10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10–K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004 Commission File Number 0-13396

CNB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1450605
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

County National Bank

1 South Second Street

P.O. Box 42

Clearfield, Pennsylvania 16830

(Address of principal executive office)

Registrant’s telephone number, including area code, (814) 765-9621

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act:

Common Stock, $1.00 Par Value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  x    No  ¨

The aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, 2004.

Common Stock, $1.00 Par Value - $122,016,742

The number of shares outstanding of the registrant’s common stock as of March 10, 2005:

Common Stock, $1.00 Par Value - 9,129,522 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Shareholders’ Report for the year ended December 31, 2004 are incorporated by reference into Part I and Part II pursuant to Section 13 of the Act.

Portions of the proxy statement for the annual shareholders’ meeting on April 19, 2005 are incorporated by reference into Part III. The incorporation by reference herein of portions of the proxy statement shall not be deemed to incorporate by reference the information referred to in Item 402(a)(8) of regulation S-K.

Exhibit index is located on sequentially numbered page 15.

INDEX

ITEM 1.	BUSINESS	4
ITEM 2.	PROPERTIES	12
ITEM 3.	LEGAL PROCEEDINGS	12
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	12
PART II.
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	13
ITEM 6.	SELECTED FINANCIAL DATA	13
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	13
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	14
ITEM 9A.	CONTROLS AND PROCEDURES	14
PART III.
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	14
ITEM 11.	EXECUTIVE COMPENSATION	14
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	14
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	15
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND PROCEDURES	15
PART IV.
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K	15
	SIGNATURES	17

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PART I.

ITEM 1. BUSINESS

CNB FINANCIAL CORPORATION

CNB Financial Corporation (the Corporation) is a Financial Holding Company registered under the Bank Holding Company Act of 1956, as amended. It was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for the purpose of engaging in the business of a Financial Holding Company. On April 26, 1984, the Corporation acquired all of the outstanding capital stock of County National Bank (the Bank), a national banking chartered institution. The Corporation is subject to regulation, supervision and examination by the Board of Governors of the Federal Reserve System. In general, the Corporation is limited to owning or controlling banks and engaging in such other activities as are properly incident thereto. The Corporation is currently engaged in three non-banking activities through its wholly owned subsidiaries CNB Investment Corporation, County Reinsurance Company, and CNB Insurance Agency. CNB Investment Corporation was formed in November 1998 to hold and manage investments that were previously owned by County National Bank and the Corporation and to provide the Corporation with additional latitude to purchase other investments. County Reinsurance Company was formed in June of 2001 as a corporation in the state of Arizona. The company provides accidental death and disability and life insurance as a part of lending relationships of the Bank. CNB Insurance Agency was established in February of 2003. The company provides fixed annuity products to banking customers.

The Corporation does not currently engage in any operating business activities, other than the ownership and management of County National Bank, CNB Investment Corporation, County Reinsurance Company, and CNB Insurance Agency.

COUNTY NATIONAL BANK

The Bank is a nationally chartered banking institution incorporated in 1934. The Bank’s Main Office is located at 1 South Second Street, Clearfield, (Clearfield County) Pennsylvania. The primary marketing area consists of the Pennsylvania Counties of Clearfield, Elk (excluding the Townships of Millstone, Highland and Spring Creek), McKean, Cambria and Cameron. It also includes a portion of western Centre County including Philipsburg Borough, Rush Township and the western portions of Snow Shoe and Burnside Townships and a portion of Jefferson County, consisting of the boroughs of Brockway, Falls Creek, Punxsutawney, Reynoldsville and Sykesville, and the townships of Washington, Winslow and Henderson. The approximate population of the general trade area is 150,000. The economy is diversified and includes manufacturing industries, wholesale and retail trade, services industries, family farms and the production of natural resources of coal, oil, gas and timber.

In addition to the Main Office, the Bank has 18 full-service branch offices, 1 limited service branch facility, and 2 loan production offices located in various communities in its market area

The Bank is a full-service bank engaging in a full range of banking activities and services for individual, business, governmental and institutional customers. These activities and services principally include checking, savings, and time deposit accounts; real estate, commercial, industrial, residential and consumer loans; and a variety of other specialized financial services. Its Trust division offers a full range of client services.

The Bank’s customer base is such that loss of one customer relationship or a related group of depositors would not have a materially adverse effect on the business of the Bank.

The Bank’s loan portfolio is diversified so that one industry, group of related industries or changes in household economic conditions would not comprise a material portion of the loan portfolio.

The Bank’s business is not seasonal nor does it have any risks attendant to foreign sources.

COMPETITION

The banking industry in the Bank’s service area continues to be extremely competitive, both among commercial banks and with other financial service providers such as consumer finance companies, thrifts, investment firms, mutual funds and credit unions. The increased competition has resulted from changes in the legal and regulatory guidelines as well as from economic conditions. Mortgage banking firms, leasing companies, financial affiliates of industrial companies, brokerage firms, retirement fund management firms, and even government agencies provide additional competition for loans and other financial services. Some of the financial service providers operating in the Bank’s market area operate on a large-scale

4

regional or national basis and possess resources greater than those of the Bank and the Corporation. The Bank is generally competitive with all competing financial institutions in its service area with respect to interest rates paid on time and savings deposits, service charges on deposit accounts and interest rates charged on loans.

SUPERVISION AND REGULATION

The Bank is subject to supervision and examination by applicable federal and state banking agencies, including the Office of the Comptroller of the Currency. In addition, the Bank is insured by and subject to some or all of the regulations of the Federal Deposit Insurance Corporation (“FDIC”). The Bank is also subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types, amounts and terms and conditions of loans that may be granted, and limitation on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operation of the Bank. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve Board, including actions taken with respect to interest rates, as it attempts to control the money supply and credit availability in order to influence the economy.

EXECUTIVE OFFICERS

The table below lists the executive officers of the Corporation and County National Bank and sets forth certain information with respect to such persons.

NAME	AGE	PRINCIPAL OCCUPATION FOR LAST FIVE YEARS
WILLIAM F. FALGER	57	PRESIDENT AND CHIEF EXECUTIVE OFFICER,
		CNB FINANCIAL CORPORATION, SINCE 1/1/01;
		PRESIDENT AND CHIEF EXECUTIVE OFFICER,
		COUNTY NATIONAL BANK, SINCE 1/01/93.
JOSEPH B. BOWER, JR.	41	SECRETARY, SINCE 12/31/03 &
		TREASURER, CNB FINANCIAL
		CORPORATION, SINCE 11/18/97
		EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER, SINCE 12/31/03 AND PREVIOUSLY
		CHIEF FINANCIAL OFFICER,
		COUNTY NATIONAL BANK, SINCE 11/10/97
MARK D. BREAKEY	46	SENIOR VICE PRESIDENT AND
		CREDIT RISK MANAGER,
		COUNTY NATIONAL BANK, SINCE 5/95
DONALD E. SHAWLEY	49	SENIOR VICE PRESIDENT,
		COUNTY NATIONAL BANK, SINCE 9/29/98.
		TRUST OFFICER SINCE 11/1/85.
RICHARD L. SLOPPY	54	SENIOR VICE PRESIDENT AND
		SENIOR LOAN OFFICER,
		COUNTY NATIONAL BANK, SINCE 1/1/04

Officers are elected annually at the reorganization meeting of the Board of Directors.

EMPLOYEES

The Corporation has no employees who are not employees of County National Bank. As of December 31, 2004, the Bank had a total of 242 employees of which 192 were full time and 50 were part time.

5

MONETARY POLICIES

The earnings and growth of the banking industry are affected by the credit policies of monetary authorities, including the Federal Reserve System. An important function of the Federal Reserve System is to regulate the national supply of bank credit in order to control recessionary and inflationary pressures. Among the instruments of monetary policy used by the Federal Reserve to implement these objectives are open market activities in U.S. Government Securities, changes in the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. These operations are used in varying combinations to influence overall economic growth and indirectly, bank loans, securities, and deposits. These variables may also affect interest rates charged on loans or paid for deposits. The monetary policies of the Federal Reserve authorities have had a significant effect on the operating results of commercial banks in the past and are expected to continue to have such an effect in the future.

In view of the changing conditions in the national economy and in the money markets, as well as the effect of actions by monetary and fiscal authorities including the Federal Reserve System, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or their effect on the business and earnings of the Corporation and the Bank.

