair values.
MSR's are amortized in proportion to the estimated servicing income over the estimated life
of the servicing portfolio.
<P>
<P><B><I>COMPREHENSIVE INCOME</I></B>
<BR>  The Company is required to present comprehensive income in a full set of
general purpose financial statements for all periods presented. Other comprehensive income
is comprised exclusively of unrealized holding gains (losses) on the
available-for-sale securities portfolio. The Company has elected to report the effects
of other comprehensive income as part of the Statement of Changes in Stockholders' Equity.
<P>
<P><B><I>TREASURY STOCK</I></B>
<BR>  The purchase of the Company's common stock is recorded at cost.  At the date
of subsequent reissue, the treasury stock account is reduced by the cost of such stock on
a first-in-first-out basis.
<!-- Page 20 -->
<PAGE>
<HR>
<SMALL>[PAGE 20]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P><B><I>CASH FLOWS</I></B>
<BR>  The Company utilizes the net reporting of cash receipts and cash payments for
deposit and lending activities.  The Company considers amounts due from banks and
interest-bearing deposits in banks as cash equivalents.
<P>
<P><B><I>TRUST ASSETS AND INCOME</I></B>
<BR>  Assets held by the Bank in a fiduciary or agency capacity for its customers are
not included in the consolidated financial statements since such items are not assets of
the Bank.
<P>
<P><B><I>EARNINGS PER SHARE</I></B>
<BR>  Earnings per share are calculated on the weighted average of common shares
outstanding during the year.  The number of shares used in the earnings per share
computations presented was 2,793,805, 2,800,563 and 2,800,563 for 1999, 1998 and 1997,
respectively.  The Company has no dilutive securities.
<P>
<P><B><I>RECLASSIFICATION</I></B>
<BR>  Certain of the 1998 and 1997 amounts have been reclassified to conform with the
1999 presentation. Such reclassifications had no effect on net income or stockholders' equity.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>2. COMMON STOCK SPLIT</B></FONT></TD>
</TR>
</TABLE>
<P>  On August 19, 1997, the Board of Directors approved a two-for-one stock split.
The additional shares resulting from the split were effected in the form of a 100%
stock dividend.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>3. RESTRICTIONS ON CASH AND DUE FROM BANKS</B></FONT></TD>
</TR>
</TABLE>
<P>  The Bank is required to maintain reserves, in the form of cash and balances with
the Federal Reserve Bank, against its deposit liabilities.  The amount of such reserves
was $2,648,000 and $1,845,000 at December 31, 1999 and 1998, respectively.
<P>  Deposits with one financial institution are insured up to $100,000.  The
Company maintains cash and cash equivalents with other financial institutions in excess of
the insured amount.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>4. INVESTMENT SECURITIES</B></FONT></TD>
</TR>
</TABLE>
<P>  The amortized cost and estimated fair value of investment securities at December
31, 1999 and 1998, were as follows (<I>in
thousands</I>):
<TABLE BGCOLOR="DDDDDD">
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><B>December 31, 1999</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Amortized<BR>Cost</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Gross<BR>Unrealized<BR>Holding<BR>Gains</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Gross<BR>Unrealized<BR>Holding<BR>Losses</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Estimated<BR>Fair<BR>Value</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Available-for-sale securities:<BR>
	  U.S. Treasury securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>13,556</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>73</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(1)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>13,628</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Obligations of state and<BR>
	    political subdivisions</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>20,634</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(1,165)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>19,469</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Corporate obligations</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>19,354</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(725)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>18,629</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Mortgage-backed securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>35,070</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(1,025)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>34,045</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Equity securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,544</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>155</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(439)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,260</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Restricted equity securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,665</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,665</B></FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	    Total available-for-sale</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>94,823</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>228</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(3,355)</B></FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>91,696</B></FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
</TABLE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.
<!-- Page 21 -->
<PAGE>
<HR>
<SMALL>[PAGE 21]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>

</TABLE>
<TABLE>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">December 31, 1998</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Amortized<BR>Cost</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Gross<BR>Unrealized<BR>Holding<BR>Gains</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Gross<BR>Unrealized<BR>Holding<BR>Losses</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Estimated<BR>Fair<BR>Value</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Available-for-sale securities:<BR>
	  U.S. Treasury securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">31,763</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,000</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">32,763</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Obligations of state and<BR>
	    political subdivisions</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">18,289</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">247</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(84)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">18,452</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Corporate obligations</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">14,818</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">75</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(4)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">14,889</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Mortgage-backed securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">23,112</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">67</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(66)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">23,113</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Equity securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,271</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">413</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(167)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,517</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	  Restricted equity securities</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,348</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,348</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD VALIGN="bottom"><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">
	    Total available-for-sale</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">91,601</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,802</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(321)</FONT></TD>
	<TD WIDTH="6"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">93,082</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="13"><HR></TD>
</TR>
</TABLE>
<BR>  Proceeds from the sale of securities available-for-sale during 1999, 1998 and
1997 were  $24,225,000, $23,243,000 and $5,588,000, respectively.  Gross gains and
gross losses were realized on those sales as follows <I>(in thousands)</I>:
<BR><bR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1997</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Gross gains</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>375</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">475</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">34</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Gross losses</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>96</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">18</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">9</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Net gains</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>279</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">457</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">25</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
</TABLE>
<bR><BR>
  Investment securities with an approximate carrying value of $45,837,000 and
$43,695,000 at December 31, 1999 and 1998, respectively, were pledged to secure public funds
and certain other deposits as provided by law.
<P>  Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and estimated carrying value of debt securities at December
31, 1999, by contractual maturity, are shown below (<I>in thousands</I>).
<BR><BR>
<TABLE BGCOLOR="DDDDDD">
<TR VALIGN="bottom">
	<TD></TD>
	<TD COLSPAN="2" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Amortized<BR>Cost</TD>
	<TD WIDTH="10"></TD>
	<TD COLSPAN="2"><FONT FACE="Arial,Helvetica" SIZE="-1">Estimated<BR>Fair Value</TD>
	<TD WIDTH="10"></TD>
</TR>
<TR>
	<TD COLSPAN="7"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Available-for-sale securities:<BR>
	  Due in one year or less</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2</B></FONT></TD>
	<TD WIDTH="10"></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Due after one year through five years</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>40,199</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>39,392</B></FONT></TD>
	<TD WIDTH="10"></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Due after five years through ten years</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>15,880</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>15,300</B></FONT></TD>
	<TD WIDTH="10"></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Due after ten years</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>32,533</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>31,077</B></FONT></TD>
	<TD WIDTH="10"></TD>
</TR>
<TR>
	<TD COLSPAN="7"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	    Total</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>88,614</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>85,771</B></FONT></TD>
	<TD WIDTH="10"></TD>
</TR>
<TR>
	<TD COLSPAN="7"><HR></TD>
</TR>
</TABLE>
<BR>
<P>  On October 1, 1998, the Company transferred certain held-to-maturity securities to
the available-for-sale investment portfolio. The amortized cost of the securities was
approximately $63,585,000, resulting in a net unrealized gain, net of taxes of
approximately $1,152,000. This transfer was in accordance with a special reassessment
provision contained within Statement of Financial Accounting Standard No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which was adopted by the Company
on October 1, 1998.
<!-- Page 22 -->
<PAGE>
<HR>
<SMALL>[PAGE 22]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>5. LOANS</B></FONT></TD>
</TR>
</TABLE>
<P>  The Company grants commercial, industrial, residential, and consumer loans
primarily to customers throughout Northcentral Pennsylvania and Southern New York.
Although the Company has a diversified loan portfolio, a substantial portion of its debtors'
ability to honor their contracts is dependent on the economic conditions within this region.
<P>  Major classifications of loans are as follows (<I>in thousands</I>):
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD COLSPAN="2"></TD>
	<TD COLSPAN="5" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">December 31,</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD COLSPAN="2"></TD>
	<TD ALIGN="center" BGCOLOR="DDDDDD" COLSPAN="2"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></FONT></TD>
	<TD WIDTH="10"></TD>
    <TD ALIGN="center" COLSPAN="2"><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Real estate loans:<BR>
	  Residential</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>139,518</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">127,053</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Commercial</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>32,159</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">27,164</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Agricultural</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>9,392</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">9,266</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Construction</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,359</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,234</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Loans to individuals for household,<BR>
	  family and other purchases</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>15,569</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">14,489</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Commercial and other loans</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>12,313</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">12,457</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	State and political subdivision loans</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>18,148</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">10,272</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>231,458</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">205,935</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	<BR>Less unearned income on loans</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>29</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">60</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	Less allowance for loan losses</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,270</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,292</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	  Loans, net</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>229,159</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">203,583</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
</TABLE>
<BR><BR>
<P>  At December 31, 1999 and 1998, net unamortized loan fees and costs of $857,000
and $818,000, respectively, have been deducted from the carrying value of loans.
<P><P><P></P></P>At December 31, 1999 and 1998, the recorded investment in loans that are considered to
be impaired was $1,334,000, and $859,000, respectively, all of which were on a nonaccrual basis.
 At December 31, 1999 and 1998, the Company had an impaired loan of $160,000 and
$336,000 with an allocation of $65,000 and $60,000 of the allowance for loan losses, respectively.
<P>  The average recorded investment in impaired loans during the year ended
December 31, 1999 and 1998, was approximately $1,097,000 and $621,000, respectively.  For
the years ended December 31, 1999 and 1998, the Company recognized interest income
on impaired loans of $104,000 and $10,000, respectively, all of which was recognized using
the cash basis method of income recognition. For the year ended December 31, 1997, there
was no interest income recognized on impaired loans.
<P>  Loans on which the accrual of interest has been discontinued or reduced amounted
to $1,755,000 and $1,877,000 (which included impaired loans) at December 31, 1999
and 1998, respectively.  If interest had been recorded at the original rate on those loans,
such income would have approximated $149,000, $298,000, and $229,000 for the years
ended December 31, 1999, 1998, and 1997, respectively. Interest income on such loans,
which is recorded as received, amounted to approximately $124,000,
$89,000, and $72,000 for the years ended December 31, 1999, 1998, and 1997, respectively.
<P>  Transactions in the allowance for loan losses were as follows (<I>in thousands</I>):
<BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD></TD>
	<TD COLSPAN="8" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Years Ended December 31,</FONT></TD>
</TR>
<TR>
	<TD></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">1997</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, beginning of year</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,292</B></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,138</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,995</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Provisions charged to income</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>475</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">218</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">210</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Recoveries on loans previously<BR>
	    charged against the allowance</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>54</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">48</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">16</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,821</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,404</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,221</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Loans charged against the allowance</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>(551)</B></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(112)</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">(83)</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Balance, end of year</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>2,270</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,292</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2,138</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
	<TD COLSPAN="6"><HR></TD>
</TR>
</TABLE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.
<!-- Page 23 -->
<PAGE>
<HR>
<SMALL>[PAGE 23]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P>The following is a summary of the past due and nonaccrual loans as of December
31, 1999 and 1998 (<I>in thousands</I>):
<BR><BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="8" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>December 31, 1999</B></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Past Due<BR>30-89 days</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Past Due<BR>90 days or more</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
	<TD BGCOLOR="DDDDDD" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Nonaccrual</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="8"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Real Estate loans</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,600</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>77</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,736</B></FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Installment loans</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>138</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>19</B></FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Credit cards and related loans</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>15</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Commercial and all other loans</FONT></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>57</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>-</B></FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="8"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total</FONT></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,810</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>78</B></FONT></TD>
	<TD BGCOLOR="DDDDDD" WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right" BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,755</B></FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD" COLSPAN="8"><HR></TD>
</TR>
</TABLE>
<BR>
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD></TD>
	<TD COLSPAN="8" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">December 31, 1998<BR><BR></FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD></TD>
	<TD></TD>
    <TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Past Due<BR>30-89 days</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Past Due<BR>90 days or more</FONT></TD>
	<TD></TD>
	<TD></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Nonaccrual</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="8"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Real Estate loans</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,593</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">12</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,821</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Installment loans</FONT></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">203</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Credit cards and related loans</FONT></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">22</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Commercial and all other loans</FONT></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">32</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">56</TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="8"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Total</FONT></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,850</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">15</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,877</B></FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD COLSPAN="8"><HR></TD>
</TR>
</TABLE>
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>6. PREMISES & EQUIPMENT</B></FONT></TD>
</TR>
</TABLE>
<P>  Premises and equipment are summarized as follows (<I>in thousands</I>):
<TABLE CELLSPACING="0" CELLPADDING="0">
<TR>
	<TD COLSPAN="2"></TD>
	<TD COLSPAN="5" ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">December 31,</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD COLSPAN="2"></TD>
	<TD ALIGN="center" BGCOLOR="DDDDDD" COLSPAN="2"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1999</B></FONT></TD>
	<TD WIDTH="10"></TD>
    <TD ALIGN="center" COLSPAN="2"><FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Land</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>1,407</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">1,198</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Buildings</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,923</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">4,353</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Furniture, fixtures and equipment</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>4,979</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,056</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>11,309</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">10,607</FONT></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Less accumulated depreciation</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>5,367</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,001</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR VALIGN="bottom">
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">  Premises and equipment, net</FONT></TD>
	<TD WIDTH="10"></TD>
	<TD BGCOLOR="DDDDDD"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>$</B></FONT></TD>
    <TD BGCOLOR="DDDDDD" ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1"><B>5,942</B></FONT></TD>
	<TD WIDTH="10"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,606</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
	<TD COLSPAN="2" BGCOLOR="DDDDDD"><HR></TD>
	<TD COLSPAN="3"><HR></TD>
</TR>
</TABLE>
<BR>  Depreciation expense amounted to $667,000, $652,000, and $479,000 for 1999,
1998, and 1997, respectively.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>7. DEPOSITS</B></FONT></TD>
</TR>
</TABLE>
<P>  Certificates of deposit of $100,000 or more amounted to $25,804,000 and
$24,658,000 at December 31, 1999 and 1998, respectively. Interest expense on certificates of
deposit of $100,000 or more amounted to $1,491,000, $1,504,000, and $1,420,000 for the
years ended December 31, 1999, 1998, and 1997, respectively.