DISTRIBUTION OF ASSETS, LIABILITIES, & SHAREHOLDER’S EQUITY;

INTEREST RATES AND INTEREST DIFFERENTIAL

The following tables set forth statistical information relating to the Corporation and its wholly-owned subsidiaries. The tables should be read in conjunction with the consolidated financial statements of the Corporation which are incorporated by reference hereinafter.

6

Average Balances and Net Interest Margin

(Dollars in thousands)

	December 31, 2004							December 31, 2003							December 31, 2002
	Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.		Average Balance			Annual Rate		Interest Inc./Exp.
Assets
Interest-bearing deposits with banks	$	3,484		3.36	%	$	117	$	1,818		2.42	%	$	44	$	1,733		4.85	%	$	84
Federal funds sold and securities purchased under agreements to resell		6,246		1.92	%		120		13,395		1.34	%		180		14,034		1.90	%		267
Securities:
Taxable		108,437		3.45	%		3,746		117,018		3.81	%		4,457		125,461		5.19	%		6,507
Tax-Exempt (1)		41,508		6.94	%		2,881		45,297		6.90	%		3,125		44,104		6.87	%		3,030
Equity Securities (1)		14,027		3.95	%		554		13,576		3.73	%		507		12,700		3.53	%		448
Total Securities		173,702		4.27	%		7,418		191,104		4.35	%		8,313		198,032		5.22	%		10,336
Loans
Commercial (1)		180,422		6.19	%		11,163		147,719		6.19	%		9,141		107,821		6.67	%		7,194
Mortgage (1)		263,083		6.65	%		17,495		247,365		7.25	%		17,927		241,757		7.86	%		19,011
Installment		30,178		8.70	%		2,626		34,496		8.64	%		2,981		37,608		8.14	%		3,063
Leasing		3,669		6.70	%		246		8,955		6.91	%		619		16,246		7.03	%		1,142
Total Loans (2)		477,352		6.61	%		31,530		438,535		6.99	%		30,668		403,432		7.54	%		30,410
Total earning assets		651,054		5.98	%		38,948		629,639		6.19	%		38,981		601,464		6.77	%		40,746
Non Interest Bearing Assets
Cash & Due From Banks		14,268							15,130							13,508
Premises & Equipment		13,124							12,723							12,213
Other Assets		39,311							39,458							19,867
Allowance for Loan Losses		(5,904	)						(5,627	)						(4,422	)
Total Non Interest Earning Assets		60,799							61,684							41,166
Total Assets	$	711,853				$	38,948	$	691,323				$	38,981	$	642,630				$	40,746
Liabilities and Shareholders’ Equity
Interest-Bearing Deposits
Demand - interest-bearing	$	127,272		0.29	%	$	373	$	127,965		0.44	%	$	563	$	132,288		0.85	%	$	1,126
Savings		76,440		0.62	%		473		77,578		0.90	%		696		77,851		1.53	%		1,192
Time		311,227		3.12	%		9,705		301,254		3.19	%		9,623		265,112		3.99	%		10,590
Total interest-bearing deposits		514,939		2.05	%		10,551		506,797		2.15	%		10,882		475,251		2.72	%		12,908
Short-term borrowings		3,739		0.88	%		33		1,654		0.67	%		11		1,915		2.09	%		40
Long-term borrowings		40,000		5.10	%		2,041		40,000		5.09	%		2,036		38,740		5.10	%		1,976
Subordinated debentures		10,000		5.03	%		503		10,000		4.71	%		471		5,833					277
Total interest-bearing liabilities		568,678		2.31	%		13,128		558,451		2.40	%		13,400		521,739		2.91	%		15,201
Demand - non-interest-bearing		68,986							60,124							56,321
Other liabilities		6,576							8,230							8,121
Total Liabilities		644,240					13,128		626,805					13,400		586,181					15,201
Shareholders’ Equity		67,613							64,518							56,449
Total Liabilities and Shareholders’ Equity	$	711,853				$	13,128	$	691,323				$	13,400	$	642,630				$	15,201
Interest Income/Earning Assets				5.98	%	$	38,948				6.19	%	$	38,981				6.77	%	$	40,746
Interest Expense/Interest Bearing Liabilities				2.31	%		13,128				2.40	%		13,400				2.91	%		15,201
Net Interest Spread				3.67	%	$	25,820				3.79	%	$	25,581				3.86	%	$	25,545
Interest Income/Interest Earning Assets				5.98	%	$	38,948				6.19	%	$	38,981				6.77	%	$	40,746
Interest Expense/Interest Earning Assets				2.02	%		13,128				2.13	%		13,400				2.53	%		15,201
Net Interest Margin				3.97	%	$	25,820				4.06	%	$	25,581				4.25	%	$	25,545

(1) The amounts are reflected on a fully tax equivalent basis using the federal statutory rate of 35% in 2004 and 2003 and 34% in 2002, adjusted for certain tax preferences.

(2) Average outstanding includes the average balance outstanding of all non-accrual loans. Loans consist of the average of total loans less average unearned income. The amount of loan fees included in the interest income on loans is not material.

7

Net Interest Income

Rate-Volume Variance

(Dollars in thousands)

	For Twelve Months Ended December 31,									For Twelve Months Ended December 31,
	2004 over (under) 2003 Due to Change In									2003 over (under) 2002 Due to Change In
	Volume			Rate			Net			Volume			Rate			Net
Assets
Interest-Bearing Deposits with Banks	$	40		$	33		$	73		$	4		$	(44	)	$	(40	)
Federal Funds Sold and securities purchased under agreements to resell		(96	)		36			(60	)		(12	)		(75	)		(87	)
Securities:
Taxable		(327	)		(384	)		(711	)		(438	)		(1,612	)		(2,050	)
Tax-Exempt		(261	)		17			(244	)		82			13			95
Equity Securities		17			30			47			31			28			59
Total Securities		(627	)		(268	)		(895	)		(333	)		(1,690	)		(2,023	)
Loans
Commercial		2,024			(2	)		2,022			2,662			(715	)		1,947
Mortgage		1,139			(1,571	)		(432	)		441			(1,525	)		(1,084	)
Installment		(373	)		18			(355	)		(253	)		171			(82	)
Leasing		(365	)		(8	)		(373	)		(513	)		(10	)		(523	)
Total Loans		2,425			(1,563	)		862			2,337			(2,079	)		258
Total Earning Assets	$	1,798		$	(1,831	)	$	(33	)	$	2,004		$	(3,769	)	$	(1,765	)
Liabilities and Shareholders’ Equity
Interest-Bearing Deposits
Demand - Interest-Bearing	$	(3	)	$	(187	)	$	(190	)	$	(37	)	$	(526	)	$	(563	)
Savings		(10	)		(213	)		(223	)		(4	)		(492	)		(496	)
Time		319			(237	)		82			1,444			(2,411	)		(967	)
Total Interest-Bearing Deposits		306			(637	)		(331	)		1,403			(3,429	)		(2,026	)
Short-Term Borrowings		14			8			22			(5	)		(24	)		(29	)
Long-Term Borrowings		0			5			5			64			(4	)		60
Subordinated debentures		0			32			32			198			(4	)		194
Total Interest-Bearing Liabilities	$	320		$	(592	)	$	(272	)	$	1,660		$	(3,461	)	$	(1,801	)
Change in Net Interest Income	$	1,478		$	(1,239	)	$	239		$	344		$	(308	)	$	36

1. The change in interest due to both volume and rate had been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

2. Included in interest income is $1,992, $1,878 and $1,621 of fees for the years ending 2004, 2003 and 2002, respectively.