<P>  Following are maturities of certificates of deposit as of December 31, 1999 <I>(in thousands):</I>
<BR><BR>

</TABLE>
<TABLE>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2000</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">76,994</FONT></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2001</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">38,498</FONT></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2002</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">28,599</FONT></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2003</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">7,829</FONT></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">2004</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">5,910</FONT></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">Thereafter</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">$</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">866</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="4"><HR></TD>
</TR>
<TR>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">Total certificates of deposit</FONT></TD>
	<TD WIDTH="40"></TD>
	<TD></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">158,696</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="4"><HR></TD>
</TR>
</TABLE>
<!-- Page 24 -->
<PAGE>
<HR>
<SMALL>[PAGE 24]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>8. BORROWED FUNDS</B></FONT></TD>
</TR>
</TABLE>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=600>
<TR><TD VALIGN="BOTTOM">
<I><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>(dollars in thousands)</I></FONT></TD>
<TD ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Securities Sold Under<BR>
Agreements to<BR>
Repurchase(a)</FONT></TD>
<TD ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>FHLB<BR>
Advances(b)</FONT></TD>
<TD ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Term<BR>
Loans(c)</FONT></TD>
<TD ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Capital <BR>
Lease<BR>
Obligations</FONT></TD>
<TD ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total Borrowed<BR>
Funds</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1999<BR>
</B>Balance at December 31</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$3,396</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$14,340</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$8,000</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  117</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$25,853</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Highest balance <BR>
  at any month-end</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,030</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,690</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,000</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">156</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,876</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Average balance</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,647</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,189</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,849</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">140</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,825</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Weighted average interest rate:<BR>
  Paid during year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.52%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.43%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.82%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.91%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" HEIGHT=36>
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.55%</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  As of year-end</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.70%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.71%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.23%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.90%</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.86%</B></FONT></TD>
</TR>
<TR>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Balance at December 31</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$3,966</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">3,208</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0,00,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">160</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"> </FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">7,334</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Highest balance <BR>
  at any month-end</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,217</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,208</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,874</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">198</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,497</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Average balance</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,903</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">269</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,746</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">182</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,100</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Weighted average interest rate:<BR>
  Paid during year </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.76%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.47%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.56%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.91%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.17%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  As of year-end</FONT></TD>
<TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.48</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.96</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">%</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.90</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM" HEIGHT=17>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.24</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="6"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1997</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT"> </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Balance at December 31</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$4,789</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00,00,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,874</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">201</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">6,864</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Highest balance <BR>
  at any month-end</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,202</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,625</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,874</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">222</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,923</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Average balance</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,030</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,117</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,874</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">108</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,129</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Weighted average interest rate:<BR>
  Paid during year </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.85%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.56%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.56%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.16%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.19%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  As of year-end</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.78</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.73</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.56</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.90</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.24</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="6"><HR></TD>
</TR>
</TABLE>
<BR>
<P>  (a) Securities sold under agreements to repurchase mature within one-to-five years.
The carrying value of the underlying securities at December 31, 1999 and 1998 was
$4,447,000 and $5,170,000, respectively.
<P>  (b) FHLB Advances consist of an 'Open RepoPlus' agreement with the Federal
Home Loan Bank of Pittsburgh.  FHLB "Open RepoPlus" advances are short-term
borrowings maturing within one year, bear a fixed rate of interest and are subject to
prepayment penalty.  The Company has a borrowing limit of $20,000,000, exclusive of any
outstanding advances.   Although no specific collateral is required to be pledged for
Open RepoPlus borrowings, FHLB advances are secured by a blanket security agreement
that includes the Company's FHLB stock, as well as investment and
mortgage-backed securities held in safekeeping at the FHLB.   At December 31, 1999 and 1998,
approximate carrying value of collateral was $63,079,000 and $48,722,000, respectively.
<P>  (c) Term loans consist of separate loans with the Federal Home Loan Bank of
Pittsburgh as follows (<I>in thousands</I>):
<BR><BR>
<TABLE WIDTH="400">
<TR>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Interest Rate</FONT></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">Maturity</FONT></TD>
	<TD ALIGN="center"><FONT FACE="Arial,Helvetica" SIZE="-1">December 31, 1999</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">Variable<BR>
	     (d)</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">August 24, 2000</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">$4,000</FONT></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	     (e)</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">August 24, 2009</FONT></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">$4,000</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3"><HR></TD>
</TR>
<TR>
	<TD><FONT FACE="Arial,Helvetica" SIZE="-1">
	   Total term loans</FONT></TD>
	<TD ALIGN="right"></TD>
	<TD ALIGN="right"><FONT FACE="Arial,Helvetica" SIZE="-1">$8,000</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3"><HR></TD>
</TR>
</TABLE>
<BR><BR>
  (d) Interest rate floats monthly based on the 1 month LIBOR +.02, the interest rate was 6.49% at December 31, 1999.
<P>  (e) Interest rate is fixed for three yars at which time FHLB has the option to float the interest rate based on the 3 month LIBOR +.16, the interest rate was 5.96% at December 31, 1999.
<!-- Page 25 -->
<PAGE>
<HR>
<SMALL>[PAGE 25]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P>  During 1998, the Company retired term loans with the FHLB prior to their
stated maturity.  The retirement resulted in the Company incurring a prepayment penalty
of $141,000, net of income tax of $72,000, which is reported as an extraordinary item in
the Consolidated Statement of Income.
<P>  Following are maturities of borrowed funds as of December 31, 1999
<I>(in thousands):</I>
<BR><BR>
<TABLE WIDTH="260">
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2000</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">$20,069</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2001</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1,073</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2002</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">711</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2003</FONT></TD><TD>-</TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2004</FONT></TD><TD>-</TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Thereafter</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">4,000</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Total borrowed funds</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">$25,853</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>9. LEASES</B></FONT></TD>
</TR>
</TABLE>
<P>  The Company is committed under two noncancellable operating leases for
facilities with initial or remaining terms in excess of one year.  The minimum annual
rental commitments under these leases at December 31, 1999, are as follows
(<I>in thousands</I>):
<BR><BR>
<TABLE WIDTH="260">
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2000</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">$ 41</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2001</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">56</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2002</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">56</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2003</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">51</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2004</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">25</FONT></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Thereafter</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">15</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
</TR>
<TR ALIGN="right">
	<TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Total minimum lease payments</FONT></TD><TD><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">$244</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<BR><P>  Total rental expense for all operating leases for 1999, 1998, and 1997 amounted
to $40,000, $50,000, and $50,000, respectively.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>10. EMPLOYEE BENEFIT PLANS</B></FONT></TD>
</TR>
</TABLE>
<BR>
<P>The Company has a noncontributory, defined-benefit pension plan (the "Plan") for
all employees meeting certain age and length of service requirements. Benefits are
based primarily on years of service and the average annual compensation during the
highest five consecutive years within the final ten years of employment. The Company's
funding policies are consistent with the funding requirements of federal law and
regulations. Plan assets are comprised of common stock, U.S. government and corporate
debt securities. Plan assets included 10,201 and 10,100 shares of the Company's
common stock at December 31, 1999 and 1998, respectively.
<BR>
<!-- Page 26 -->
<PAGE>
<HR>
<SMALL>[PAGE 26]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P>  The following table sets forth the change in plan assets and benefit obligation
at December 31 (<I>in thousands</I>):
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Plan assets at fair value, beginning of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$3,064</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$2,681</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Actual return on plan assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">277</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">433</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Amendments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Employer contribution</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Benefits paid</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(47)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(51)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Plan assets at fair value, end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,294</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,064</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Benefit obligation, beginning of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,513</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,226</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Service cost</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">155</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">144</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest cost</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">161</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">146</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Amendments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(267)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">48</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Benefits paid</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(47)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(51)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Benefit obligation, end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,515</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,513</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Funded status</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">779</B>)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">551</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Transition adjustment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(84)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(99)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Prior service cost</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(51)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(57)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Unrecognized net gain from past experience<BR>  different from that assumed</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(598)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(298)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Benefit asset, end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$     46</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT>   <FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">97</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
</TABLE>
<BR><BR>
Assumptions used in determining net periodic pension cost are as follows:<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=430>
<TR><TD VALIGN="BOTTOM">
<P><FONT FACE="Arial"> </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial"><P ALIGN="RIGHT"><HR></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="CENTER"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Discount rate</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">7.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">6.50%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">6.50%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Expected return on plan assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">8.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">8.00</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">8.00<FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">%</FONT></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Rate of compensation increase</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">4.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">4.00</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">4.00</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="4"><BR><BR>Net periodic pension cost includes the following components <I>(in thousands)</I>:<BR><BR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P><FONT FACE="Arial"> </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><BR><P>Service cost of the current period</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$155</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$144</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$110</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Interest cost on projected benefit obligation</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">161</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">146</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">126</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Actual return on plan assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(277)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(433)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(478)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Net amortization and deferral</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">12</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">199</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">277</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Unrealized gain</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial"><P ALIGN="RIGHT"><HR></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="CENTER"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Net periodic pension cost</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$ 51</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial" SIZE="-1">56</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial" SIZE="-1">35</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT><FONT FACE="Arial" SIZE="-1"> </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial"><P ALIGN="RIGHT"><HR></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="CENTER"><HR></TD>
</TR>
</TABLE>
<BR>
<P>  The Company also has a profit-sharing plan, covering substantially all
employees, which provides tax-deferred salary savings to plan participants. The Company's
contributions to the profit-sharing plan are allocated to the participants based upon a
percentage of their compensation. The Company's profit-sharing contribution is determined
by the Board of Directors on a discretionary basis. The Company's contributions for
1999, 1998, and 1997 were $85,000, $128,000, and $187,000, respectively.
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 27 -->
<PAGE>
<HR>
<SMALL>[PAGE 27]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>11. ARBITRATION SETTLEMENT</B></FONT></TD>
</TR>
</TABLE>
<BR><P>  On February 24, 1997, the Bank reached an arbitration settlement with a vendor.
The settlement was for legal remedies associated with relationships with this vendor. The
Bank received $884,000 in cash and $250,000 in credits to be applied to future
expenditures, which if unused will expire within two years. As of December 31, 1999, 1998 and
1997 there was $29,000, $112,000 and $110,000, respectively, of credits applied for
current expenditures.  The amount received by the Bank is net of fees associated with the
arbitration.
<P>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>12. INCOME TAXES</B></FONT></TD>
</TR>
</TABLE>
<BR><P>The provision for income taxes consists of the following
<I>(in thousands):</I>
<BR><BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=360>
<TR><TD VALIGN="TOP">
<P><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"> </FONT></TD>
<TD COLSPAN="3" VALIGN="bottom" ALIGN="center">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Years Ended December 31,</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P> </FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Currently payable</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,070</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,333</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,614</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Deferred (benefit) liability </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(27)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(4)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">59</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,043</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,329</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,673</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
</TABLE>
<BR>
  The following temporary differences gave rise to the net deferred tax asset (liability) at December 31, 1999 and 1998 <I>(in thousands)</I>:
<BR><BR>
</TABLE>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="TOP">
<P><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"> </FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Deferred tax assets:<BR>
  Allowance for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  588</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  596</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Deferred compensation</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">213</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">211</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Loan fees and costs</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Unrealized losses on available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,063</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Core deposit intangible</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">51</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">37</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Investment security loss</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,915</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">854</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Deferred tax liabilities:<BR>
  Unrealized gains on available-for-sale<BR>
    securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(504)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Premises and equipment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(288)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(298)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Bond accretion</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(76)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(94)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Prepaid pension cost</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(15)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(33)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Foreclosed assets held for sale</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(11)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Loan fees and costs</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(17)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Mortgage servicing rights</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(9)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Investment security gain</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(2)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(407)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(940)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Deferred tax asset (liability), net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$1,508</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">.</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">(86)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
</TABLE>
<BR>
<!-- Page 28 -->
<PAGE>
<HR>
<SMALL>[PAGE 28]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<BR>
<P>  The total provision for income taxes is different from that computed at the
statutory rates due to the following items <I>(in thousands):</I>
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=420>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" COLSPAN=3>
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">Years Ended December 31,</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P> </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Provision at statutory rates on<BR>
  pre-tax income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,563</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,638</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,872</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Effect of tax-exempt income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(585)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(364)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(211)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Nondeductible interest</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">88</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">56</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">27</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Other items</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(23)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(1)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">(15)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,043</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,329</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,673</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Statutory tax rates</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">34%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">34%</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">34%</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Effective tax rates</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">22.7%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">27.6%</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">30.4%</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">)</FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>13. RELATED PARTY TRANSACTIONS</B></FONT></TD>
</TR>
</TABLE>
<BR>
<P>  Certain executive officers, corporate directors or companies in which they have
10 percent or more beneficial ownership were indebted to the Bank.
<P>  A summary of loan activity with officers, directors, stockholders and associates
of such persons is listed below <I>(in thousands):</I>
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD WIDTH="20%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">Beginning Balance</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">Additions</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">Repayments</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">Ending<BR>
Balance</FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">1999</B></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$2,590</B></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,478</B></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$1,027</B></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$3,041</B></FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">1998</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">1,172</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">1,753</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">335</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">2,590</FONT></TD>
</TR>
</TABLE>
<P>  Such loans were made in the ordinary course of business at the Bank's normal
credit terms and do not present more than a normal risk of collection.<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>14. REGULATORY MATTERS</B></FONT></TD>
</TR>
</TABLE>
<P>Dividend Restrictions:
<P>  The approval of the Comptroller of the Currency is required for a national bank to
pay dividends up to the Company if the total of all dividends declared in any calendar
year exceeds the Bank's net income (as defined) for that year combined with its retained
net income for the preceding two calendar years. Under this formula, the Bank can
declare dividends in 2000 without approval of the Comptroller of the Currency of
approximately $1,087,000, plus the Bank's net income for 2000.
<P>Loans:
<P>  The Bank is subject to regulatory restrictions which limit its ability to loan funds
to the Company. At December 31, 1999, the regulatory lending limit amounted to
approximately $2,698,000.
<P>Regulatory Capital Requirements:
<P>  Federal regulations require the Company and the Bank to maintain minimum
amounts of capital. Specifically, each is required certain minimum dollar amounts and ratios
of Total and Tier I capital to risk-weighted assets and of Tier I capital to average
total assets.
<P>  In addition to the capital requirements, the Federal Deposit Insurance
Corporation Improvement Act (FDICIA) established five capital categories ranging from
"well capitalized" to "critically undercapitalized." Should any institution fail to meet
the requirements to be considered "adequately capitalized", it would become subject to
a series of increasingly restrictive regulatory actions.
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 29 -->
<PAGE>
<HR>
<SMALL>[PAGE 29]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<BR>
<P>  As of December 31, 1999 and 1998, the Federal Reserve Board and the Office of
the Comptroller of the Currency categorized the Company and the Bank as well
capitalized under the regulatory framework for prompt corrective action.  To be categorized as
a well capitalized financial institution, Total risk-based, Tier I risk-based and Tier
I leverage capital ratios must be at least 10%, 6% and 5% respectively.
<P>
<P>  The following table reflects the Company's capital ratios at December 31
<I>(in thousands):</I>
<BR><BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=540>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Ratio</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Ratio</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Total capital (to risk-weighted assets)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Company</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$30,610</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14.09%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$29,296</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14.99%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">For capital adequacy purposes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17,382</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,632</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">To be well capitalized</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">21,728</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19,540</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><BR>Tier I capital (to risk-weighted assets)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Company</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$28,341</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.04%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$26,893</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.76%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">For capital adequacy purposes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,691</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,816</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">To be well capitalized</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13,037</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,724</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><BR>Tier I capital (to average assets)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Company</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$28,341</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.32%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$26,893</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.66%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">For capital adequacy purposes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13,620</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12,423</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">To be well capitalized</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17,025</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.00%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,529</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">%</FONT></TD>
</TR>
</TABLE>
<P>The most recent notification from the Office of the Comptroller of the
Currency categorized the Bank as well capitalized under the regulatory framework for
corrective action.
<P>At December 31, 1999, the Bank's Total capital and Tier I ratios were 13.11%
and 12.04%, respectively, and Tier I capital to average assets was 8.09%.   At December
31, 1998, the Bank's Total capital and Tier I ratios were 13.91% and 12.68%,
respectively, and Tier I capital to average assets was 8.16%.
<P>This annual report has not been reviewed, or confirmed for accuracy or relevance,
by the Federal Deposit Insurance Corporation.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>15. OFF-BALANCE-SHEET RISK</B></FONT></TD>
</TR>
</TABLE>
<BR><P>  The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters of credit.
These instruments involve, to varying degrees, elements of credit and interest rate or
liquidity risk in excess of the amount recognized in the consolidated balance sheet.
<P>  The Company's exposure to credit loss from nonperformance by the other party to
the financial instruments for commitments to extend credit and standby letters of credit
is represented by the contractual amount of these instruments. The Company uses the
same credit policies in making commitments and conditional obligations as it does for
on-balance sheet instruments.
<P>  Financial instruments whose contract amounts represent credit risk at December
31, 1999 and 1998, are as follows <I>(in thousands):</I>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM">
<HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Commitments to extend credit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$27,065</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$33,039</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Standby letters of credit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,337</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">898</FONT></TD>
</TR>
</TABLE>
<!-- Page 30 -->
<PAGE>
<HR>
<SMALL>[PAGE 30]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P>  Commitments to extend credit are legally binding agreements to lend to
customers. Commitments generally have fixed expiration dates or other termination clauses and
may require payment of fees. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily represent
future liquidity requirements. The Company evaluates each customer's creditworthiness on
a case-by-case basis. The amount of collateral obtained if deemed necessary by
the Company on extension of credit is based on management's credit assessment of
the counter party.
<P>  Standby letters of credit are conditional commitments issued by the Company
guaranteeing performance by a customer to a third party. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending normal loan
commitments to customers. The Company generally holds collateral supporting standby
letters of credit.
<BR><BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>16. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS</B></FONT></TD>
</TR>
</TABLE>
<BR><P>  The estimated fair values of the Company's financial instruments are as follows
(in thousands)
<BR><BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3">
<P ALIGN="CENTER"><B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">December 31, 1999</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">CARRYING<BR>
AMOUNT</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">ESTIMATED<BR>FAIR VALUE</B></FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Financial assets:<BR>  Cash and due from banks</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$    8,522</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$    8,522</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">91,696</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">91,696</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Net loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">229,159</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">224,866</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Accrued interest receivable</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,120</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,120</B></FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total financial assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$331,497</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$327,204</B></FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Financial liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$284,318</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$284,997</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Securities sold under agreements to repurchase</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,396</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,367</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Other borrowed funds</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22,457</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22,323</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Accrued interest payable</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,557</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,557</B></FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total financial liabilities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$312,728</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$313,244</B></FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">December 31, 1998</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">CARRYING<BR>
AMOUNT</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">ESTIMATED <BR>
FAIR VALUE</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3" VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Financial assets:</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Cash and due from banks</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">7,305</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">7,305</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">93,082</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">93,082</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Net loans</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">203,583</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">206,935</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Accrued interest receivable</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,188</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,188</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3" VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total financial assets</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$306,158</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$309,510</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3" VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Financial liabilities:</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Deposits</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$274,193</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$276,639</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Securities sold under agreements to repurchase</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,966</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,024</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Other borrowed funds</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,368</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,159</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Accrued interest payable</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,363</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,363</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3" VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total financial liabilities</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$283,890</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$286,185</FONT></TD>
</TR>
<TR>
	<TD COLSPAN="3" VALIGN="BOTTOM"><HR></TD>
</TR>
</TABLE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.
<!-- Page 31 -->
<PAGE>
<HR>
<SMALL>[PAGE 31]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<P>  Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument.  These estimates do
not reflect any premium or discount that could result from offering for sale at one time
the Company's entire holdings of a particular financial instrument.  Because no
market exists for a significant portion of the Company's financial instruments, fair
value estimates are based on judgments regarding future expected loss experience,
current economic conditions, risk characteristics of various financial instruments and
other factors. These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore cannot be determined with precision. Changes
in assumptions can significantly affect the estimates.
<P>  Estimated fair values have been determined by the Company using historical data,
as generally provided in the Company's regulatory reports, and an estimation
methodology suitable for each category of financial instruments. The Company's fair value
estimates, methods and assumptions are set forth below for the Company's other financial
instruments.
<P>
<P><B><I>Cash and Due From Banks:</I></B>
<P>  The carrying amounts for cash and due from banks approximate fair value
because they mature in 90 days or less and do not present unanticipated credit concerns.
<P>
<P><B><I>Investment Securities:</I></B>
<P>  The fair values of investments are based on quoted market prices as of the
balance sheet date.  For certain instruments, fair value is estimated by obtaining quotes
from independent dealers.
<P>
<P><B><I>Loans:</I></B>
<P>  Fair values are estimated for portfolios of loans with similar financial characteristics.
<P>  The fair value of performing loans has been estimated by discounting expected
future cash flows. The discount rate used in these calculations is derived from the
Treasury yield curve adjusted for credit quality, operating expense and prepayment option
price, and is calculated by discounting scheduled cash flows through the estimated
maturity using estimated market discount rates that reflect the credit and interest rate risk
inherent in the loan. The estimate of maturity is based on the Company's historical
experience with repayments for each loan classification, modified as required by an estimate of
the effect of current economic and lending conditions.
<P>  Fair value for significant nonperforming loans is based on recent external appraisals.
If appraisals are not available, estimated cash flows are discounted using a rate
commensurate with the risk associated with the estimated cash flows. Assumptions regarding
credit risk, cash flows, and discount rates are judgmentally determined using available
market information and specific borrower information.
<P>
<P><B><I>Deposits:</I></B>
<P>  The fair value of deposits with no stated maturity, such as noninterest-bearing
demand deposits, savings and NOW accounts, and money market accounts, is equal to
the amount payable on demand. The fair value of certificates of deposit is based on
the discounted value of contractual cash flows. The discount rate is estimated using the
rates currently offered for deposits of similar remaining maturities.
<P>
<P>  The deposit's fair value estimates do not include the benefit that results from the
low-cost funding provided by the deposit liabilities compared to the cost of borrowing
funds in the market, commonly referred to as the core deposit intangible.
<P>
<P><B><I>Borrowed Funds:</I></B>
<P>  Rates available to the Company for borrowed funds with similar terms and
remaining maturities are used to estimate the fair value of borrowed funds.
<!-- Page 32 -->
<PAGE>
<HR>
<SMALL>[PAGE 32]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>17. CONDENSED FINANCIAL INFORMATION<BR>      PARENT COMPANY ONLY</B></FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD WIDTH="100%" VALIGN="BOTTOM" COLSPAN=3>
<P ALIGN="CENTER"><FONT FACE="Arial,Helvetica" SIZE=2>CITIZENS FINANCIAL SERVICES, INC.<BR>
CONDENSED BALANCE SHEET<BR>
December 31, 1999 and 1998</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<I><FONT FACE="Arial,Helvetica" SIZE=2><P>(in thousands)</I></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="CENTER">1998</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Assets:<BR>
  Cash</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$    103</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">0,0</FONT><FONT FACE="Arial,Helvetica" SIZE=2>135</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Investment in subsidiary,<BR>
    First Citizens National Bank</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">24,711</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">26,134</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">2,133</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">2,336</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Deferred tax asset</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">122</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Other assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">31</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">32</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$27,100</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$28,637</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Other liabilities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$      18</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">00,0</FONT><FONT FACE="Arial,Helvetica" SIZE=2>23</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>  Deferred tax liability</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">16</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$      18</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE=2 COLOR="#ffffff">000,</FONT><FONT FACE="Arial,Helvetica" SIZE=2>39</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">27,082</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">28,598</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P>Total liabilities and stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$27,100</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE=2><P ALIGN="RIGHT">$28,637</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
</TABLE>
<BR><BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM" COLSPAN="4">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">CITIZENS FINANCIAL SERVICES, INC.<BR>
CONDENSED STATEMENT OF INCOME<BR>
Years Ended December 31, 1999, 1998, and 1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<I><FONT FACE="Arial,Helvetica" SIZE="-1"><P>(in thousands)</I></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P><HR></TD>
<TD VALIGN="BOTTOM">
<P><HR></TD>
<TD VALIGN="BOTTOM">
<P><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Dividends from:<BR>
  Bank subsidiary</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,214</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$3,801</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,179</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">56</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">17</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Interest-bearing deposits with banks</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,273</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,830</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,180</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Realized securities gains (losses)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">69</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(18)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Expenses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">124</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">75</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">97</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Income before equity in undistributed<BR>
  earnings of subsidiary</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,218</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,737</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,083</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Equity in undistributed<BR>
  earnings - First Citizens National Bank</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,335</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(248)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,749</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Net income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$3,553</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$3,489</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$3,832</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
</TABLE>
<!-- Page 33 -->
<PAGE>
<HR>
<SMALL>[PAGE 33]</SMALL>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<BR><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=500>
<TR>
<TD VALIGN="BOTTOM" COLSPAN=4>
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">CITIZENS FINANCIAL SERVICES, INC.<BR>
CONDENSED STATEMENT OF CASH FLOWS<BR>
Years Ended December 31, 1999, 1998, and 1997</FONT></TD>
</TR>
<TR>
<TD VALIGN="BOTTOM">
<I><FONT FACE="Arial,Helvetica" SIZE="-1"><P>(in thousands)</I></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Cash flows from operating activities:<BR>
  Net income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$3,553</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">3,489</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">3,832</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Adjustments to reconcile net income to net<BR>
    cash provided by operating activities:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Equity in undistributed earnings of subsidiary</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,335)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">248</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(2,749)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Deferred income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(6)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Realized gains on securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(69)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    (Decrease) increase in other assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(31)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">611</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    (Decrease) increase in other liabilites</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(5)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(3)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">26</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Net cash provided by operating activities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,153</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,696</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,720</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Cash flows from investing activities:<BR>
  Purchase of available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,293)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(2,333)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(111)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Proceeds from the sale of available-for-sale securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,135</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">175</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Net cash used in investing activities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(158)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(2,158)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(111)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1">Cash flows used in financing activities:<BR>
  Cash dividends paid</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,567)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,449)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,596)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Acquisition of treasury stock</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(460)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Net cash used in financing activities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(2,027)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,449)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1,596)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    Net (decrease) increase in cash</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(32)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">89</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Cash at beginning of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">135</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">46</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">33</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Cash at end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$   103</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">135</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0,0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">46</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM"><HR></TD>
</TR>
</TABLE>
<!-- Page 34 -->
<PAGE>
<HR>
<SMALL>[PAGE 34]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Notes to Consolidated Financial Statements - continued</H2>
<BR>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>18. CONSOLIDATED QUARTERLY DATA</B></FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE BORDER=0 CELLSPACING=0 BORDERCOLOR="#000000" CELLPADDING=0 WIDTH=600>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<P><I><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">(dollar amounts in thousands)</I></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="4" BGCOLOR="#DDDDDD" ALIGN="center">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Three Months Ended</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1999</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">March 31</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">June 30</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Sept 30</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Dec 31</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,713</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,709</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,898</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$6,226</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest expense</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,887</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,891</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,047</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,241</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,826</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,818</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,851</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,985</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">60</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">60</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">90</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">265</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">551</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">601</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">486</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">707</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Realized securities gains, net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">95</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">132</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">48</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating expenses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,228</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,230</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,239</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,336</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Income before provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,184</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,261</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,012</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,139</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">296</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">308</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">207</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">232</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  888</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  953</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  805</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  907</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Earnings Per Share</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 0.32</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 0.34</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 0.29</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 0.32</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD">
<HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="#DDDDDD"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD COLSPAN="4" ALIGN="center" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="center">Three Months Ended</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">March 31</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">June 30</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">Sept 30</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">Dec 31</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest income</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,659</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,700</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,857</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$5,872</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest expense</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,915</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,957</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,034</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,014</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,744</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,743</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,823</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,858</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for loan losses</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">53</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">52</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">53</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">60</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating income</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">425</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">480</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">446</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">487</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Realized securities gains, net</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">95</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">78</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">202</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">82</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating expenses</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,021</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,973</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,075</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,145</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Income before provision for income taxes and extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,190</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,276</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,343</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,222</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">343</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">361</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">375</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">322</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Income before extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">847</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">915</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">968</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">900</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">141</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Net income</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial" SIZE="-1">847</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial" SIZE="-1">915</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial" SIZE="-1">968</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0'</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">759</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Earnings Per Share</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">0.30</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">0.33</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">0.35</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">0.27</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="5"><HR></TD>
</TR>
</TABLE><BR>
<!-- Page 35 -->
<PAGE>
<HR>
<SMALL>[PAGE 35]</SMALL>
<H2>Report of Independent Auditors</H2>
<BR>
<FONT SIZE="5">SNODGRASS</FONT><BR>
Certified Public Accountants<BR>
<BR>
<P>To the Stockholders and Board of Directors of<BR>
Citizens Financial Services, Inc.
<P>
<P>We have audited the consolidated balance sheet of Citizens Financial Services, Inc.
and subsidiary as of December 31, 1999 and 1998, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.
<P>
<P>We conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for our opinion.
<P>
<P>In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Citizens Financial Services, Inc. and subsidiary
as of December 31, 1999 and 1998, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles.
<P>
/s/ S.R. Snodgrass, A.C.<BR>

<P>Wexford, PA<BR>
February 11, 2000
<BR>
<BR>
<BR>
<BR>
<P>S.R. Snodgrass, A.C.<BR>
101 Bradford Road    Wexford, PA 15090-6909     Phone: 724-934-0344    Faxsimile: 724-934-0345
<BR>
<!-- Page 36 -->
<PAGE>
<HR>
<SMALL>[PAGE 36]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Selected Financial Data<BR>Five Years Summary of Operations</H2>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=640>
<TR><TD VALIGN="BOTTOM">
<P><I><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">(dollar amounts in thousands)</I></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 23,546</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">23,088</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">22,779</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">21,341</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">19,422</FONT><FONT FACE="Arial,Helvetica,San-Serif"
SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest expense</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12,066</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,920</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,610</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,867</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,851</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,480</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,168</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,169</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,474</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,571</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">475</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">218</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">210</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">205</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">163</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income after provision<BR>
<B>  </B>for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,005</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,950</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,959</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,269</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,408</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,345</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,838</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,427</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,372</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,242</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Realized securities gains, net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">279</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">457</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">25</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other operating expenses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,033</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,214</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,906</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,350</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,665</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Income before provision for income taxes<BR>
<B>  </B>and extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,596</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,031</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,505</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,310</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,995</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,043</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,401</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,673</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,307</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,161</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Income before extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,553</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,630</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,832</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,003</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,834</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Extraordinary item</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">141</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">000</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  3,553</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">3,489</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">3,832</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">3,003</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">00</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">2,834</FONT><FONT FACE="Arial,Helvetica,San-Serif"
SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Per share data:</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Income before extraordinary item (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$   1.27</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">000</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.30</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">000</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.37</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">000</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.07</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">000</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.01</FONT><FONT FACE="Arial,Helvetica,San-Serif"
SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net income (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.27</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.25</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.37</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.07</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.01</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Cash dividends (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.560</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.520</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.355</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">.445</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">.425</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Book value (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.76</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10.21</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.26</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.18</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.60</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><BR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total investments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 91,696</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$   93,082</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$   88,562</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">86,057</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">73,715</FONT><FONT FACE="Arial,Helvetica,San-Serif"
SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans, net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">229,159</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">203,583</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">189,910</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">180,418</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">159,794</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">340,779</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">313,564</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">294,811</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">282,810</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">247,094</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">284,318</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">274,193</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">256,783</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">240,177</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">213,316</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,082</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">28,598</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">25,923</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22,904</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">21,297</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN="6">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P>(1) Amounts were adjusted to reflect the stock dividend and the two-for-one stock split as described in Footnote 2.</FONT></TD>
</TR>
</TABLE>
<H3>COMMON STOCK</H3>
  Common stock issued by Citizens Financial Services, Inc. is traded in the local over-the-counter market,
primarily in Pennsylvania and New York. Prices presented in the table below are bid/ask prices between
broker-dealers published by the National Association of Securities Dealers through the NASD OTC "Bulletin Board", its
automated quotation system for non-NASDAQ quoted stocks and the National Quotation Bureau's "Pink Sheets."