3. Income on restructured loans accounted for under SFAS Nos. 114 & 118 are included in interest earning assets.

8

Investment Portfolio

(Dollars In Thousands)

	December 31, 2004								December 31, 2003								December 31, 2002
	Amortized Cost		Unrealized				Market Value		Amortized Cost		Unrealized				Market Value		Amortized Cost		Unrealized				Market Value
			Gains		Losses						Gains		Losses						Gains		Losses
Securities Available for Sale:
U.S. Treasury	$	13,096	$	—	$	85	$	13,011	$	13,282	$	62	$	6	$	13,338	$	10,169	$	145	$	—	$	10,314
U.S. Government agencies and corporations		30,563		—		303	$	30,260		30,312		162		35	$	30,439		26,109		431		8		26,532
Obligations of States and Political Subdivisions		41,712		2,567		—	$	44,279		45,401		3,294		—	$	48,695		47,322		2,520		105		49,737
Other Debt Securities		66,893		1,799		147	$	68,545		73,171		2,384		279	$	75,276		87,441		2,950		500		89,891
Marketable Equity Securities		7,811		665		369	$	8,107		8,962		558		1,365	$	8,155		8,680		280		409		8,551
	$	160,075	$	5,031	$	904	$	164,202	$	171,128	$	6,460	$	1,685	$	175,903	$	179,721	$	6,326	$	1,022	$	185,025

Maturity Distribution of Investment Securities

(Dollars In Thousands)

December 31, 2004

	Within One Year				After One But Within Five Years				After Five But Within Ten Years				After Ten Years				Collaterialized Mortgage Obligation and Other Asset Backed Securities
	$ Amt.		Yield		$ Amt.		Yield		$ Amt.		Yield		$ Amt.		Yield		$ Amt.		Yield
Securities Available for Sale:
U.S. Treasury	$	7,049	1.73	%	$	5,962	2.32	%	$	—			$	—			$	—
U.S. Government agencies and corporations		14,970	2.02	%		14,802	2.42	%		488	3.76	%		—				—
Obligations of States and Political Subdivisions		1,329	7.11	%		7,432	6.58	%		8,952	7.01	%		26,566	7.04	%		—
Other Debt Securities		—	0.00	%		6,333	6.13	%		9,184	7.34	%		12,348	3.61	%		40,680	3.91	%
TOTAL	$	23,348	2.22	%	$	34,529	3.98	%	$	18,624	7.09	%	$	38,914	5.74	%	$	40,680	3.91	%

The weighted average yields are based on market value and effective yields weighted for the scheduled maturity with tax-exempt securities adjusted to a taxable-equivalent basis using a tax rate of 34%.

The portfolio contains no holdings of a single issuer that exceeds 10% of shareholders’ equity other than the US Treasury and governmental agencies.

9

LOAN PORTFOLIO

(Dollars in thousands)

A. TYPE OF LOAN

	2004		2003		2002		2001		2000
Commercial, Financial and Agricultural	$	187,261	$	168,794	$	130,121	$	98,745	$	79,229
Residential Mortgage		149,621		141,720		143,569		154,115		160,523
Commercial Mortgage		115,566		110,951		97,928		73,904		59,680
Installment		27,526		30,910		36,289		39,442		40,128
Lease Receivables		2,074		6,285		13,600		22,249		30,318
GROSS LOANS		482,048		458,660		421,507		388,455		369,878
Less: Unearned Income		111		411		1,143		2,282		3,722
TOTAL LOANS NET OF UNEARNED	$	481,937	$	458,249	$	420,364	$	386,173	$	366,156

B. LOAN MATURITIES AND INTEREST SENSITIVITY

	December 31, 2004
	One Year or Less		One Through Five Years		Over Five Years		Total Gross Loans
Commercial, Financial and Agricultural
Loans With Predetermined Rate	$	13,325	$	44,411	$	26,834	$	84,570
Loans With Floating Rate		84,156		18,535		—		102,691
	$	97,481	$	62,946	$	26,834	$	187,261

C. RISK ELEMENTS

	2004		2003		2002		2001		2000
Loans on non-accrual basis	$	1,683	$	1,873	$	1,830	$	1,174	$	652
Accruing loans which are contractually past due 90 days or more as to interest or principal payment		177		1,076		1,106		432		1,136
	$	1,860	$	2,949	$	2,936	$	1,606	$	1,788

1. Interest income recorded on the non-accrual loans for the year ended December 31, 2004 was $99. Interest income which would have been recorded on these loans had they been on accrual status was $258.

2. Loans are placed in non-accrual status when the interest or principal is 90 days past due, unless the loan is in collection, well secured and it is believed that there will be no loss of interest or principal.

3. At December 31, 2004 there was $12,495 in loans which are considered problem loans which were not included in the table above. In the opinion of management, these loans are adequately secured and losses are believed to be minimal.

10

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in Thousands)

Analysis of the Allowance for Loan Losses

Years Ended December 31,	2004			2003			2002			2001			2000
Balance at beginning of Period	$	5,764		$	5,036		$	4,095		$	3,879		$	3,890
Charge-Offs:
Commercial, Financial and Agricultural		51			19			152			38			144
Commercial Mortgages		226			174			82			162			3
Residential Mortgages		147			109			127			87			12
Installment		409			511			468			494			413
Overdraft Deposit Accounts		236			—			—			—			—
Leasing		30			111			235			234			395
		1,099			924			1,064			1,015			967
Recoveries:
Commercial, Financial and Agricultural		1			1			1			1			18
Commercial Mortgages		13			2			52			4			2
Residential Mortgages		20			—			—			8			—
Installment		56			80			87			83			95
Overdraft Deposit Accounts		21			—			—			—			—
Leasing		9			34			65			55			34
		120			117			205			151			149
Net Charge-Offs:		(979	)		(807	)		(859	)		(864	)		(818	)
Provision for Loan Losses		800			1,535			1,800			1,080			807
Balance at End-of-Period	$	5,585		$	5,764		$	5,036		$	4,095		$	3,879
Percentage of net charge-offs during the period to average loans outstanding		0.21	%		0.18	%		0.21	%		0.23	%		0.22	%

The Provision for loan losses reflects the amount deemed appropriate by management to provide for probable incurred losses based on present risk characteristics of the loan portfolio. Management’s judgement is based on the evaluation of individual loans, the overall risk characteristics of various portfolio segments, past experience with losses, the impact of economic condition on borrowers, and other relevant factors.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

(Dollars In Thousands)

	2004				2003				2002				2001				2000
	% of Loans in each Category				% of Loans in each Category				% of Loans in each Category				% of Loans in each Category				% of Loans in each Category
Real Estate Mortgages	$	2,400	55.01	%	$	2,042	55.09	%	$	1,428	57.29	%	$	1,026	58.70	%	$	811	59.54	%
Installment		446	5.74	%		497	6.74	%		490	8.61	%		519	10.15	%		473	10.84	%
Commercial, Financial and Agricultural		2,396	38.23	%		2,472	36.80	%		1,776	30.87	%		1,066	25.42	%		706	21.42	%
Overdraft Deposit Accounts		308	0.61	%		—				—				—				—
Leasing		20	0.41	%		79	1.37	%		178	3.23	%		212	5.73	%		221	8.20	%
Unallocated		15	0.00	%		674	0.00	%		1,164	0.00	%		1,272	0.00	%		1,668	0.00	%
TOTALS	$	5,585	100.00	%	$	5,764	100.00	%	$	5,036	100.00	%	$	4,095	100.00	%	$	3,879	100.00	%

1. In determining the allocation of the allowance for possible credit losses, County National Bank considers economic trends, historical patterns and specific credit reviews.

2. With regard to the credit reviews, a “watchlist” is evaluated on a monthly basis to determine potential commercial losses. Consumer loans and mortgage loans are allocated using historical loss experience. The total of these reserves is deemed “allocated”, while the remaining balance is “unallocated”.

The unallocated component of the allowance for loan losses has declined over the last several years as management has refined its methodology for monitoring and measuring credit risk. In 2004, additional individual loans were subject to specific review, resulting in an increase in specific allowance allocations. In addition, consideration of current economic risk factors were applied to individual pools of homogeneous pools of loans. In prior years, economic risk factors were applied to the portfolio of loans as a whole and were reflected as unallocated.

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DEPOSITS

(Dollars In Thousands)

December 31,	2004				2003				2002
	Average Amount		Annual Rate		Average Amount		Annual Rate		Average Amount		Annual Rate
Demand - Non Interest Bearing	$	68,986			$	60,124			$	56,321
Demand - Interest Bearing		127,272	0.29	%		127,965	0.44	%		132,288	0.85	%
Savings Deposits		76,440	0.62	%		77,578	0.90	%		77,851	1.53	%
Time Deposits		311,227	3.12	%		301,254	3.19	%		265,112	3.99	%
TOTAL	$	583,925			$	566,921			$	531,572

The maturity of certificates of deposits and other time deposits in denomination of $100,000 or more as of December 31, 2004.

(Dollars In Thousands)

Maturing in:

Three months or less	$	32,773
Greater than three months and through six months		7,010
Greater than six months and through twelve months		7,672
Greater than twelve months		45,610
	$	93,065

Key ratios for the Corporation for the years ended December 31, 2004 and 2003 appear in the Annual Shareholders’ Report for the year ended December 31, 2004 under the caption “Selected Financial Data” on pages 27 and 28 and are incorporated herein by reference. Short-term borrowings for the Corporation were less on average than 30% of the Corporation’s stockholders’ equity at December 31, 2004.

ITEM 2. PROPERTIES

The headquarters of the Corporation and the Bank are located at 1 South Second Street, Clearfield, Pennsylvania, in a building owned by the Corporation. The Bank operates 19 full-service, 1 limited service office, and 2 loan production offices. Of these 22 offices, 17 are owned and 5 are leased from independent owners. There are no incumberances on the offices owned, and the rental expense on the leased property is immaterial in relation to operating expenses.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Corporation or the Bank is a party, or of which any of their property is the subject, except ordinary routine proceedings which are incidental to the business. In the opinion of management and counsel, pending legal proceedings will not have a material adverse effect on the consolidated financial position of the Corporation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Information relating to the Corporation’s common stock is on page 28 of the Annual Shareholders’ Report for the year ended December 31, 2004 and is incorporated herein by reference. There were 1,554 registered shareholders of record as of March 10, 2005.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
10/1/04 to 10/31/04	442		14.95	—	362,600
11/1/04 to 11/30/04	236		15.17	—	362,600
12/1/04 to 12/31/04	1,499	$	16.13	—	362,600
Total	2,177	$	15.79	—

ITEM 6. SELECTED FINANCIAL DATA

Information required by this item is presented on pages 29 and 30 of the Annual Shareholders’ Report for the year ended December 31, 2004 and is incorporated herein by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Information required by this item is presented on pages 31 to 40 of the Annual Shareholders’ Report for the year ended December 31, 2004 and is incorporated herein by reference.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this item is presented on pages 37 and 38 of the Annual Shareholders’ Report for the year ended December 31, 2004 and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements and report, which appear in the Annual Shareholders’ Report for the year ended December 31, 2004, are incorporated herein by reference:

13

	Pages in Annual Report
Consolidated Statements of Financial Condition	5
Consolidated Statements of Income	6
Consolidated Statements of Cash Flows	7
Consolidated Statements of Changes in Shareholders’ Equity	8
Notes to Consolidated Financial Statements	9-26
Report of Independent Registered Public Accounting Firm on Financial Statements	27

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Corporation’s disclosure controls and Procedures. Based on that evaluation, the Corporation’s Chief Executive Officer and Principal Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective to ensure that the financial and nonfinancial information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, including the form 10-K for the period ended December 31, 2004, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no significant changes in the Corporation’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation or any significant deficiencies or material weaknesses in such internal controls requiring corrective actions. As a result, no corrective actions were taken.

The Corporation meets the conditions as discussed in SEC Release No. 50754 of November 30, 2004 and intends to use the 45 day extension period to complete documentation before filing Management’s annual report over financial reporting, required by Item 308(a) of Regulation S-K, and the related Attestation report of the registered public accounting firm, required by Item 308(b) of Regulation S-K. As such, the Corporation will file an amended 10-K within the 45 day extension period. As of the date of this filing, management of the Corporation is not aware of any material weaknesses in its internal control over financial reporting for the year ended December 31, 2004.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to the Corporation’s directors appears on pages 3 and 4 of the Proxy Statement for the Annual Meeting to be held on April 19, 2005 and is incorporated herein by reference. Information relating to Executive Officers is included in Part I.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is presented on pages 6-10 of the Proxy Statement for the Annual Meeting of Shareholders to be held April 19, 2005 and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this item is presented on pages 2-4 of the Proxy Statement for the Annual Meeting of Shareholders to be held April 19, 2005 and is incorporated herein by reference.

14

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item is presented on page 10 of the Proxy Statement for the Annual Meeting of Shareholders to be held April 19, 2005 and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND PROCEDURES

Information concerning principal accountant fees and procedures is incorporated herein by reference to the “Concerning the Independent Public Accountants” section of the proxy statement for the 2005 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on or about March 16, 2005.

PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) The following documents are filed as a part of this report:

1. The following financial statements of the Corporation incorporated by reference in Item 8:

Consolidated Statements of Condition at December 31, 2004 and 2003

Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm on Financial Statements

2. All financial statement schedules are omitted since they are not applicable.

3. The following exhibits:

EXHIBIT NUMBER	DESCRIPTION
3 i	Articles of Incorporation
3 ii	By-Laws
10(A)	Employment Contract, President and CEO, filed herewith*
10(B)	Form of employment contract for Other Executive Officer, Joseph B. Bower, Jr., filed herewith*
10(C)	Stock Option Plan filed in the 1999 Proxy Statement Form DEF 14A incorporated herein by reference
13	Portions of Annual Report to Shareholders for 2004, filed herewith
21	Subsidiaries of the Registrant
31.1	CEO Certification
31.2	Principal Financial Officer Certification

* Management contract or compensatory plan.

A Form 8-K was filed on November 9, 2004 announcing the declaration of a 13 cent per share dividend payable on December 15, 2004 to holders of record on December 3, 2004.

15

A Form 8-K was filed on January 25, 2005 announcing the Corporation’s intent to record an other-than-temporary impairment non-cash after-tax charge of $910,000, or $0.10 per share, in the quarter ending December 31, 2004 related to a perpetual preferred stock issued by Fannie Mae.

A Form 8-K was filed on January 28, 2005 announcing earnings for the quarter ended December 31, 2004.

A Form 8-K was filed on February 8, 2005 announcing the declaration of a 13 cent per share dividend payable on March 15, 2005 to holders of record on March 3, 2005.

16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CNB FINANCIAL CORPORATION
	(Registrant)
Date: March 15, 2005	By:	/s/ William F. Falger
		WILLIAM F. FALGER
		President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 16, 2005.

/s/ William F. Falger WILLIAM F. FALGER		President and Chief Executive Officer, Director
/s/ Robert E. Brown ROBERT E. BROWN	Director	/s/ Jeffrey S. Powell JEFFREY S. POWELL
/s/ Michael F. Lezzer MICHAEL F. LEZZER	Director	/s/ James B. Ryan JAMES B. RYAN
/s/ James J. Leitzinger JAMES J. LEITZINGER	Director	/s/ Peter F. Smith PETER F. SMITH
/s/ Dennis L. Merrey DENNIS L. MERREY	Director	/s/ Deborah Dick Pontzer DEBORAH DICK PONTZER
/s/ William R. Owens WILLIAM R. OWENS	Director	/s/ James P. Moore JAMES P. MOORE

17

EX-3.(I)

EXHIBITS 3 i & ii

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2004

Articles of Association and By-Laws

ARTICLES OF ASSOCIATION

(Six Pages)

AND

BY-LAWS

(Four Pages)

CNB FINANCIAL CORP.

Clearfield, Pennsylvania

AS AMENDED

LOG OF AMENDMENTS:

ARTICLES OF INCORPORATION:

Article 5., Number of Shares - Amended March 18, 1986

Article 5., Number of Shares - Amended April 21, 1998

Article 5., Number of Shares - Amended April 20, 1999

Article 9A. Number, Term and Qualification of Directors - Amended April 20, 1999

Article 9B. By-Law Qualification - Amended April 20, 1999

BY-LAWS:

Article VIII, All Sections - Amended February 22, 1988

Article I, Section 1 - Amended March 28, 1995

Article I, Section 3 - Amended April 20, 1999

Article V, Section 1 - Amended April 20, 1999

Article V, Section 8 - Amended April 20, 1999

ARTICLES OF ASSOCIATION

OF

CNB FINANCIAL CORPORATION

COMMONWEALTH OF PENNSYLVANIA	Filed this 12th day of September, 19 83
DEPARTMENT OF STATE
CORPORATION BUREAU	Commonwealth of Pennsylvania
	Department of State
Articles of CNB FINANCIAL CORPORATION
	/s/ William R. Davis
Domestic Business Corporation	Secretary of the Commonwealth

In compliance with the provisions of the Act of May 5, 1933, as amended, specifically, Title 15 Purdon’s Pennsylvania Statutes Annotated, Section 1204, the undersigned, desiring to be incorporated as a business corporation, hereby certifies that:

1. The name of the corporation is:

CNB FINANCIAL CORPORATION

2. The address of its office in Pennsylvania is One South Second Street, P.O. Box 42, Clearfield, Pa., 16830. (The physical location of the Corporation’s registered office has not changed. However, Clearfield County’s 911 system redesignated the address. Earlier, the Corporation’s address was known as the “Corner of Market & Second Streets, Clearfield”.)