The prices do not include retail markups or markdowns or any commission to the broker-dealer. The bid prices do
not necessarily reflect prices in actual transactions. Cash dividends are declared on a quarterly basis and the effects
of stock dividends have been stated retroactively in the table below (also see dividend restrictions in Note 14).
<P>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 BORDERCOLOR="#000000" WIDTH=500>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Dividends</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<P> <FONT FACE="Arial,Helvetica" SIZE="-1">Dividends</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P> </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=2 ALIGN="center">
<P> <B><FONT FACE="Arial,Helvetica" SIZE="-1">1999</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">declared</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<P> </TD>
<TD COLSPAN=2 VALIGN="BOTTOM" ALIGN="center">
<P> <FONT FACE="Arial,Helvetica" SIZE="-1">1998</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<P> <FONT FACE="Arial,Helvetica" SIZE="-1">declared</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P> </FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">High</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Low</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">per share</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<P> </TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">High</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<P> <FONT FACE="Arial,Helvetica" SIZE="-1">Low</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">per share</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=4><HR></TD>
	<TD WIDTH="3%" VALIGN="TOP"><P> </TD>
	<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>First quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$24.00</B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$20.50</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ .135</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>First quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$24.75</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$18.75</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"> 0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.125</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Second quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">20.50</B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">17.00</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ .140</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Second quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27.75</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">24.75</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"> 0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.130</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Third quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">17.25</B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16.00</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ .140</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Third quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27.75</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">26.50</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ </FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.130</FONT></TD>
</TR>
<TR><TD WIDTH="19%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Fourth quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16.75</B></FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16.00</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ .145</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">
<P> </TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Fourth quarter</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">26.50</FONT></TD>
<TD WIDTH="9%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">24.00</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"> 0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.135</FONT></TD>
</TR>
</TABLE>
<P ALIGN="CENTER">CITIZENS FINANCIAL SERVICES, INC.<BR>
<!-- Page 37 -->
<PAGE>
<HR>
<SMALL>[PAGE 37]</SMALL>
<H2>Trust and Investment Services Statement of Condition</H2>
<TABLE WIDTH="100%">
<TR BGCOLOR="black">
	<TD><FONT COLOR="white" SIZE="-1"><B>TRUST AND INVESTMENT SERVICES FUNDS UNDER MANAGEMENT (MARKET VALUE)</B></FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="TOP"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P>INVESTMENTS:</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="TOP">
<P> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Bonds</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$15,941</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$12,385</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Stock</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">37,519</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">34,270</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Savings and money market funds</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8,927</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">11,875</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Mutual funds</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10,012</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9,557</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Mortgages</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">211</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">302</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Real estate</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">118</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">549</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Miscellaneous</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">87</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">202</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Cash</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">197</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(45)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    TOTAL</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$73,012</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$69,095</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P>ACCOUNTS:</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Estates</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$   190</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">00,</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">578</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Trusts</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">35,932</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">35,099</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Guardianships</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">537</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">395</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Pension/profit sharing</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,653</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12,564</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Investment management</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15,807</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,921</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Custodial</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,893</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,538</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    TOTAL</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$73,012</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$69,095</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP"><HR></TD>
</TR>
</TABLE>
<BR>
<BR>
The following graph shows personal trust asset growth over the past five years:<BR>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  A bar chart depicting personal trust assets from 1995 to 1999.  A tabular  presentation of the graph is set forth as follows:

PERSONAL TRUST ASSETS
(Dollars in Thousands)
1995          1996          1997          1998          1999
31,786        39,776        41,643        46,654        49,535]
<HR> </BLOCKQUOTE> 
<BR>
<!-- Page 38 -->
<PAGE>
<HR>
<SMALL>[PAGE 38]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations</H2>
<P><B>Introduction</B>
<P>  The following is management's discussion and analysis of the significant changes
in the results of operations, capital resources and liquidity presented in its
accompanying consolidated financial statements for Citizens Financial Service, Inc., a
bank holding company and its subsidiary (the company).  Our company's
consolidated financial condition and results of operations consist almost entirely
of our wholly owned subsidiary's (First Citizens National Bank)
financial conditions and results of operations. Current performance does not
guarantee, assure or indicate similar performance in the future. Except as
noted, tabular information is presented in thousands of dollars.<BR>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  A bar chart depicting investments from 1995 to 1999.  A tabular presentation of the graph is set forth as follows:

INVESTMENTS
(Dollars in Thousands)
1995          1996          1997          1998          1999
73,715        86,057        88,562        93,082        91,696]
<HR> </BLOCKQUOTE> 
<P>  Forward-looking statements may prove inaccurate. We have made
forward-looking statements in this document, and in documents that
we incorporate by reference, that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Citizens Financial Services, Inc.,
First Citizens National Bank or the combined company. When we use such
words as "believes", "expects", "anticipates", or similar expressions, we are
making forward-looking statements.
<P>  You should note that many factors, some of which are discussed
elsewhere in this document and in the documents we incorporate by reference,
could affect the future financial results. These factors include, but are not
limited to, the following:
<P>·     operating, legal and regulatory risks;
<BR>·     economic, political and competitive forces affecting our banking,
securities, asset management and credit services;
<BR>·     risk that our analysis of these risks and forces could be incorrect and/or
the strategies developed to address them could be unsuccessful.
<P>  Readers should carefully review the risk factors described in
other documents our company files from time to time with the Securities and
Exchange Commission, including the quarterly reports on Form 10-Q to be filed by our
company and any current reports on Form 8-K filed by us.
<P>  Our company currently engages in the general business of banking throughout
our service area of Potter, Tioga and Bradford counties in North Central Pennsylvania
and Allegany, Steuben, Chemung and Tioga counties in Southern New  York.  We
maintain our central office in Mansfield, Pennsylvania.  Presently we operate banking facilities
in Mansfield, Blossburg, Ulysses, Genesee, Wellsboro, Troy, Sayre, Canton, Gillett and
the Wellsboro Weis Market store.   Additionally, we have automatic teller machines
(ATMs) located in Soldiers and  Sailors Memorial Hospital in Wellsboro and at
Mansfield University.  Our lending and deposit products and investment services are
offered primarily within the vicinity of the service area.
<P>  We face strong competition in the communities we serve from other
commercial banks, savings banks, and savings and loan associations, some of which are
substantially larger institutions than our subsidiary.  In addition, personal and corporate
trust services are offered by insurance companies, investment counseling firms, and
other business firms and individuals.  We also compete with credit unions, issuers of
money market funds, securities brokerage firms, consumer finance companies,
mortgage brokers and insurance companies.  These entities are strong competitors for virtually
all types of financial services.
<P>  In recent years, the financial services industry has experienced tremendous change
to competitive barriers between bank and nonbank institutions.  We not only
must compete with traditional financial institutions, but also with other business
corporations that have begun to deliver competing financial services.  Competition for
banking services is based on price, nature of product, quality of service, and in the case
of certain activities, convenience of location.
<P ALIGN="RIGHT">Citizens Financial Services, Inc.
<BR>
<!-- Page 39 -->
<PAGE>
<HR>
<SMALL>[PAGE 39]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations</H2>
<B>Trust and Investment Services</B>
<P>Our company offers the following trust and investment services:
<BR>·     Investment management accounts that assume managerial duties for investment accounts.
<BR>·     Custody services for safekeeping and preservation of assets.
<BR>·     Mutual funds that provide an asset allocation program.
<BR>·     Personal trust services that include stand-by, living and testamentary trusts.
<BR>·     Estate planning and administration to provide financial planning.
<BR>·     Retirement plan services for individuals and businesses.
<P>
<P><B>Financial Condition</FONT></B>
<P>The following table presents the growth (dollars in millions) during the past two years:<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM" COLSPAN="2" ALIGN="center">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P>1999/1998</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2" ALIGN="center">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>1998/1997</FONT></TD>
</TR>
<TR>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</B></FONT></TD>
<TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">%</FONT></TD>
</TR>
<TR>
	<TD><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD BGCOLOR="DDDDDD"><HR></TD>
	<TD><HR></TD>
	<TD><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27.2</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18.8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.4</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10.1</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">17.4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.8</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">25.6</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12.5</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13.7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.2</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total investments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  (including available-for-sale</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>   and held-to-maturity)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1.4)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1.5)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total stockholders'</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  equity</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1.5)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(5.3)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2.7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10.3</FONT></TD>
</TR>
</TABLE>
<P><B>Investments</B>
<P>  Our investment portfolio, including available-for-sale, decreased by $1.4 million
or 1.5% in 1999 as compared to growth of $4.5 million in 1998.  We were able to
increase our assets primarily through loan growth rather than investing surplus funds in investments.
<P>  From 1990 through 1996, the composition of our investment portfolio shifted to
U.S. Treasury securities and, until 1997, no new  investments had been made in state
and political subdivisions.  During 1997, 1998 and 1999, we have been selling U.S.
Treasury notes to restructure the investment portfolio to improve our portfolio yield.  We
then reinvest the proceeds by purchasing AAA municipal bonds, investment grade
corporate bonds and U S agency mortgage backed securities.
<P>  The following table shows the year-end composition of the investment portfolio
for the five years ended December 31, 1999:
<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=700>
<TR>
<TD VALIGN="TOP" ALIGN="center">
<TD VALIGN="TOP" ALIGN="center">
<TD VALIGN="TOP" COLSPAN="9" ALIGN="center">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Estimated Fair Market Value at December 31,</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">% of</B></FONT></TD>
<TD VALIGN="TOP"> </TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">% of</FONT></TD>
<TD VALIGN="TOP"> </TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">% of</FONT></TD>
<TD VALIGN="TOP"> </TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">% of</FONT></TD>
<TD VALIGN="TOP"> </TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">% of</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAN="8"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Held-to-maturity:</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  U.S. Treasury securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$     -</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">00,,00</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$47,566</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">53.2</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$49,439</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">57.2</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$43,905</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">58.5</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Federal agency obligations</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Obligations of state & political</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    subdivisions</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,611</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.3</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">620</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">0.7</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,348</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.8</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Corporate obligations</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,175</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3.6</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,712</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.5</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,845</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.5</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Mortgage-backed securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6,856</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.7</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,688</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2.0</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,352</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3.1</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Available-for-sale:</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  U.S. Treasury securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13,628</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14.9</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">32,763</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">35.3</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,948</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16.7</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">21,406</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">24.8</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15,591</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">20.8</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Obligations of state & political</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="TOP">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    subdivisions</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">19,469</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">21.2</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18,452</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">19.8</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Corporate obligations</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18,629</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">20.3</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,889</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16.0</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6,849</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.7</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7,253</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8.4</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,778</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.7</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Mortgage-backed securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">34,045</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">37.2</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">23,113</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">24.8</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,771</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3.1</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Equity securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,260</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.6</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,517</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2.7</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">259</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.3</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">77</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">0.1</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">75</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.1</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Restricted equity securities</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,665</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.8</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,348</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.4</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,282</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.4</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,128</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.3</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,139</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.5</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAN="8"><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$91,696</B></FONT></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$93,082</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$89,317</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$86,323</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$75,033</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAN="8"><HR></TD>
</TR>
</TABLE>
<BR>
<!-- Page 40 -->
<PAGE>
<HR>
<SMALL>[PAGE 40]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  The expected principal repayments (amortized cost) and average weighted yields
for the investment portfolio as of December 31, 1999, are shown below.   Expected
maturities, which include prepayment speed assumptions for mortgage-back securities,
are significantly different than the contractual maturities detailed in Footnote 4 of
the Consolidated Financial Statements.   Yields on tax-exempt securities are presented on
a fully-taxable equivalent  basis assuming a 34% tax rate. <BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=700>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Within<BR>
One<BR>
Year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Yield<BR>
(%)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">One-<BR>
Five<BR>
Years</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Yield<BR>
(%)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Five-<BR>
Ten<BR>
Years</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Yield<BR>
(%)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">After<BR>
Ten<BR>
Years</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Yield<BR>
(%)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amortized<BR>
Cost<BR>
Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Yield<BR>
(%)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="11"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Available-for-sale securities:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  U.S. Treasury</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$13,556</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.53</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$    -</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">.</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$    -</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$13,556</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.53</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  State & political subdivisions,</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>    general obligation</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.95</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,632</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.52</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,150</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.46</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">850</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.16</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">20,634</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.49</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Corporate obligations</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16,389</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.03</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,965</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.08</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">19,354</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.19</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Mortgage-backed securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6,050</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.51</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">25,716</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.28</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,304</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8.54</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">35,070</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.53</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Equity securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,544</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.34</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,544</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.34</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Restricted equity securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,665</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.00</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,665</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.00</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="11"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total available-for-sale</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$6,052</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.51</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$70,293</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.32</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$11,419</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.22</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$7,059</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.61</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$94,823</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.39</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="11"><HR></TD>
</TR>
</TABLE>
<BR>
<P>  During 1999 we implemented an investment strategy to sell securities maturing
within one year and reinvesting the proceeds to obtain higher yields.
<P>  Approximately 80% of the amortized cost of debt securities are expected to
mature within five years or less.
<P>  Our company expects that earnings from operations, the high liquidity level of
the available-for-sale securities, growth of deposits and the availability of borrowings
from the Federal Home Loan Bank will be sufficient to meet future  liquidity needs.
<P>  Our company has no securities from a single issuer representing more than 10%
of stockholders' equity.
<P>
<P><B><FONT COLOR="#13017c">Loans</FONT></B>
<P>  Historically, our company's loan customers have been located in North
Central Pennsylvania and the Southern Tier of New York.  We originate loans primarily
through direct loans to our existing customer base, with new customers generated by
referrals from real estate brokers, building contractors, attorneys, accountants and
existing customers.  We also do a limited amount of indirect loans through new and used
car dealers in the primary lending area.
<P>  All lending is governed by a lending policy that is developed and maintained by
us and approved by the Board of Directors. Our company's lending policy regarding
real estate loans is that generally the maximum mortgage granted on
owner-occupied residential property is 80% of the appraised value or purchase  price (whichever
is lower) when secured by the first mortgage on the  property.  Home equity lines of
credit or second mortgage loans are generally originated subject to maximum mortgage
liens against the property of 80% of the current appraised value.  The maximum term
for mortgage loans is 25 years for one- to four-family residential property and 20 years
for commercial and vacation property.