3. PURPOSE:

The corporation shall have unlimited power to engage in and to do any lawful act concerning any or all lawful business for which corporations may be incorporated under this act and the corporation is incorporated under the provisions of the Act of May 5, 1933, as amended, specifically, Title 15 Purdon’s Pennsylvania Statutes Annotated, Section 1204.

4. TERM:

Perpetual

1

5.      NUMBER OF SHARES:	(Amended March 18, 1986)
	(Amended April 21, 1998)
	(Amended April 20, 1999)

The total number of authorized shares shall be 10,000,000 with a par value of $1.00.

The shares of stock of this Corporation shall not have preemptive rights or the right to cumulative voting on any issues.

6. Except as set forth in paragraph five hereof, there are no special rights, designations, preferences, qualifications, limitations or restrictions imposed upon the stock of the corporation except as provided in these Articles of Incorporation.

7. The Board of Directors shall have no authority to change any designations, preferences, limitations, qualifications or restrictions or special or relative rights of the stock described in paragraph five hereof.

8. The name and post office address of the incorporators and the number and class of shares subscribed by him/her is:

NAME	ADDRESS	NUMBER and CLASS OF SHARES
JOHN LEITZINGER	205 SW Third Avenue	One
	Clearfield, PA 16830	Common
JOHN W. POWELL	27 Coventry Lane	One
	State College, PA 16801	Common
FRANCIS E. REED	R.D. 2 Box 269	One
	Clearfield, PA 16830	Common
WILLIAM U. SMITH	120 W. Walnut Street	One
	Clearfield, PA 16830	Common
L. E. SOULT, JR.	108 Elizabeth St.	One
	Clearfield, PA 16830	Common
JAMES K. NEVLING	1019 Linden Street	One
	Clearfield, Pa 16830	Common
WILLIAM R. OWENS	R 1307 Riverview Road	One
	Clearfield, PA 16830	Common
ROBERT G. SPENCER	Grampian, PA 16838	One
		Common

2

NAME	ADDRESS	NUMBER and CLASS OF SHARES
RONALD B. STRATTAN	909 South Second Street	One
	Clearfield, PA 16830	Common
W. K. ULERIICH	724 South Second Street	One
	Clearfield, PA 16830	Common
ROBERT E. BROWN	46 West Pauline Drive	One
	Clearfield, PA 16830	Common
ROBERT S. KEPNER	804 Hannah Street	One
	Clearfield, PA 16830	Common
JAMES P. MOORE	508 South Fourth Street	One
	Clearfield, Pa 16830	Common
ROBERT C. PENOYER	1220 South Second Street	One
	Clearfield, PA 16830	Common
EDWARD B. REIGHARD	8 Turnpike Avenue	One
	Clearfield, PA 16830	Common
E. DORSE ALBERT	111 East Pine Street	One
	Clearfield, PA 16830	Common

9. OTHER PROVISIONS AS PERMITTED UNDER THE ACT:

A. NUMBER, TERM AND QUALIFICATION OF DIRECTORS:

(Amended April 20, 1999)

The Board of Directors shall consist of not less than nine (9) nor more than twenty four (24) members. The exact number of Directors shall be fixed from time to time by resolution of the majority of the Board of Directors. All directors shall have equal vote. They shall be elected by classes as follows: Class 1, Class 2, Class 3, with the numbers in each class to be no less than three (3) directors nor more than eight (8) directors. The exact number of each class shall be fixed from time to time by resolution of the majority of the Board of Directors.

The Initial Directors of Class I shall serve until the third (3rd) annual meeting of the shareholders. At the third (3rd) annual meeting of the shareholders, the directors of Class I shall be elected for a term of three (3) years and, after expiration of such term, shall thereafter be elected every three (3) years for three (3) year terms. The initial directors of Class 2 shall serve until the second (2nd) annual meeting of

3

shareholders. At the second (2nd) annual meeting of the shareholders, the directors of Class 2 shall be elected for a term of three (3) years for three (3) year terms. The initial directors of Class 3 shall serve until the first (1st) annual meeting of the shareholders. At the first (1st) annual meeting of the shareholders, the directors of Class 3 shall be elected for a term of three (3) years and, after the expiration of such term, shall thereafter be elected every three (3) years for three (3) year terms.

Each director shall serve until his or her successor has been elected and qualified, even though his or her term of office as provided herein has otherwise expired, except in the event of his or her earlier resignation, removal or disqualification.

B. BY-LAW QUALIFICATIONS: (Amended April 20,1999)

The Board of Directors of the Corporation may, subject to the provisions contained in Article V of the By-Laws, change the number of directors in any class between the minimum and maximum number per class as described in 9.A. and at the time affect the total number of directors in all classes between the minimum of nine (9) and the maximum of twenty (24) directors. Any additional nominee shall then stand for election consistent with the principles of 9.A. above at the next annual meeting.

C. INITIAL BOARD OF DIRECTORS:

1. Elected for a term of three years:

JOHN LEITZINGER

JOHN W. POWELL

FRANCIS E. REED

WILLIAM U. SMITH

L. E. SOULT, JR.

2. Elected for a term of two years:

JAMES K. NEVLING

WILLIAM R. OWENS

ROBERT G. SPENCER

RONALD B. STRATTAN

W. K. ULERICH

3. Elected for a term of one year:

ROBERT E. BROWN

ROBERT S. KEPNER

JAMES P. MOORE

ROBERT C. PENOYER

EDWARD B. REIGHARD

4

D. CONDITIONS PRECEDENT TO MERGER, CONSOLIDATION OR DISSOLUTION OF THE CORPORATION:

1. In order to effect the merger or consolidation of the corporation into another corporation which is not a wholly owned subsidiary of this corporation the affirmative action of 75% of the outstanding shares entitled to vote shall be required.

2. The shareholders have reserved the right to amend the By-Laws to themselves by affirmative vote of the majority of the shares voting.

5

EX-3.(II)

August 30, 1983

BY - LAWS

OF

CNB FINANCIAL CORPORATION

ARTICLE I

Meetings

Section 1: (Amended March 28, 1995) The annual meeting of the shareholders for the purpose of electing Directors and such other business as may properly come before the meeting of the shareholders, shall be held on a date determined by the Board of Directors annually at such time and placed as per Board of Directors shall direct.

Section 2: Special meetings of the shareholders may be called by the President of the Company or by order of the Board of Directors, and it shall be the duty of the Board of Directors to call such meetings upon the written request of one-half of the outstanding stock.

Section 3: (Amended April 20,1999) At all meetings of the shareholders, each shareholder shall be entitled to one vote for each share of stock held by the shareholder.

ARTICLE II

Notice of Meetings

Section 1: Written notice of any regular meeting of the Board of Directors shall not be required. Written notice of any special meeting of the Board of Directors shall be required. All shareholder’s meetings shall only be upon twenty-one (21) days prior written notice.

ARTICLE III

Registered Office

Section 1: The Corporation shall maintain a registered office and the first office shall be as stated in the Articles of Incorporation.

1

Section 2: Thereafter a majority of the Board of Directors may change the registered office or place of business as deemed in the best interest of the corporation.

ARTICLE IV

Inspection of Corporate Records

Section 1: Any shareholder may inspect and copy at shareholder’s expense proper corporate records upon ten days written notice setting forth specifically, the reason for such inspection.

ARTICLE V

Board of Directors

Section 1: (Amended April 20, 1999) The affairs of the corporation shall be managed by no less than nine (9) nor more than twenty four (24) directors elected as set forth in the Articles of Association. Directors shall serve until their successors are duly elected and qualified.

Section 2: No shareholder shall be eligible for election or serve as a Director who:

A. Does not own and continue to own 350 unencumbered shares of the corporation

B. Any present Director less than 57 years of age as of the date of these By-Laws and all future Directors shall tender their resignation as Director on or before their 70th year.

C. Any Director as of the date of these By-Laws, 57 years of age or more may continue as a Director if properly elected until the Director chooses to retire.

D. The Board of Directors may appoint any shareholder as Director Emeritus who may with compensation but without the right to vote, attend Director’s meetings. Such person shall have stature in the community in which he/she resides and shall have been a consistent promotor of the interests of the financial industry and specifically, CNB Financial Corporation.

E. No incumbent Director shall be proposed for nomination to the Board of Directors without approval of 25% of the Board of Directors.

F. No shareholder, not a Director, shall be proposed for the Board of Directors without approval of two-thirds (2/3) of the Board of Directors.

Section 3: The Board of Directors may fill any vacancy upon the Board of Directors. Such appointees shall serve until the next annual meeting at which time, he /she or they shall stand separately for election to serve out the term to which they have been appointed.

2

Section 4: The Directors shall have power to elect or appoint all necessary officers; to employ agents, clerks and workpersons; to fix their compensation, to prescribe their duties, to dismiss any officers or agents without previous notice, and generally to control and manage the affairs of the corporation.

Section 5: A majority of the Board of Directors shall constitute a quorum.

Section 6: The corporation is authorized to pay its Directors a reasonable compensation for their services.

Section 7: A salaried person of the corporation may also be a Director, but shall not receive Director’s fees, except at the discretion of the Board of Directors.

Section 8: (Amended April 20, 1999) The Board may, in its discretion, decrease the number of directors to no less than nine (9) or increase the number of directors to no more than twenty four (24) between annual meetings without shareholder approval. The board shall appoint an individual to fill any vacancy so created until the next annual meeting at which time the appointee shall stand for election as set forth in the Articles of Association.

ARTICLE VI

Officers

Section 1: The Board of Directors of the corporation shall annually elect the following officers who shall hold their respective offices at the discretion of the Board of Directors and at such salaries as the Board may fix from time to time, to wit: A President, a Secretary, a Treasurer, and one or more Vice Presidents if deemed desirable. Any of the offices, except the office of President, may be combined and held by one person.

Section 2: The Board of Directors may, but they shall not be required to do so, elect an Assistant Secretary and Assistant Treasurer, or to establish any other offices which may be determined necessary for the conduct of the corporation.

ARTICLE VII

Duties of Officers

Section 1: The duties of the officers shall be prescribed by the Board of Directors.

3

ARTICLE VIII (Amended February 22, 1988)

Director Liability

Limitation and Indemnification

Section 1: A director of the Corporation shall, to the maximum extent permitted by the laws of the Commonwealth of Pennsylvania, have no personal liability for monetary damages for any action taken, or any failure to take any action as a director, provided that this Section 1, Article VIII shall not eliminate the liability of a director in any case where such elimination is not permitted by law.”

Section 2: Each person who at any time is or shall have been a director or officer of the Corporation, or is serving or shall have served at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and his heirs, executors and administrators, shall be indemnified by the Corporation in accordance with and to the full extent permitted by the laws of the Commonwealth of Pennsylvania as in effect at the time of such indemnification. The foregoing right of indemnification shall constitute a contract between the Corporation and each of its directors and officers and shall not be deemed exclusive of other rights to which any director, officer, employee, agent or other person may be entitled in any capacity as a matter of law or under any by-law, agreement, vote or shareholders or directors, or otherwise. If authorized by the Board of Directors, the Corporation may purchase and maintain insurance on behalf of any person to the full extent permitted by the laws of the Commonwealth of Pennsylvania.”

ARTICLE LX

Amendment or Change to By-Laws

Section 1: These By-Laws may only be amended or changed upon appropriate notice to the shareholders and their affirmative approval.

ARTICLE X

Saving Clause

Section 1: If any provision of these By-Laws conflicts with any Rule, Regulation or Statute of the Commonwealth of Pennsylvania or the United States of America, then the By-Laws shall remain in force and effect and construed as such provision did not exist.

4

EX-10.(A)

EXHIBIT 10(A)

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2004

Material Contracts

EXECUTIVE EMPLOYMENT CONTRACT

MADE this 1st day of January 2005, by and between CNB FINANCIAL CORPORATION, a Pennsylvania business corporation and COUNTY NATIONAL BANK, a national banking institution, with principal office at One South Second Street, P.O. Box 42, Clearfield, Pennsylvania, 16830, (hereinafter collectively referred to as “CNB”);

A N D

WILLIAM F. FALGER, an adult individual, residing 112 Latimer Street, Clearfield, Pennsylvania, 16830, (hereinafter “MR. FALGER”).

WHEREAS, MR. FALGER has been employed by CNB as a Senior Executive for some time; and,

WHEREAS, MR. FALGER currently serves as CNB Financial Corporation’s President and CEO and President and CEO of CNB; and,

WHEREAS, the parties first entered a written Executive Employment Contract on August     , 2001 which has subsequently been renewed; and,

WHEREAS, the parties wish to amend certain provisions therein; and,

WHEREAS, the parties desire to memorialize their new contractual relation in writing.

NOW WITNESSETH:

The parties for themselves, their heirs, successors and assigns, in consideration of their mutual promises contained herein, intending to be legally bound, hereby agree to the following terms and conditions.

1. EMPLOYMENT: CNB will employ MR. FALGER as its President and CEO, and MR. FALGER agrees to serve in those capacities. MR. FALGER promises that during the term of this Agreement he shall dedicate his full time, attention and energies to his employment with CNB. MR. FALGER further promises that he will report to CNB’s Board of Directors, carry out its decisions and otherwise abide by and enforce the policies of CNB.

MR. FALGER shall also perform such other reasonable duties as may hereafter be assigned to him by CNB consistent with his abilities and position, including but not limited to services to CNB’s parent CNB Financial Corporation and its other subsidiaries.

MR. FALGER will not engage in any other employment during the term of this Agreement, nor shall he engage in self-employed activities.

MR. FALGER also recognizes that CNB’s success and recognition depend on his involvement with charitable and social organizations. In this regard, MR. FALGER agrees to engage in such social and charitable activities or organizations as are consistent with his personal responsibilities and with his position with CNB.

MR. FALGER shall also comply with all other CNB procedures and polices now or hereafter in effect.

MR. FALGER further agrees that he and the members of his family shall comport themselves at all times in a manner that reflects upon CNB in a positive fashion.

2. TERM: The term of this Agreement shall be for three (3) years commencing on January 1, 2001, and ending on December 31, 2004, unless terminated sooner pursuant to the other provisions of this Agreement.

The parties agree that this contract shall automatically renew itself for success of terms of one (1) year unless either party gives the other ninety (90) days written notice of his or its intent not to renew the contract prior to the end of the then current term.

3. COMPENSATION: MR. FALGER shall be paid a base salary to be established annually by the Board of Directors. MR. FALGER shall also receive such annual increases, stock, stock options and bonuses as may from time to time be awarded by the Board of Directors.

CNB will provide MR. FALGER with a vehicle. CNB will pay for gasoline, lubricants, maintenance, insurance and all other expenses associated with this vehicle.

CNB will also provide MR. FALGER with a family membership at the Clearfield-Curwensville Country Club.

4. OTHER BENEFITS: MR. FALGER shall also participate in CNB’s retirement plan, health insurance plan, life insurance plan and receive such other benefits as CNB from time to time may provide to its employees.

MR. FALGER shall also be entitled to vacation, leave for illness and so forth as now or hereafter granted by CNB’s personnel policies.

5. CONFIDENTIAL INFORMATION: MR. FALGER acknowledges and agrees that as an inducement to CNB to employ him and enter this written contract with him, that he shall not disclose, directly or indirectly, intentionally or unintentionally, during the term of this contract or at any time after its termination, any of CNB’s proprietary information, account information, customer lists, customer information, policies, pricing, strategy, codes, strategic plan, plans for expansion or business development or other information of a confidential nature (hereinafter referred to as “Confidential Information”), whatsoever regarding CNB without first obtaining the prior, written consent from CNB’s Board of Directors that such disclosure is authorized. Communications with CNB’s employees, customers and business relations are excepted from the foregoing prohibition during the term of this Agreement to the extent that such communications are consistent with MR. FALGER’s duties.

Confidential Information shall include all information recorded, memorialized or communicated in any form whether written, printed, verbal, video, electronic, magnetic, digital or otherwise.

Upon termination of this contract for any reason, MR. FALGER promises that he shall promptly return to CNB or its designated representative any Confidential Information, keys, credit cards, or other property, such as his vehicle, in his possession.

MR. FALGER further promises that he will not take, keep, or record copies, duplications or reproductions of the Confidential Information or other property subject to this Agreement after termination of this Agreement.