<P>  As shown in the following table, total loans grew by $25.5 million in 1999, or
12.6% the result of our new sales training, continued demand and attractive interest rates.
 Fixed rate home equity loans have been especially popular.  In addition, $2.5 million
in conforming mortgage loans were originated and sold on the secondary market
through the Federal Home Loan Mortgage Corporation, providing over $21,000 of income
in origination fees and premiums on loans sold, compared to $3.8 million in loans
originated and $63,000 of income in  1998.  The reduced activity in loans sold was a result
of us retaining more of the loans originated.  Residential mortgage lending is a
principal business activity and one we expect to continue by providing a full complement
of competitively priced conforming, nonconforming and home equity mortgages.
<P ALIGN="RIGHT"><FONT COLOR="#13017c">Citizens Financial Services, Inc.</FONT>
<BR>
<!-- Page 41 -->
<PAGE>
<HR>
<SMALL>[PAGE 41]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  Our company focuses its commercial lending activity on small businesses and
our company's commercial lending officers have been successful in attracting new
business loans, especially loans to state and political subdivisions.
<P>  The majority of lending activity has been mortgage loans secured by one- to
four-family residential property.  As of December 31, 1999, residential real estate and
real estate construction loans made up 62.2% of our company's total loan portfolio.
<P>  Continuing in 1999, our company's primary goal is to be the premier mortgage
lender in our market area, with our large menu of conforming mortgages  (including
"jumbo" and low- to moderate-income home buyer mortgages) through Farmers Home
Administration (FmHA) and Pennsylvania Housing Finance Agency  (PHFA).  The
local economy continues to expand and the average unemployment rate has recently
been approximately 4% (the same as the state unemployment rate) down from 5.3% in 1998.
 We believe that our continued training of branch office personnel and the focus
on flexibility and fast "turn around time" will aid in us meeting this goal.  (Also see
the discussion in Footnote 5 of the Consolidated Financial Statements.)
<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=732>
<TR><TD VALIGN="BOTTOM" COLsPAN="11">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Five Year Breakdown of Loans by Type</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLsPAN="11">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">December 31,</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLsPAN="2">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" COLsPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM" COLsPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM" COLsPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="BOTTOM" COLsPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amount</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1">Real estate:<BR>  Residential</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$139,518</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">60.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$127,053</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">61.8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$120,019</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">62.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$108,416</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">59.4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">96,594</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">59.7</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1">  Commercial</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">32,159</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27,164</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13.2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27,480</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14.3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">27,670</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15.2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">24,167</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14.9</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1">  Agricultural</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9,392</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.1</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9,266</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8,769</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.6</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6,134</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3.4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8,027</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.0</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1">  Construction</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,359</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5,234</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,035</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.6</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,262</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2.3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,018</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">0.6</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Loans to individuals<BR>  for family and other<BR>  purchases</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15,569</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,489</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13,905</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,465</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13,198</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8.1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Commercial and other</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12,313</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12,457</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9,485</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">11,529</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10,535</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">6.5</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>State and political<BR>  subdivision loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18,148</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.8</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10,272</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9,457</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10,105</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8,347</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.2</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">231,458</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">205,935</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">192,150</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">182,581</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">161,886</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Less:<BR>  Unearned income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">29</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">60</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">102</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">168</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">259</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Allowance for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,270</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,292</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,138</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,995</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,833</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Net loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$229,159</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$203,583</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$189,910</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$180,418</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$159,794</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
</TR>
</TABLE>
<BR>
<P>	<B>	</P></DIR>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=480>
<TR><TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999/1998</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998/1997</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Change</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Change</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Real estate</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Residential</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12,465</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9.8</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7,034</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.9</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Commercial</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,995</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18.4</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(316)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1.1)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Agricultural</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">126</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.4</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">497</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">5.7</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Construction</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(875)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(16.7)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,199</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">72.5</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Loans to individuals for</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">household, family and other purchases</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,080</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.5</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">584</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4.2</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Commercial and other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(144)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">(1.2)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2,972</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">31.3</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>State and political subdivision loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7,876</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">76.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">815</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8.6</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">25,523</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">12.5</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">13,785</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7.2</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<BR>
<!-- Page 42 -->
<PAGE>
<HR>
<SMALL>[PAGE 42]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  Our loan portfolio is our predominant source of earning assets.  The following
table shows the maturity of state and political subdivision loans,  commercial and
agricultural loans and commercial loans secured by real estate as of December 31, 1999,
classified according to the sensitivity to changes in  interest rates within various time intervals:<BR><BR>
<TABLE BGCOLOR="DDDDDD" CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Commercial,<BR>
financial, agricultural</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Real<BR>estate<BR>
construction</FONT></TD>
<TD VALIGN="BOTTOM" WIDTH="80">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Maturity of loans:<BR>
  One year or less</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$ 4,316</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$      51</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$  4,367</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Over one year but less than five years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,361</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">14,361</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Over five years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">53,335</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4,308</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">57,643</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$72,012</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$4,359</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$76,371</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Sensitivity of loans to changes in interest rates - loans due after one year:</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Predetermined interest rate</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$17,525</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,067</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$18,592</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Floating or adjustable interest rate</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">50,171</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3,241</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">53,412</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$67,696</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$4,308</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$72,004</FONT></TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
</TABLE>
<P><B><FONT
COLOR="#13017c">Loan Quality and Provision for Loan Losses</FONT></B>
<P>  As discussed previously, the loan portfolio contains a large portion of real
estate secured loans (generally residential home mortgages, mortgages on small
business properties, etc.), consumer installment loans and other commercial loans.  Footnote 5
of the Consolidated Financial Statements provides further details on the composition of
the loan portfolio.
<P>  The following tables indicate the level of nonperforming assets over the past
five years ending December 31:
<bR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Nonperforming loans:<BR>
  Nonaccruing loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$   421</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,495</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,169</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">844</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">762</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Impaired loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1,334</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">382</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">382</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">414</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">697</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Accrual loans - 90 days or more past due</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">78</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">170</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">723</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">689</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total nonperforming <BR>
  loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,833</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,892</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,721</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,981</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,148</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Foreclosed assets <BR>
  held for sale</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">573</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">529</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">238</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">164</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">208</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total nonperforming <BR>
  assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,406</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,421</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,959</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,145</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,356</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Nonperforming loans as a <BR>
  percent of loans, net <BR>
  of unearned income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">.79%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">.92%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">.90%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.09%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.33%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total nonperforming <BR>
  assets as a percent <BR>
  of loans, net of <BR>
  unearned income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.04%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.18%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.02%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.18%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.46%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
</TABLE>
<BR>
<!-- Page 43 -->
<PAGE>
<HR>
<SMALL>[PAGE 43]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  We do not believe there are any loans classified for regulatory purposes as
loss, doubtful, substandard, special mention or otherwise which will result in losses or
to have a material impact on future operations, liquidity or capital reserves. We are
not aware of any other information that causes us to have serious doubts as to the ability
of borrowers in general to comply with repayment terms.
<P>  The following table presents an analysis of the allowance for loan losses for the
five years ending December 31:
<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=576>
<TR><TD VALIGN="BOTTOM" COLSPAN="6">
<B><FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#000080"><P ALIGN="CENTER">Summary of Loan Loss Experience</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Balance at<BR>
  beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,292</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,138</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,995</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,833</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,721</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Charge-offs</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Real estate - construction</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Real estate - mortgage</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">73</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">10</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">23</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Loans to individuals for household,<BR>
    family and other purchases</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">93</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">105</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">32</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">56</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">42</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Commercial and other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">385</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">41</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">4</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total loans charged-off</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">551</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">112</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">83</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">64</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">69</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Recoveries</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Real estate - construction</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Real estate - mortgage</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Loans to individuals for household,<BR>
    family and other purchases</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">38</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">37</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">11</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">19</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>  Commercial and other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">15</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">3</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Total loans recovered</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">54</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">48</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">16</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">21</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">18</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Net loans charged-off</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">497</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">64</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">67</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">43</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">51</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Additions charged to operations</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">475</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">218</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">210</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">205</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">163</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Balance at end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,270</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,292</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$2,138</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,995</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$1,833</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=4><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Loans outstanding at end of year</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$231,429</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$205,875</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$192,048</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$182,413</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$161,627</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Average loans outstanding, net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$217,265</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$196,281</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$186,425</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$170,104</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">$156,754</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Net charge-offs to average loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">.23%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.03%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.04%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.03%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica" SIZE="-1">.03%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Year-end allowance to total loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">.98%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.11%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.11%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.09%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">1.13%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P>Year-end allowance to total<BR>
  nonperforming loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">123.84%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">121.14%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">124.23%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">100.71%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica" SIZE="-1"><P ALIGN="RIGHT">85.34%</FONT></TD>
</TR>
</TABLE>
<BR>
<!-- Page 44 -->
<PAGE>
<HR>
<SMALL>[PAGE 44]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>

<P>  As detailed in Footnote 5 of the Consolidated Financial Statements and the
above tables, total past due (90 days or more) and nonperforming loans decreased 3.1%
from December 31, 1998 to December 31, 1999.   Charged off commercial and other
loans increased significantly, primarily the result of a single borrower going in to
bankruptcy during the fourth quarter of 1999.  Overall, Northern Teir counties development
corporations were reporting a favorable outlook in employment and property values have
been stable to slightly increasing.  The majority of our loan volume is well-collateralized
by real estate.
<P>
<P><B><FONT COLOR="#13017c">Allowance for Loan Losses</FONT></B>
<P>  The allowance is maintained at a level to absorb potential future loan losses.
<P>  Management's basis for the level of the allowance and the annual provision is as follows:
<BR>     ·     Our evaluation of the loan portfolio,
<BR>     ·     Current and projected economic conditions,
<BR>     ·     Historical loan loss experience,
<BR>     ·     Present and prospective financial condition of the borrowers,
<BR>     ·     The level of nonperforming assets,
<BR>     ·     Other relevant factors.
<P>  While we evaluate all of this information quarterly, future adjustments to the
allowance may be necessary if economic conditions differ substantially from the
assumptions used in making the evaluation.  In addition, various regulatory agencies, as an
integral part of their examination process, review our company's allowance for loan losses.
 These agencies may require us to recognize additions to the allowance based on
their evaluation of information available to them.  We believe that the current allowance
is adequate to offset any exposure that may exist for under secured or loans that might
not be collectable.   During 1999 we increased our loan loss provision substantially as
a result of our evaluation considering the impact of the charge-off of the large
commercial loan discussed previously.
<P>  We do not accrue interest income on seriously past due loans.  Subsequent
cash payments received are applied to the outstanding principal balance or recorded
as interest income, depending upon our assessment of our ultimate ability to
collect principal and interest.
<P>
<P><B><FONT COLOR="#13017c">Allocation of the Allowance for Loan Losses</FONT></B>
<P>  The allocation of the allowance for loan losses is our determination of the
amounts necessary for concentrations and changes in mix and volume of the loan portfolio.
<P>  The unallocated portion of the allowance is based upon our assessment of general
and specific economic conditions within our market.  This allocation is more uncertain
and considers risk factors that may not be reflected in our historical loss factors.
Total charge-offs for 2000 are expected to return to their moderate historic levels.
<P>  The following table provides the amount of distribution of the allowance for
loan losses and the percentage of loans compared to total loans by loan category:
<BR><BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=600>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P> </FONT> </TD>
<TD VALIGN="BOTTOM" COLSPAN=2 BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN=2>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN=2>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN=2>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1996</FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN=2>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1995</FONT></TD>
</TR>
<TR ALIGN="center"><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
	</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Real estate loans:<BR>  Residential</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">232</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">60.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">140</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">61.8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">140</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">62.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">143</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">59.4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">165</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">59.6</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Commercial, agricultural</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.077</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">927</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17.7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">577</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">325</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">328</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19.9</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Construction</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.6</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.6</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans to individuals for household,<BR>  
family and other purchases</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">313</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">365</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">321</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.2</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">164</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">181</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.2</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Commercial and other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">322</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">265</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">323</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">108</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">110</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.5</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>State and political subdivision loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.8</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.9</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">5.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">5.2</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Unallocated</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">311</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">N/A</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">591</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">N/A</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">773</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">N/A</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,252</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">N/A</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,046</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">N/A</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
	</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total allowance for loan losses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,270</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,292</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,138</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,995</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,833</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR>
	<TD VALIGN="BOTTOM"><HR></TD>
	<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
	<TD VALIGN="BOTTOM" COLSPAN="8"><HR></TD>
	</TR>
</TABLE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 45 -->
<PAGE>
<HR>
<SMALL>[PAGE 45]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P><B>Deposits</B>
<P>  Our company tiers interest-bearing transaction and savings accounts by deposit
size (larger balances receive higher rates).  We have been offering a wide variety of
deposit instruments, as have our competitors.
<P>  Some of the deposit product variations are:
<BR>·     Money Market Investor accounts (limited transaction deposit accounts with
interest rates that vary as often as daily),
<BR>·     NOW accounts (unlimited transaction interest-bearing accounts),
<BR>·     Premier 50 and Premier 50 Plus (interest-bearing transactions accounts for senior customers),
<BR>·     Gold Club accounts (a package of services combined with a checking account),
<BR>·     Individual retirement accounts (certificates of deposit),
<BR>·     Longer-term certificates of deposit (generally of five-year maturity),
<BR>·     Promotional 30-month, 66-month and Roll-Up certificates of deposit.
<BR>
<P>  Our company also offers a wide variety of IRA products.
<P>  Deposit growth in 1999 was $10.1 million or 3.7%.
<P>The following table shows the composition of deposit accounts over the last
three years as of December 31:
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR ALIGN="center"><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Noninterest-bearing deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 23,435</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">20,978</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">19,016</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.4</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>NOW accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">36,081</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">37,113</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">32,794</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12.8</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Savings deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,276</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.2</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,421</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.6</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,523</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10.3</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Money market deposit accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">39,831</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">39,584</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14.4</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">34,357</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.4</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">158,695</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">55.8</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">150,097</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">54.8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">144,093</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">56.1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$284,318</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$274,193</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$256,783</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
</TABLE>
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM">
<P></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999/1998</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998/1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change</FONT></TD>
</TR>
<TR ALIGN="center"><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Noninterest-bearing deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,457</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,962</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10.3</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>NOW accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(1,032)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(2.8)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,319</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.2</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Savings deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(145)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(.5)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(102)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(.4)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Money market deposits accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">247</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.6</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,227</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15.2</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,598</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,004</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.2</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,125</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17,410</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.8</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>

<P>  We experienced a significant growth in noninterest-bearing deposits in both
personal and business accounts.
<P>  The decrease in the growth of NOW and money market account was a result of
the increase in interest rates of certificates of deposit and other non-bank
investment products.
<P>  Remaining maturities of certificates of deposit of $100,000 or more:
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>3 months or less</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  3,750</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1,295</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1,658</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>3 through 6 months</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,801</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,409</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,929</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>6 through 12 months</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,948</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,788</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,263</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Over 12 months</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,305</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,166</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,110</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$25,804</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$24,658</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$23,960</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>As a percent of total<BR>
  certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">16.26%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">16.43%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">16.63%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<!-- Page 46 -->
<PAGE>
<HR>
<SMALL>[PAGE 46]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
Deposits by Type of Depositor
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=560>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAn="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM" COLSPAn="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Amount</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Individual, partnerships <BR>
  & corporations</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$254,954</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">89.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$240,446</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">87.7</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$226,306</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">88.1</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>United States government</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">20</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">-</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>State & political subdivisions</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,381</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.6</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">32,374</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11.8</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">28,721</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11.2</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,966</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">.7</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,351</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">.5</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,736</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">.7</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$284,318</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$274,193</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$256,783</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">100.0</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="4"><HR></TD>
</TR>
</TABLE>

<P>  The methods used by our company to attract and retain deposits (in addition to
competitive interest rates) have been by increased marketing and business development
efforts, continuous emphasis on quality personal service, and expanded trust and
investment management services.  In all of our community offices, lobby and drive-up hours
include Wednesday afternoons (when they were traditionally closed) as well as Saturday hours.
 The supermarket office is open seven days a week with extended hours on weekdays.
We currently provide thirteen MAC automated teller machines, which are part of the
MAC regional and PLUS national network.  We also implemented a MasterMoney debit card
 program in 1998 and internet banking and bill payment in November 1999.
<P>  In addition to the above, continuing an effort to add value to products, we have a
voice response system to provide customers a convenient method of  accessing account
information and transferring funds 24 hours a day.
<P>
<P><B>Results of Operations</B>
<P>  Net income for the twelve months ending December 31, 1999 was $3.6 million,
an increase of $64,000 or 1.8% over the $3.5 million for the 1998 related period.
Earnings per share was $1.27 for the year ended 1999 compared with $1.25 during the
comparable 1998 period.  Details of the reasons for these changes are discussed on the
following pages.
<P>  The following table sets forth certain performance ratios of our company for
the periods indicated (net of the arbitration settlement discussed in Footnote  11 of
the Consolidated Financial Statements):
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=580>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Return on assets (net income to average total assets) (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.09%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.13%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">1.10%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Return on equity (net income to average total equity) (1)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12.69%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12.75%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.11%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Dividend payout ratio (dividends declared divided by net income)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">44.10%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">41.53%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">25.68%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Equity to asset ratio (average equity to average total assets)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.57%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">8.86%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">8.38%</FONT></TD>
</TR>
</TABLE>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>(1) Return on average assets and average equity was computed after excluding the nonrecurring
after-tax income associated with the arbitration award by a vendor.</FONT>
<BR><P>  Net income is influenced by five key components: net interest income, other
operating income, other operating expenses, provision for income taxes and the  provision
for possible loan losses.  A discussion of these five components follows.
<P>
<P><B>Net Interest Income</B>
<P>  The most significant source of revenue is net interest income, the amount of
interest earned on interest-earning assets exceeds interest expense on  interest-bearing liabilities.
<P>  Factors that influence net interest income are changes in volume of
interest-earning assets and interest-bearing liabilities as well as changes in the associated  interest rates.
<P>  Net interest income for the current twelve month period, after provision for loan
losses, was $11,005,000, an increase of $55,000 or .5% compared with a decrease of
$9,000 during the same period in 1998.
<P>  The following tables set forth our company's average balances of, and the
interest earned or incurred on, each principal category of assets, liabilities  and
stockholders' equity, the related rates, net interest income and rate "spread" created:
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 47 -->
<PAGE>
<HR>
<SMALL>[PAGE 47]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P ALIGN="CENTER">Analysis of Average Balances and Interest Rates (1)
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=720>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average<BR>
Balance</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Interest</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average <BR>
Rate</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average<BR>Balance</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Interest</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average<BR>Rate</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average <BR>
Balance</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Interest</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-2"><P ALIGN="CENTER">Average<BR>Rate</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Short-term investments:<BR>
  Interest-bearing deposits at banks</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,187</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">56</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.72</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,403</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">290</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.37</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,042</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">221</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.47</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total short-term investments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,187</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">56</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.72</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,403</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">290</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.37</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,042</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">221</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.47</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Investment securities:</FONT> <BR>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">  Taxable</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">69,991</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,216</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.02</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">75,722</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,654</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.15</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">83,686</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,332</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.37</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Tax-exempt (3)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">20,854</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,449</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.95</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,428</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">745</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.14</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">714</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">79</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11.06</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total investment securities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">90,845</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,665</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.24</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">86,150</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,399</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.27</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">84,400</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,411</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.41</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans:<BR>
  Residential mortgage loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">138,037</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,675</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.46</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">126,758</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,325</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.93</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">119,083</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,952</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.20</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Commercial & farm loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">49,503</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,547</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.19</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">45,309</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,473</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.87</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">43,790</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,263</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.74</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Loans to state & political subdivisions</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,350</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,197</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.34</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10,303</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">885</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.59</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,652</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">875</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.07</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,511</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,306</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.00</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13,911</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,270</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.13</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13,900</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,378</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.91</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans, net of discount (2)(3)(4)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">216,401</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18,725</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.65</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">196,281</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17,953</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.15</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">186,425</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">17,468</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9.37</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest-earning assets</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">308,433</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">24,446</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7.93</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">287,834</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23,642</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.21</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">274,867</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23,100</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8.40</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Cash and due from banks</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,036</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,663</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,417</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Bank premises and equipment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,899</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,697</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,140</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>FASB 115 adjustment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(409)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">499</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">170</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,929</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,449</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,342</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total noninterest-earning assets</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">16,455</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,308</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,069</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total assets</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">324,888</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">302,142</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">288,936</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Liabilities and Stockholders' Equity</B> <BR>
Interest-bearing deposits liabilities:<BR>
  NOW accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">36,542</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">660</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.81</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">33,411</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">693</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.07</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">32,644</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">786</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.41</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Savings accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,909</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">486</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.74</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,670</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">580</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.17</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,736</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">614</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2.21</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Money market accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">41,282</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,810</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.38</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">37,682</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,801</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.78</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">29,420</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,349</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.59</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">152,455</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,454</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.55</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">146,630</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,408</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.73</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">143,837</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,358</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.81</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Short term borrowings</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,888</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">422</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.35</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,777</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">93</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.23</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,627</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">147</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.60</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Long term borrowings</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,937</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">234</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5.94</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,323</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">345</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.48</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">5,502</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">356</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.47</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest-bearing liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">270,013</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12,066</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.47</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">251,493</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,920</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.74</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">241,766</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,610</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.80</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Demand deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22,342</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19,924</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19,141</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other liabilities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,682</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,950</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,804</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total noninterest-bearing liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,024</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23,874</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">22,945</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Stockholders' equity</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">27,851</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,775</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">24,225</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total liabilities & stockholders'</B> <B>equity</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">324,888</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">302,142</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">288,936</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12,380</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,722</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,490</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="9"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Net interest spread (5)</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3.46%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3.47%</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3.60%</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Net interest income as a percentage <BR>
    of average interest-earning assets</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.01%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.07%</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4.18%</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> <FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">  Ratio of interest-earning assets<BR>
    to interest-bearing liabilities</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.14  </B></FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.14  </FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.14  </FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
</TABLE>
<P>
(1) Averages are based on daily balances.
<BR>(2) Includes loan origination and commitment fees of $174, $187, and $141 for 1999, 1998, and 1997, respectively.
<BR>(3) In order to make pre-tax income and resultant yields on tax exempt investments and loans comparable to those
on taxable investments and loans, a tax equivalant adjustment is made using a federal income tax rate of 34%.
<BR>(4) Income on nonaccrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets.
<BR>(5) Interest rate spread represents the difference between the average rate earned on interest-earning assets and the
average rate paid on interest-bearing liabilities.
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<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
  As disclosed in the previous table, we have experienced a narrowing interest margin percentage
during 1999 continuing the trend in recent years.   The 1998 flat yield curve limited our opportunity to
increase margin with new business as the existing investments and loans mature or repay.  When the yield
curve became steeper in 1999,  interest rates began to rise resulting in our short-term liabilities repricing
faster than our short term assets.  Currently the yield curve is slightly inverted (not a normal up slope) beyond
10 years.  However, most of the company's investments, loans, deposits and borrowings are priced or
repriced along the three month to five year portion of the yield curve.  We continue to review various pricing
and investment strategies to enhance deposit growth while maintaining or expanding the current interest margin.
<P>  The following table shows the effect of changes in volume and rates on interest income and expense.
Tax-exempt interest revenue is shown on a tax-equivalent basis for proper comparison using a statutory
federal income tax rate of 34%.
<P>
<BR>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=700>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Analysis of Changes in Net Interest Income</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999 vs. 1998(1)</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="3">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998 vs. 1997(1)</FONT></TD>
</TR>
<TR VALIGN="top"><TD>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>on a Tax-Equivalent Basis</FONT></TD>
<TD BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change in<BR>
Volume</B></FONT></TD>
<TD BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change<BR>
in Rate</B></FONT></TD>
<TD BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Total<BR>
Change</B></FONT></TD>
<TD>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change in<BR>
Volume</FONT></TD>
<TD>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Change<BR>
in Rate</FONT></TD>
<TD>
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Total<BR>
Change</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest income:<BR>
</B>Short-term investments:<BR>
  Interest-bearing deposits at banks</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ (203)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ (31)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(234)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  73</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  (4)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  69</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Investment securities:<BR>
  Taxable</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(347)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(91)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(438)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(494)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(184)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(678)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Tax-exempt</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">724</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(20)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">704</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">684</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(18)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">666</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total investments</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">377</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(111)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">266</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">190</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(202)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(12)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Residential mortgage loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">874</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(524)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">350</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">670</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(297)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">373</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Commercial and farm loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">298</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(224)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">74</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">149</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">61</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">210</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Loans to state & political subdivisions</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">337</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(25)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">312</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">45</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(35)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">10</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Other loans</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">54</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(18)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">36</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(109)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(108)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total loans - net of discount </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,563</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(791)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">772</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">865</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(380)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">485</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest income</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,737</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(933)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">804</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,128</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(586)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">542</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest expense:</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest bearing deposits:</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  NOW accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">87</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(120)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(33)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(112)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(93)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Savings accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">29</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(123)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(94)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(23)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(11)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(34)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Money market accounts</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">172</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(163)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">393</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">59</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">452</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>  Certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">269</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(223)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">46</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">155</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(105)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">50</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest-bearing deposits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">557</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(629)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(72)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">544</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(169)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">375</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Short term borrowings</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">327</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">329</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(45)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(9)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(54)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Long term borrowings</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(84)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(27)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(111)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(12)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(11)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest expense</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">800</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(654)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">146</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">487</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(177)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">310</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Net interest income</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 937</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ (279)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 658</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">641</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ (409)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 232</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="3"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="3"><HR></TD>
</TR>
</TABLE>
<P>(1) The change in interest due to both rate and volume has been allocated to the volume and rate in proportion to the
absolute dollar amounts of each change.
<BLOCKQUOTE>As can be seen from the preceding tables, tax equivalent net interest income rose from $11,490,000
in 1997 to $11,722,000 in 1998 and increased to $12,380,000 in 1999.  In 1999, net interest income
increased $658,000 while overall spread decreased from 3.47% to 3.46%.  The increased volume of
interest-earning assets generated an increase in interest income of $1,737,000 while increased volume of
interest-bearing liabilities produced $800,000 of interest expense.  The change in volume resulted in an increase of
$937,000 in net interest income.  The net change in rate was a negative $279,000 resulting in a total positive
net change of $658,000 when combined with change in volume.  The yield on interest-earning assets
decreased 28 basis points from 8.21% to 7.93% and the average interest rate on interest-bearing liabilities decreased
 27 basis points from 4.74% to 4.47%. Analysis of our company's current net interest income in 1999
shows that the effects of stable interest rates and the effect of the level yield curve during 1998 but has yet to
fully reflect the increase in interest rates that occurred in 1999. We are currently evaluating alternatives
to improve the interest spread.</BLOCKQUOTE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 49 -->
<PAGE>
<HR>
<SMALL>[PAGE 49]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM">
<P><B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Other Operating Income</B></FONT></TD>
<TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP">
<P> </TD>
</TR>
<TR ALIGN="center"><TD VALIGN="TOP">
<P> </TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1999</B></FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1998</FONT></TD>
<TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>1997</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAn=2><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Service charges</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$1,511</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$1,060</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">0,</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">848</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Trust</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>410</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>362</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>339</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>395</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>304</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>246</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Arbitration settlement</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>29</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>112</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>994</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Realized securities gains, net</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>279</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>457</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>25</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAn=2><HR></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD ALIGN="right" VALIGN="TOP" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$2,624</B></FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$2,295</FONT></TD>
<TD ALIGN="right" VALIGN="TOP">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>$2,452</FONT></TD>
</TR>
<TR><TD VALIGN="TOP"><HR></TD>
<TD VALIGN="TOP" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="TOP" COLSPAn=2><HR></TD>
</TR>
</TABLE>
<P>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=400>
<TR><TD VALIGN="BOTTOM"> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAn="2">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999/1998<BR>
Change</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAn="2">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998/1997<BR>
Change</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif"><P> </FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Service charges</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">451</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">42.5</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">212</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">25.0</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Trust</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">48</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6.8</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">91</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">29.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">58</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23.6</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Arbitration settlement</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(83)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(74.1)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(882)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(88.7)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Realized securities gains, net</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(178)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(38.9)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">432</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">329</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(157)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">(6.4)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<P>  As indicated in the above table, total other operating income increased
$329,000 compared with the same period in 1998 primarily as a result of the increase in
service charge revenue related to overdraft and NSF charges during 1999.
<P>  We continue to evaluate additional means of increasing other operating income to
off-set the loss of net interest income described above.  Our approach is to apply
service charges on business accounts by charging fees on transaction activity (reduced by
earnings credit based on customers' balances) to more equitably recover costs.  We expect
to use this analysis for our other products in the near future.
<P>  Investment security gains decreased by $178,000 as a result of the restructuring of
our investment portfolio that occurred primarily in 1998 as discussed previously on page 39.
 This restructuring was accomplished with out significantly reducing the yield of the portfolio.
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=450>
<TR><TD VALIGN="BOTTOM">
<P><B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Other Operating Expenses</B></FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Salaries and employee benefits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$4,320</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$3,848</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$3,882</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Occupancy</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">532</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">522</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">519</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Furniture and equipment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">706</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">713</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">706</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other professional fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">529</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">401</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">219</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">2,946</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">2,730</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">2,580</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Total other operating expenses</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$9,033</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$8,214</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$7,906</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=450>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1999/1998</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1998/1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">Change</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN="2">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">Change</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Salaries and employee benefits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">472</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">12.3</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(34)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(.9)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Occupancy</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">10</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">1.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">3</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">.6</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Furniture and equipment</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(7)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(1.0)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">7</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">1.0</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other professional fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">128</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">31.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">182</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">83.1</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">216</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">7.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">150</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">0</FONT><FONT FACE="Arial" SIZE="-1">5.8</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">819</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">10.0</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">308</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">3.9</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN="2"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN="2"><HR></TD>
</TR>
</TABLE>
<P>  Total other operating expense was $9,033,000 in 1999 reflecting an increase of
 $819,000 over the 1998 period.