6. COVENANT NOT TO COMPETE: As additional consideration to CNB for entering this Agreement, and for granting the severance benefits described in paragraph 7 below which are a new benefit, MR. FALGER covenants that he shall not compete against CNB, its parent, affiliates or subsidiaries, either directly or indirectly, by taking employment, gratuitously assisting or serving as an independent contractor, consultant, partner, director or officer with a competitor of CNB, or starting his own business which would compete directly or indirectly with CNB, or have a material interest in any business, corporation, partnership, LLC, savings and loan, bank or other venture which competes directly or indirectly with CNB either while he is employed by CNB or for a period of three (3) years following the date on which MR. FALGER is last employed by CNB. For the purpose of defining and enforcing this covenant, CNB’s competitors will be identified at the time it seeks enforcement of this covenant. This determination shall be based on CNB’s market area and CNB’s plans for expansion or acquisition into other market areas at the time enforcement of this covenant is sought.

The parties also agree that indirect competition shall include the instances stated above but involving MR. FALGER’s spouse, child or in-laws.

The parties further agree that MR. FALGER’s covenant not to compete shall apply in the event of his regular retirement or voluntary termination of his employment hereunder. MR. FALGER agrees in this regard that the security provided by this agreement is adequate consideration for his covenant not to compete.

7. SEVERANCE PAY: If MR. FALGER’s employment is terminated without cause, whether or not a change in control of CNB has occurred, MR. FALGER shall be entitled to severance benefits equal to 2.99 times his base salary for the year in which his employment ends plus 2.99 times the average of Mr. Falger’s incentive pay bonuses for the three (3) years preceding the year in which his employment is terminated hereunder. This severance pay shall be tendered to MR. FALGER in cash within 30 days following the end of his employment with CNB. MR. FALGER shall also be entitled to this severance pay if he voluntarily terminates his employment with CNB after a change in control for any of the following reasons:

A. Reduction in title or responsibilities;

B. Assignment of duties or responsibilities inconsistent with MR. FALGER’s status as President and CEO;

C. A reduction in salary or other benefits; and, or,

D. Reassignment to a location greater than 25 miles from the location of MR. FALGER’s office on the date of change and control.

For the purposes of this Agreement, a “change in control” shall include but not be limited to the following:

1. Sale of all or substantially all of CNB’s or CNB Financial Corporation’s stock;

2. Sale of all or substantially all of CNB’s or CNB Financial Corporation’s assets;

3. Acquisition by a third party or group acting in concert of stock sufficient to elect a majority of directors to the Board of CNB or CNB Financial Corporation; or,

4. Ownership of more than 50% of CNB Financial Corporation stock by a single person or entity or more than one person or entity acting as a group.

8. TERMINATION: This Agreement shall be terminated on the occurrence of any of the following events and if terminated under this paragraph, MR. FALGER shall not be entitled to severance benefits under Paragraph 7:

A. The execution of a written agreement between CNB and MR. FALGER to terminate this Agreement;

B. MR. FALGER’s death;

C. MR. FALGER’s breach of any term or condition of this Agreement;

D. MR. FALGER’s failure or refusal to comply with such reasonable policies, directions, standards and regulations that CNB may establish from time to time;

E. MR. FALGER’s inability to fully and competently perform his duties hereunder for a period of 30 continuous days due to physical, mental or psychology illness, injury or condition; or,

F. MR. FALGER ceases to qualify for his offices and responsibilities under this Agreement pursuant to any statute or regulation, now or hereafter issued by the United States of America, the Federal Reserve, the Office of the Comptroller of Currency or other regulatory agency or body duly invested with authority over CNB, its parent or affiliate(s).

9. NOTICES: All notices or communications required by or bearing upon this Agreement or between the parties shall be in writing and sent by First Class Mail to the parties as follows unless otherwise specified above:

CNB Financial Corporation	William F. Falger
County National Bank	112 Latimer Street
Attention: Chairman of the Board	Clearfield, PA 16830
One South Second Street, P.O. Box 42
Clearfield, PA 16830

10. NON-ASSIGNMENT: The parties acknowledge the unique nature of services to be provided by MR. FALGER under this Agreement, the high degree of responsibility borne by him and the personal nature of his relationship to CNB’s Board of Directors and customers. Therefore, the parties agree that MR. FALGER may not assign this Agreement.

11. ARBITRATION: The parties agree that all disputes or questions arising under this Agreement or because of their employment relationship shall be submitted to arbitration by three (3) arbitrators. Each party shall select one (1) arbitrator, and then those two (2) arbitrators shall select a third (3) arbitrator. The arbitrators’ decision need not be unanimous. Arbitration shall be conducted at a private location in Clearfield County convenient to the parties. The arbitrators must reach and give notice of their decision within five (5) days after completion of an arbitration. The

Pennsylvania Uniform Arbitration Act, 42 Pa.C.S.A. §§7301 et sec. shall govern arbitrations hereunder. CNB shall compensate the arbitrators and stenographer if used. CNB shall also pay for the arbitration room. Each party shall pay their attorney fees and other costs.

12. GENERAL PROVISIONS:

A. This Agreement shall be governed by the laws of Pennsylvania;

B. In construing or interpreting this Agreement, “CNB” and “MR. FALGER” shall mean, wherever applicable, the singular or plural, the masculine or the feminine, individual, individuals, partnership or corporation, as the case may be;

C. This Agreement represents the sole agreement of the parties on these subjects and supersedes all prior communications, representations and negotiations, whether oral or written;

D. This Agreement can only be modified or amended by the prior written consent of both parties hereto;

E. Jurisdiction and venue shall rest in the Court of Common Pleas of Clearfield, Pennsylvania, for all suits, claims and causes of action whatsoever;

F. Failure by either party to pursue remedies or assert rights under this Agreement shall not be construed as waiver of that party’s rights or remedies, nor shall a party’s failure to demand strict compliance with the terms and conditions of this Agreement prohibit or estop that party from insisting upon strict compliance in the future; and

G. The parties deem that the terms of this Agreement are unique, and in addition to their other Rights and remedies at law, and at equity, either party shall have the right to specifically enforce the terms of this Agreement.

H. This Agreement shall bind the parties’ heirs, successors, representatives, related corporations and assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date written above for the purposes herein contained.

CNB FINANCIAL CORPORATION		MR. FALGER
By:
	President	William F. Falger
By:
	Secretary
COUNTY NATIONAL BANK
By:
	President
By:
	Secretary

EX-10.(B)

EXHIBIT 10(B)

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2004

Material Contracts

EXECUTIVE EMPLOYMENT CONTRACT

MADE this 1st day of January 2005, by and between CNB FINANCIAL CORPORATION, a Pennsylvania business corporation and COUNTY NATIONAL BANK, a national banking institution, with principal office at One South Second Street, P.O. Box 42, Clearfield, Pennsylvania, 16830, (hereinafter collectively referred to as “CNB”);

AND

JOSEPH B. BOWER, JR., an adult individual, residing at 738 Weaver Street, Clearfield, Pennsylvania, 16830, (hereinafter “MR. BOWER”).

WHEREAS, MR. BOWER has been employed by CNB as a Senior Executive for some time; and,

WHEREAS, MR. BOWER currently serves as CNB Financial Corporation’s Secretary and Treasurer and as the Executive Vice President & Cashier and Chief Operating Officer of CNB; and,

WHEREAS, the parties first entered a written Executive Employment Contract on August     , 2001 which has subsequently been renewed; and,

WHEREAS, the parties wish to amend certain provisions therein; and,

WHEREAS, the parties desire to memorialize their new contractual relation in writing.

NOW WITNESSETH:

The parties for themselves, their heirs, successors and assigns, in consideration of their mutual promises contained herein, intending to be legally bound, hereby agree to the following terms and conditions.

1. EMPLOYMENT: CNB will employ MR. BOWER as its Secretary and Treasurer and Executive Vice President & Cashier and Chief Operating Officer, and MR. BOWER agrees to serve in those capacities. MR. BOWER promises that during the term of this Agreement he shall dedicate his full time, attention and energies to his employment with CNB. MR. BOWER further promises that he will report to CNB’s President & CEO, carry out his and the Board of Directors’ decisions and otherwise abide by and enforce the policies of CNB.

MR. BOWER shall also perform such other reasonable duties as may hereafter be assigned to him by CNB consistent with his abilities and position, including but not limited to services to CNB’s parent CNB Financial Corporation and its other subsidiaries.

MR. BOWER will not engage in any other employment during the term of this Agreement, nor shall he engage in self-employed activities.

MR. BOWER also recognizes that CNB’s success and recognition depend on his involvement with charitable and social organizations. In this regard, MR. BOWER agrees to engage in such social and charitable activities or organizations as are consistent with his personal responsibilities and with his position with CNB.