<P>  Salaries and benefit's expense increased by $472,000 for the current period
reflecting
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<PAGE>
<HR>
<SMALL>[PAGE 50]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>associated new positions and compensation adjustments in line with a tight
labor market.
<P>  Other expenses increased by $216,000 influenced by the costs associated with
moving to new operations facilities, marketing expenses, and expenses related to
repossessions and foreclosures.
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM">
<B><FONT FACE="Arial" SIZE="-1"><P>Professional Fees</B></FONT></TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<P> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1999</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1998</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1997</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other professional fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$441</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$301</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$161</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Legal fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">37</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">59</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">19</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Examinations and audits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">51</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">41</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">39</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$529</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$401</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">$219</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD"><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
</TABLE>
<P>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=500>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=2>
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1999/1998<BR>Change</B></FONT></TD>
<TD VALIGN="BOTTOM" COLSPAN=2>
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">1998/1997<BR>Change</FONT></TD>
</TR>
<TR ALIGN="center"><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">$</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">%</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">$</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=2><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Other professional fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">140</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">46.5</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">140</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">87.0</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Legal fees</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(22)</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">(37.3)</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">00</FONT><FONT FACE="Arial" SIZE="-1">40</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1" COLOR="#ffffff"><P ALIGN="RIGHT">00</FONT><FONT FACE="Arial" SIZE="-1">210.5</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Examinations and audits</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">10</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">24.4</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">2</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">5.1</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=2><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P>Total</FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">128</B></FONT></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD">
<B><FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">31.9</B></FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">182</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial" SIZE="-1"><P ALIGN="RIGHT">83.1</FONT><FONT FACE="Arial" SIZE="-1" COLOR="#ffffff">)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM"><HR></TD>
<TD VALIGN="BOTTOM" BGCOLOR="DDDDDD" COLSPAN=2><HR></TD>
<TD VALIGN="BOTTOM" COLSPAN=2><HR></TD>
</TR>
</TABLE>
<P>  The other professional fees increased $128,000 and reflects our continued efforts
to improve operational processes (see increase in service charge income discussed
above), implement future strategic growth, improve sales and performance, and Y2K expenses.
 These expenses are expected to decline into 2000 and thereafter.
<P>  The extraordinary item during 1998 represented the prepayment of Federal
Home Loan Bank long-term debt resulting in a one-time expense of $213,000 ($141,000 net
of taxes) and was done as part of the restructuring of the investment portfolio.
<P>
<P><B>Provision for Income Taxes</B>
<P>  The provision for income taxes before the extraordinary item was $1,043,000
during 1999 compared with $1,402,000 during the 1998 related period.  Income before
taxes decreased $77,000 in the 1999 period over the same period in 1998 reflecting
the change in income and increased levels of tax exempt income.
<P>  In November 1999, we entered into a limited partnership agreement to establish a
low income housing project in Bradford County, Pa.  As a result of this agreement we
expect to receive approximately $900,000 of tax credits over a ten year period once the
project has been completed.
<P>
<P><B>Stockholders' Equity</B>
<P>  We evaluate stockholders' equity in relation to total assets and the risk associated
with those assets. The greater the capital resources, the more likely a corporation is to
meet its cash obligations and absorb unforeseen losses. For these reasons capital
adequacy has been, and will continue to be, of paramount importance.
<P>  Stockholders' equity decreased by 5.3% in 1999 to its current level of $27.1
million, after growing 10.3% in 1998 and 13.2% in 1997. In 1999 we were forced to
adjust equity downward by $3,042,000 to reflect unrealized holding gains and losses
on available-for-sale securities. In comparison, in 1998 we realized a gain of $978,000 as
a direct result of the change in interest rates. Total equity was approximately 7.9% of
total assets at December 31, 1999, as compared to 9.1% at December 31, 1998.
<P>  Our Board of Directors determines our dividend rate after considering our
company's capital requirements, current and projected net income, and  other factors.
In 1999 and 1998, our company paid out 44.1% and 41.5% of net income in dividends, respectively.
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 51 -->
<PAGE>
<HR>
<SMALL>[PAGE 51]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  For the year ended December 31, 1999, the total number of common shares
outstanding was 2,800,563.  For comparative purposes, outstanding shares for  prior periods
were adjusted for the 1999 stock dividend in computing earnings  and cash dividends per share.
<P>  There are currently three federal regulatory measures of capital adequacy.
Our company's ratios substantially exceed all federal regulatory standards as detailed
in Footnote 14 of the Consolidated Financial Statements.
<P>
<P><B><FONT COLOR="#13017c">Liquidity</FONT></B>
<P>  Liquidity is a measure of our company's ability to efficiently meet normal cash
flow requirements of both borrowers and depositors.  To maintain proper liquidity, we
use funds management policies along with our investment policies to assure we can
meet our financial obligations to depositors, credit customers and stockholders.  Liquidity
is needed to meet depositors' withdrawal demands, extend credit to meet borrowers'
needs, provide funds for normal operating expenses and cash dividends, and fund other
capital expenditures.
<P>  Our company's historical activity in this area can be seen in the Consolidated
Statement of Cash Flows from investing and financing activities.
<P>  Cash generated by operating activities, investing activities and financing
activity influence liquidity management.  The most important source of  funds is the
deposits that are primarily core deposits (deposits from  customers with other
relationships). Short-term debt from the Federal Home Loan Bank supplements our company's
availability of funds.
<P>  Our company's use of funds is shown in the investing activity section of the
Consolidated Statement of Cash Flows, where the net increase in loans is detailed.
Other significant uses of funds are capital expenditures, purchase of loans and
acquisition premiums.  Surplus funds are then invested in investment securities.
<P>  Capital expenditures were $1,036,000 in 1999, $532,000 more than 1998.
<P>  Major capital expenditures for 1999 were:
<BR>·     $456,000 for the operations facility.
<BR>·     $186,000 for improvements at our branch offices.
<BR>·     $77,000 for ATMs.
<P>Some major capital expenditures in 1998 were:
<BR>·     $213,000 for remodeling branch offices;
<BR>·     $53,000 for ATMs;
<P>  These purchases will allow greater operating efficiency and provide the customer
with a higher quality banking services.
<P>  On February 8, 1999, we acquired a property near the Mansfield Wal-Mart
consisting of a large office building on 2 acres, to be used as an  operations facility.  We expect
the costs of acquisition and remodeling be approximately $1.2 million.  This
building allowed us to discontinue rentals of two other properties.
<P>  Our company plans to build a new Mansfield community office, investment
services and administration facilities.  This effort has been in various stages of planning for
more than ten years.  We expect construction to take place 2000 and cost approximately
$2.8 million.
<P>  In addition, our company has contracted with Wal-Mart to include a First
Citizens branch in their new Mansfield Supercenter scheduled to be opened August 2000.
<P>  Our company has sufficient resources to complete these projects from our
normal operations and will have a long-term positive effect on revenues, efficiency and
the capacity for future growth.
<P>  To assure the maintenance of liquidity reserves, our company monitors and
places various internal constraints on the level of loans relative to core deposits and other
stable funding sources; the liquidity characteristics of  investments; and the volume
and maturity structure of wholesale funding.
<P>
<P>  <B>Interest Rate and Market Risk Management</B>
<P>  The objective of interest rate sensitivity management is to maintain an appropriate
balance between the stable growth of income and the risks  associated with maximizing
income through interest sensitivity imbalances and  the market value risk of assets and
liabilities.
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<PAGE>
<HR>
<SMALL>[PAGE 52]</SMALL>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper left hand corner of page, .5 inches square]
<HR> </BLOCKQUOTE>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  Because of the nature of our operations, we are not subject to foreign
currency exchange or commodity price risk and, since our company has no trading portfolio, it
is not subject to trading risk.
<P>  Currently our company has equity securities that represent approximately 4.6% of
our investment portfolio and, therefore, equity risk is not significant.
<P>  The primary components of interest-sensitive assets include adjustable-rate  loans
and investments, loan repayments, investment maturities and money market  investments.
 The primary components of interest-sensitive liabilities include maturing certificates
of deposit, IRA certificates of deposit and short-term borrowings.  Savings deposits,
NOW accounts and money market investor accounts are considered core deposits and are
not short-term interest sensitive (except for the top-tier money market investor
accounts which are paid current market  interest rates).
<P>  The following table shows the cumulative static GAP (at amortized cost) for
various time intervals:
<P>
<TABLE BGCOLOR="DDDDDD" CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=700>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Within</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Four to</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">One to</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Two to</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Three to</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Over</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<P> </TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Three</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Twelve</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Two</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Three</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Five</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Five</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>(in thousands)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Months</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Months</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Years</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Interest-bearing deposits</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$   102</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$      </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$      </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$      </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$      </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$      </FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$   102</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Investment securities</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,475</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,437</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,635</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">20,016</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">21,445</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">31,815</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">94,823</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Residential mortgage loans</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">14,706</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">34,459</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">29,528</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">23,858</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">28,080</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">12,423</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">143,054</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Commercial and farm loans</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">7,603</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">15,378</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">11,766</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">8,791</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">9,323</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,203</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">54,064</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Loans to state & political subdivisions</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">693</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,874</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,997</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,652</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,527</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,435</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18,178</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Other loans</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,497</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,884</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">4,588</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">2,511</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,907</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">746</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">16,133</FONT></TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest-earning assets</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 27,076</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 62,032</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 64,514</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 56,828</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 67,282</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 48,622</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$326,354</FONT></TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>NOW accounts</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$  5,631</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$     -</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$     -</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$     -</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$     -</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 30,403</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$102,188</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Savings accounts</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">26,274</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">158,695</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Money Market accounts</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">39,830</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">30,830</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Certificates of deposit</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">31,386</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">45,508</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">38,498</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">28,599</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">13,739</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">965</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">158,695</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Short term borrowing</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">18,529</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">500</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">-</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">19,429</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Long term borrowing</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">182</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">611</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1,192</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">824</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">275</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">3,340</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">6,424</FONT></TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Total interest-bearing liabilities</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 95,958</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 46,619</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 39,690</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 29,423</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 14,014</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 60,932</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$286,686</FONT></TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Excess interest-earning <BR>
  assets (liabilities)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ (68,882)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 15,413</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 24,824</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 27,405</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 53,268</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(12,360)</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Cumulative interest-earning assets</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$27,076</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$ 89,108</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$153,622</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$210,450</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$277,732</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$326,354</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Cumulative interest-bearing liabilities</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">95,958</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">142,577</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">182,267</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">211,690</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">225,704</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">286,686</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P>Cumulative gap</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(68,882)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(53,469)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(28,645)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$(1,240)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$52,028</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">$39,668</FONT></TD>
<TD VALIGN="BOTTOM">
<P ALIGN="RIGHT"> </TD>
</TR>
<TR>
	<TD COLSPAN=8><HR></TD>
</TR>
<TR><TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1">Cumulative interest rate<BR>
  sensitivity ratio (1)</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">0.28</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">0.62</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">0.84</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">0.99</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.23</FONT></TD>
<TD VALIGN="BOTTOM">
<FONT FACE="Arial,Helvetica,San-Serif" SIZE="-1"><P ALIGN="RIGHT">1.14</FONT></TD>
<TD VALIGN="BOTTOM"> </TD>
</TR>
</TABLE>
<P>   (1)  Cumulative interest-earning assets divided by cumulative interest-bearing liabilities.
<BLOCKQUOTE>The following are reasons for increased one year liability sensitivity during 1999:
<P>·     An increase in CDs maturing within 1 year, primarily the effect of a bulge of
IRA CDs maturing in the 1<SUP>st</SUP> quarter of 2000.
<BR>·     Securities that mature within one year were sold and reinvested further out
the yield curve to increase portfolio yield.
<BR>·     Implemented a leverage strategy that includes a portion of short-term liabilities.
<BR>·     There was a higher loan demand for 5 year adjustable and fixed rate products.
<BR>·     Loan and investment growth exceeded deposit growth.   The difference
was funded by short-term FHLB advances.
<P>During the year 2000 we plan to reduce the short-term liability position
described above.</BLOCKQUOTE>
<P ALIGN="RIGHT">Citizens Financial Services, Inc.<BR>
<!-- Page 53 -->
<PAGE>
<HR>
<SMALL>[PAGE 53]</SMALL>
<H2>Management's Discussion and Analysis of<BR>
Financial Condition and Results of Operations - continued</H2>
<P>  The previous table and the simulation models discussed below are presented assuming money market
investment accounts and NOW accounts in the top interest rate tier are repriced within the first three months.  The
loan amounts reflect the principal balances expected to be repriced as a result of contractual amortization
and anticipated early payoffs.
<P>  Gap analysis, one of the methods used by us to analyze interest rate risk, does not necessarily show the
precise impact of specific interest rate  movements on our company's net interest income because the repricing
of certain assets and liabilities is discretionary and is subject to competitive  and other pressures.  In
addition, assets and liabilities within the same period may, in fact, be repaid at different times and at different rate levels.
<P>  Our company currently uses a computer simulation model to better measure the impact of interest rate
changes on net interest income. We use the model as part of our risk management process that will effectively
identify, measure, and monitor our company's risk exposure.
<P>  Interest rate simulations using a variety of assumptions are used by us to evaluate our interest rate
risk exposure.  A shock analysis at December 31, 1999, indicated that a 200 basis point movement in interest rates
in either direction would have a moderate impact on our company's anticipated net interest income and the
market value of assets and liabilities  over the next twenty four months, but within our ability to manage effectively.
<P>
<P><B>Year 2000 Event</B>
<P>  We experienced no disruptions during the century date change.   However, we continue to monitor all
applications and our third party arrangements to make sure that problems, should they appear during February
(leap year) or later, will be quickly addressed since our contingency plans remain in place.
<P>  Our total cost for Y2K expenses during 1999 was $73,500 and the total for the entire three year event
preparation period was $112,500.  We believe that much of this expense will help us to be better prepared for any
other potential disasters in the future.
<P>  The extra cash in place at our branches for year-end was returned to the Federal Reserve during January 2000.
<P>
<P><B>General</B>
<P>  The majority of assets and liabilities of a financial institution are monetary  in nature and, therefore,
differ greatly from most commercial and industrial  companies that have significant investments in fixed assets
or inventories.   However, inflation does have an important impact on the growth of total assets and on
noninterest expenses, which tend to rise during periods of general inflation.  The recent action by the Federal Reserve
of increasing short-term interest rates will help ensure that the level of inflation remains at a relatively low level.
<P>  Various congressional bills have been passed and other proposals have been made for significant changes
to the banking system, including provisions for: limitation on deposit insurance coverage; changing the timing
and method financial institutions use to pay for deposit insurance; and tightening  the regulation of bank
derivatives' activities.
<P>  Normal examinations of our company by the Office of Comptroller of the Currency occurred during 1999.
 The last Community Reinvestment Act performance evaluation by the same agency resulted in a rating of
 "Satisfactory Record of Meeting Community Credit Needs."
<P>  On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act of 1999, which is
also known as the Financial Services Modernization Act. The act repeals some depression-era banking laws and
will permit banks, insurance companies and securities firms to engage in each others' business after complying
wih certain conditions and regulations which are yet to be finalized. The act grants to community banks the power
to enter new financial markets as a matter of right that larger institutions have managed to do on an ad hoc basis.
At this time, our company has no plans to pursue these additional possibilities.
<P>  Our company does not believe that the Financial Services Modernization Act will have an immediate
positive or negative material impact on our operations. However, the act may have the result of increasing the amount
of competition that our company faces from larger financial service companies, many of whom have
substantially more financial resources than our company, which may now offer banking services in addition to insurance
and brokerage products.
<P>  Aside from those matters described above, we do not believe that there are any trends, events or
uncertainties which would have a material adverse impact on future operating results, liquidity or capital resources.  We
are not aware of  any current recommendations by the regulatory authorities (except as described  herein) which,
if they were to be implemented, would have such an effect,  although the general cost of compliance with
numerous and multiple federal and  state laws and regulations does have, and in the future may have, a negative
 impact on our company's results of operations.
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<TABLE WIDTH="100%">
<TR VALIGN="top">
<TD>
<BR><BR><BR>
<FONT SIZE=+3>CITIZENS</FONT><BR>
FINANCIAL SERVICES<BR>
INCORPORATED<br>
<P>
15 South Main Street<BR>
Mansfield, PA 16933<BR>

570-662-2121<BR>
800-326-9486<BR>
FAX 570-662-2365<BR>
<BR>
<B>DIRECTORS</B>
<BR>R. Lowell Coolidge, Esquire
<BR>  <I>Chairman of the Board</I>
<BR>Carol J. Tama
<BR>  <I>Vice Chairman of the Board</I>
<BR>Bruce L. Adams
<BR>Larry J. Croft
<BR>Mark L. Dalton
<BR>John E. Novak
<BR>John M. Thomas, MD
<BR>Rudolph J. van der Hiel, Esquire
<BR>William D. VanEtten
<BR>Richard E. Wilber
<P>
<B>DIRECTORS EMERITI</B><BR>
Robert E. Dalton<BR>
Edward Kosa<BR>
John G. Kuster<BR>
Robert J. Landy, Esquire<BR>
Robert G. Messinger<BR>
Wilber Wagner
</TD>
<TD>
<BLOCKQUOTE> <HR>
[GRAPHIC OMITTED:  Silhouette of colonial rider on horseback, upper right hand corner of page, 1 inche square]
<HR> </BLOCKQUOTE>
<FONT SIZE=+3>FIRST CITIZENS</FONT><BR>
NATIONAL BANK<BR>
<br>
<B>DIRECTORS</B>
<BR>R. Lowell Coolidge, Esquire
<BR>  <I>Chairman of the Board</I>
<BR>Carol J. Tama
<BR>  <I>Vice Chairman of the Board</I>
<BR>Bruce L. Adams
<BR>Larry J. Croft
<BR>Mark L. Dalton
<BR>John E. Novak
<BR>John M. Thomas, MD
<BR>Rudolph J. van der Hiel, Esquire
<BR>William D. VanEtten
<BR>Richard E. Wilber
<BR>  <I>President</I>
<BR>  <I>Chief Executive Officer</I>
<P>OFFICERS
<BR>Administrative Services</FONT>
<BR>Cynthia T. Pazzaglia
<BR>  <I>Vice President</I>
<BR>  <I>Human Resources Manager</I>
<BR>Audit/Compliance
<BR>V. Guy Abell
<BR>  <I>Auditor</I>
<BR>Karen R. Jacobson
<BR>  <I>Assistant Auditor/Security Officer</I>
<BR>Banking Services
<BR>Terry B. Osborne
<BR>  <I>Executive Vice President</I>
<BR>  <I>Secretary, Citizens Financial Services, Inc.</I>
<BR>Allan K. Reed
<BR>  <I>Vice President</I>
<BR>  <I>Branch Administrator</I>
<BR>  <I>Asst. Secretary, Citizens Financial Services, Inc.</I>
<BR>Valerie S. Davis
<BR>  <I>Assistant Credit Services Manager</I>
<BR>Chester L. Reed
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Commercial Services Officer</I>
<BR>Robert P. Fitzgerald
<BR>  <I>Business Development Officer</I>
<BR>Pamela A. Baldwin
<BR>  <I>Appraiser</I>
<BR>Wendy L. Southard
<BR>  <I>Marketing Coordinator</I>
<BR>Finance
<BR>Thomas C. Lyman
<BR>  <I>Vice President
<BR>  Chief Financial Officer
<BR>  Treasurer, Citizens Financial Services, Inc.</I>
<BR>Randall E. Black
<BR>  <I>Vice President of Finance
<BR>  Controller
<BR>  Asst. Treasurer, Citizens Financial Services, Inc.</I>
<BR>Operations
<BR>William W. Wilson
<BR>  <I>Vice President
<BR>Operations Division Manager</I>
<BR>Joanne W. Marvin
<BR>  <I>Banking Operations Manager</I>
<BR>Trust and Investment Services
<BR>Jean A. Knapp
<BR>  <I>Trust Administrator</I>
<BR>Sara J. Roupp
<BR>  <I>Trust Administrator</I></B>
</TD>
</TR>
</TABLE>
<!-- Page 55 -->
<PAGE>
<HR>
<SMALL>[PAGE 55]</SMALL>
<P><B>
COMMUNITY OFFICES<BR>
Toll free to all locations: 800-326-9486<BR>
<HR>
<TABLE WIDTH="100%">
<TR VALIGN="top">
<TD>MANSFIELD  570-662-2121
<BR>15 South Main Street
<BR>Mansfield, PA 16933
<BR>FAX 570-662-3278
<BR><B>Local Board</B>
<BR>William J. Smith
<BR>  <I>Chairman</I>
<BR>Anthony D. Fiamingo
<BR>Shari L. Johnson
<BR>Stephen A. Saunders
<BR>William J. Waldman
<BR><B>Officers</B>
<BR>Shari L. Johnson
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Office Manager</I>
<BR>Michele E. Litzelman
<BR> <I>Customer Service Counselor</I>
<BR>Kristina M. Payne
<BR> <I>Customer Service Counselor</I>
<HR>
BLOSSBURG   570-638-2115
<BR>300 Main Street
<BR>Blossburg, PA 16912
<BR>FAX 570-638-3178
<BR><B>Local Board</B>
<BR>Thomas R. Phinney
<BR>  <I>Chairman</I>
<BR>Terrance M. Asalone
<BR>George D. Lloyd
<BR>Susan M. Signor
<BR>Benjamin F. Jones
<BR><B>Officers</B>
<BR>Terrance M. Asalone
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Office Manager</I>
<BR>Alisha M. Fitch
<BR>  <I>Customer Service Counselor</I>
<HR>
ULYSSES   814-848-7572
<BR>502 Main Street
<BR>Ulysses, PA 16948
<bR>FAX 814-848-7633
<BR><B>Local Board</B>
<BR>Ronald G. Bennett
<BR>  <I>Chairman</I>
<BR>D. Thomas Eggler
<BR>Jerry R. McCaslin
<BR>Phillip D. Vaughn
<BR>James A. Wagner
<BR><B>Officers</B>
<BR>Phillip D. Vaughn
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Office Manager</I>
<BR>Tonya R. Coursey
<BR>  <I>Customer Service Counselor</I>
</TD>
<TD>
GENESEE   814-228-3201
<BR>391 Main Street
<BR>Genesee, PA 16923
<BR>Fax 814-228-3395
<BR><B>Local Board</B>
<BR>E. Gene Kosa
<BR>  <I>Chairman</I>
<BR>Janet H. Casey
<BR>John K. Hyslip
<BR>L. Abbie Lerch
<BR>Stephen B. Richard
<BR>Keith A. Slep, Esquire
<BR>Dennis C. Smoker
<BR><B>Officers</B>
<BR>L. Abbie Lerch
<BR>  <I>Office Manager</I>
<BR>Christine M. Miller
<BR>  <I>Customer Service Counselor</I>
<HR>
SAYRE   570-888-6602
<BR>306 West Lockhart Street
<BR>Sayre, PA 18840
<BR>FAX 570-888-3198
<BR><B>Local Board</B>
<BR>Joseph P. Burkhart, Jr.
<BR>  <I>Chairman</I>
<BR>Blaine W. Cobb, MD
<BR>R. Joseph Landy, Esquire
<BR>William A. Richetti
<BR>Michael J. Yanuzzi
<BR><B>Officers</B>
<BR>William A. Richetti
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Office Manager</I>
<BR>Antoinette G. Tracy
<BR>  <I>Customer Service Counselor</I>
<HR>
TROY   570-297-4131
<BR>103 West Main Street
<BR>Troy, PA 16947
<bR>FAX 570-297-4133
<BR><B>Local Board</B>
<BR>Lyle A. Haflett
<BR>  <I>Chairman</I>
<BR>Thomas A. Calkins, III
<BR>Richard H. Packard
<BR>David E. Carlson
<BR>Donald D. White
<BR><B>Office Manager</B>
<BR>David E. Carlson
<BR>  <I>Assistant Vice President</I></B>
</TD>
<TD>
WELLSBORO   570-724-2600
<BR>99 Main Street
<BR>Wellsboro, PA 16901
<BR>FAX 570-724-4381
<BR><B>Local Board</B>
<BR>William A. Hebe, Esquire
<BR>  <I>Chairman</I>
<BR>Timothy J. Gooch, CPA
<BR>James K. Stager
<BR>Jeffrey L. Wilson
<BR><B>Officers</B>
<BR>Jeffrey L. Wilson
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Office Manager</I>
<BR>Marsha B. Jones
<BR>  <I>Customer Service Counselor</I>
<HR>
CANTON   570-673-3103
<BR>29 West Main Street
<BR>Canton, PA 17724
<BR>FAX 570-673-4573
<BR><B>Local Board</B>
<BR>Roger C. Graham, Jr.
<BR>  <I>Chairman</I>
<BR>William F. Watkins
<BR>Christopher S. Landis
<BR>Marilyn I. Scott
<BR>David L. Wright
<BR><B>Officers</B>
<BR>Christopher S. Landis
<BR>  <I>Assistant Vice President</I>
<BR>Catherine O. Dygert
<BR>  <I>Customer Service Counselor</I>
<HR>
GILLETT   570-596-2679
<BR>P.O. Box 125
<BR>Gillett, PA 16925
<BR>FAX 570-596-4888
<BR><B>Local Board</B>
<BR>Forrest M. Oldroyd
<BR>Helen Kay Shedden
<BR><B>Office Manager</B>
<BR>Helen Kay Shedden
<BR>  <I>Assistant Vice President</I>
<HR>
WEIS MARKET    570-724-4644
<BR>201 Weis Plaza
<BR>Wellsboro, PA 16901
<BR>FAX 570-724-1842
<BR><B>Officers</B>
<BR>Carol L. Strong
<BR>  <I>Assistant Vice President</I>
<BR>  <I>Sales Manager</I>
<BR>Richard A. Pino, II
<BR>  <I>Assistant Sales Manager</I></B>
<HR>
</TD>
</TR>
<TR VALIGN="top">
<TD><BLOCKQUOTE> <HR>
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<HR> </BLOCKQUOTE>
</TD>
<TD ALIGN="center">
<H3>Bank-By-Phone</H3>
24 Hour Banking
<BR>1-888-HLP-FCNB
<BR>(1-888-457-3262)
<BR>or
<BR>662-3874
</TD>
<TD>www.firstcitizensbank.com<BR></TD>
<TD><BLOCKQUOTE> <HR>
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<HR> </BLOCKQUOTE>
</TD>
</TR>
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<TABLE CELLPADDING="7">
<TR VALIGn="top">
<TD ALIGN="right" WIDTH="30%">
<B>MISSION<BR>
STATEMENT</B><BR>
<I>We recognize<BR>
that our customers<BR>
are the reason<BR>
for our existence.<P>
Our mission is to be the<BR>
premier one-stop provider<BR>
of financial services<BR>
in our marketplace.<BR>
We endeavor to meet our customers' changing needs.<BR>
Our motivated and professional employees provide<BR>
excellent service that sets us apart from other providers.<BR>
Our bank, its board members and employees,<BR>
are active citizens<BR>
of the communities we serve.<BR>
We strive to satisfy<BR>
the expectations<BR>
of our shareholders.</I><BR>
<P>
<BR>
<BLOCKQUOTE> <HR>
[FDIC EQUAL HOUSING LENDER LOGO OMITTED]
<HR> </BLOCKQUOTE>
</TD>
<TD>
<B>SHAREHOLDER INFORMATION</B>
<P>
<P><B>ANNUAL MEETING</B></B>
<P>The Annual Meeting and Luncheon for the shareholders of Citizens Financial Services, Inc.
will be held at the Tioga County Fairgrounds Youth Building in Whitneyville, PA  on Tuesday,
April 18, 2000, at 12:00 noon.
<P>
<P><B>FORM 10-K</B>
<P>The Annual Report to the Securities and Exchange Commission, Form 10-K, will be
made available upon request.
<P>Contact:
<P>Thomas C. Lyman<BR>
<I>Treasurer</I><BR>
Citizens Financial Services, Inc.<BR>
15 South Main Street<BR>
Mansfield, PA 16933<BR>
<P>
<P>The Annual Report and other Company reports are also filed electronically through
the Electronic Data Gathering, Analysis, and Retrieval System ("EDGAR") which
performs automated collection, validation, indexing, acceptance, and forwarding of submissions to
the Securities and Exchange Commission (SEC) and is accessible by the public using the Internet
at <I>http://www.sec.gov./edgarhp.htm.</I>
<P>
<P><B>TRANSFER AGENT</B><BR>
Citizens Financial Services, Inc.<BR>
15 South Main Street<BR>
Mansfield, PA 16933<BR>
Telephone: 570-662-2121 / 800-326-9486<BR>
<P>
<P><B>SHAREHOLDER SERVICES</B>
<P>Shareholder inquiries and requests for assistance should be directed to the Transfer Agent
listed above.
<P>
<P><B>STOCK PURCHASING INFORMATION</B>
<P>The stock symbol for Citizens Financial Services, Inc. is "CZFS".  Citizens Financial
Services, Inc. stock is quoted Over the Counter ("OTC") on the OTC Bulletin Board through
the following Market Makers:
<P>
<P><B><I>Market Makers</I></B>
<HR>

<P>Ferris-Baker-Watts                       Fahnestock & Co.
<P>6 Bird Cage Walk                         1500 Walnut Street
<P>Hollidaysburg, PA 16648                  Philadelphia, PA 19102
<P>Telephone:  800-343-5149                 Telephone:  800-722-2294
<P>
<P>Ryan, Beck & Co.                         Janney Montgomery Scott
<P>80 Main Street                           1601 Market Street
<P>West Orange, NJ 07052                    Philadelphia, PA 19103
<P>Telephone:  800-342-2325                 Telephone:  800-JANNEYS
<P>
<P>Tucker Anthony Cleary Gull               PaineWebber Incorporated
<P>2101 Oregon Pike                         10 Park Street, P.O. Box 2636
<P>Lancaster, PA 17601                      Concord, NH 03302
<P>Telephone:  800-646-8647                 Telephone:  800-678-0619

<P ALIGN="CENTER">We invite you to mail any comments or questions to us at our E-Mail address, which
is <B>[email protected]</B>. Visit our Web Site at <B>www.firstcitizensbank.com</B>.
</TD>
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