MR. BOWER shall also comply with all other CNB procedures and polices now or hereafter in effect.

MR. BOWER further agrees that he and the members of his family shall comport themselves at all times in a manner that reflects upon CNB in a positive fashion.

2. TERM: The term of this Agreement shall be for three (3) years commencing on January 1, 2001, and ending on December 31, 2004, unless terminated sooner pursuant to the other provisions of this Agreement.

The parties agree that this contract shall automatically renew itself for successive terms of one (1) year unless either party gives the other ninety (90) days written notice of his or its intent not to renew the contract prior to the end of the then current term.

3. COMPENSATION: MR. BOWER shall be paid a base salary to be established annually by the Board of Directors. MR. BOWER shall also receive such annual increases, stock, stock options and bonuses as may from time to time be awarded by the Board of Directors.

CNB will also provide MR. BOWER with a family membership at the Clearfield-Curwensville Country Club.

4. OTHER BENEFITS: MR. BOWER shall also participate in CNB’s retirement plan, health insurance plan, life insurance plan and receive such other benefits as CNB from time to time may provide to its employees.

MR. BOWER shall also be entitled to vacation, leave for illness and so forth as now or hereafter granted by CNB’s personnel policies.

5. CONFIDENTIAL INFORMATION: MR. BOWER acknowledges and agrees that as an inducement to CNB to employ him and enter this written contract with him, that he shall not disclose, directly or indirectly, intentionally or unintentionally, during the term of this contract or at any time after its termination, any of CNB’s proprietary information, account information, customer lists, customer information, policies, pricing, strategy, codes, strategic plan, plans for expansion or business development or other information of a confidential nature (hereinafter referred to as “Confidential Information”), whatsoever regarding CNB without first obtaining the prior, written consent from CNB’s President & CEO that such disclosure is authorized. Communications with CNB’s employees, customers and business relations are excepted from the foregoing prohibition during the term of this Agreement to the extent that such communications are consistent with MR. BOWER’s duties.

Confidential Information shall include all information recorded, memorialized or communicated in any form whether written, printed, verbal, video, electronic, magnetic, digital or otherwise.

Upon termination of this contract for any reason, MR. BOWER promises that he shall promptly return to CNB or its designated representative any Confidential Information, keys, credit cards, or other property, in his possession.

MR. BOWER further promises that he will not take, keep, or record copies, duplications or reproductions of the Confidential Information or other property subject to this Agreement after termination of this Agreement.

6. COVENANT NOT TO COMPETE: As additional consideration to CNB for entering this Agreement, and for granting the severance benefits described in paragraph 7 below which are a new benefit, MR. BOWER covenants that he shall not compete against CNB, its parent, affiliates or subsidiaries, either directly or indirectly, by taking employment, gratuitously assisting or serving as an independent contractor, consultant, partner, director or officer with a competitor of CNB, or starting his own business which would compete directly or indirectly with CNB, or have a material interest in any business, corporation, partnership, LLC, savings and loan, bank or other venture which competes directly or indirectly with CNB either while he is employed by CNB or for a period of three (3) years following the date on which MR. BOWER is last employed by CNB. For the purpose of defining and enforcing this covenant, CNB’s competitors will be identified at the time it seeks enforcement of this covenant. This determination shall be based on CNB’s market area and CNB’s plans for expansion or acquisition into other market areas at the time enforcement of this covenant is sought.

The parties also agree that indirect competition shall include the instances stated above but involving MR. BOWER’s spouse, children or in-laws.

The parties further agree that MR. BOWER’s covenant not to compete shall apply in the event of his regular retirement or voluntary termination of his employment hereunder. MR. BOWER agrees in this regard that the security provided by this agreement is adequate consideration for his covenant not to compete.

7. SEVERANCE PAY: If MR. BOWER’s employment is terminated without cause, whether or not a change in control of CNB has occurred, MR. BOWER shall be entitled to severance benefits equal to 2.99 times his base salary for the year in which his employment ends plus 2.99 times the average of MR. BOWER’s incentive pay bonuses for the three (3) years preceding the year in which his employment is terminated hereunder. This severance pay shall be tendered to MR. BOWER in cash within 30 days following the end of his employment with CNB. MR. BOWER shall also be entitled to this severance pay if he voluntarily terminates his employment with CNB after a change in control for any of the following reasons:

A. Reduction in title or responsibilities;

B. Assignment of duties or responsibilities inconsistent with MR. BOWER’s status as Secretary and Treasurer, Executive Vice President & Cashier and Chief Operating Officer;

C. A reduction in salary or other benefits; and, or,

D. Reassignment to a location greater than 25 miles from the location of MR. BOWER’s office on the date of change and control.

For the purposes of this Agreement, a “change in control” shall include but not be limited to the following:

1. Sale of all or substantially all of CNB’s or CNB Financial Corporation’s stock;

2. Sale of all or substantially all of CNB’s or CNB Financial Corporation’s assets;

3. Acquisition by a third party or group acting in concert of stock sufficient to elect a majority of directors to the Board of CNB or CNB Financial Corporation; or,

4. Ownership of more than 50% of CNB Financial Corporation stock by a single person or entity or more than one person or entity acting as a group.

8. TERMINATION: This Agreement may be terminated on the occurrence of any of the following events and if terminated under this paragraph, MR. BOWER shall not be entitled to severance benefits under Paragraph 7:

A. The execution of a written agreement between CNB and MR. BOWER to terminate this Agreement;

B. MR. BOWER’s death;

C. MR. BOWER’s breach of any term or condition of this Agreement;

D. MR. BOWER’s failure or refusal to comply with such reasonable policies, directions, standards and regulations that CNB may establish from time to time;

E. MR. BOWER’s inability to fully and competently perform his duties hereunder for a period of 180 continuous days due to physical, mental or psychological illness, injury or condition; or,

F. MR. BOWER ceases to qualify for his offices and responsibilities under this Agreement pursuant to any statute or regulation, now or hereafter issued by the United States of America, the Federal Reserve, the Office of the Comptroller of Currency or other regulatory agency or body duly invested with authority over CNB, its parent or affiliate(s).

9. NOTICES: All notices or communications required by or bearing upon this Agreement or between the parties shall be in writing and sent by First Class Mail to the parties as follows unless otherwise specified above:

CNB Financial Corporation	Joseph B. Bower, Jr.
County National Bank	738 Weaver Street
Attention: Chairman of the Board	Clearfield, PA 16830
One South Second Street, P.O. Box 42
Clearfield, PA 16830

10. NON-ASSIGNMENT: The parties acknowledge the unique nature of services to be provided by MR. BOWER under this Agreement, the high degree of responsibility borne by him and the personal nature of his relationship to CNB’s Board of Directors and customers. Therefore, the parties agree that MR. BOWER may not assign this Agreement.

11. ARBITRATION: The parties agree that all disputes or questions arising under this Agreement or because of their employment relationship shall be submitted to arbitration by three (3) arbitrators. Each party shall select one (1) arbitrator, and then those two (2) arbitrators shall select a third (3) arbitrator. The arbitrators’ decision need not be unanimous. Arbitration shall be conducted at a private location in Clearfield County convenient to the parties. The arbitrators must reach and give notice of their decision within five (5) days after completion of an arbitration. The

Pennsylvania Uniform Arbitration Act, 42 Pa.C.S.A. §§7301 et seq. shall govern arbitrations hereunder. CNB shall compensate the arbitrators and stenographer if used. CNB shall also pay for the arbitration room. Each party shall pay their attorney fees and other costs.

12. GENERAL PROVISIONS:

A. This Agreement shall be governed by the laws of Pennsylvania;

B. In construing or interpreting this Agreement, “CNB” and “MR. BOWER” shall mean, wherever applicable, the singular or plural, the masculine or the feminine, individual, individuals, partnership or corporation, as the case may be;

C. This Agreement represents the sole agreement of the parties on these subjects and supersedes all prior communications, representations and negotiations, whether oral or written;

D. This Agreement can only be modified or amended by the prior written consent of both parties hereto;

E. Jurisdiction and venue shall rest in the Court of Common Pleas of Clearfield, Pennsylvania, for all suits, claims and causes of action whatsoever;

F. Failure by either party to pursue remedies or assert rights under this Agreement shall not be construed as waiver of that party’s rights or remedies, nor shall a party’s failure to demand strict compliance with the terms and conditions of this Agreement prohibit or estop that party from insisting upon strict compliance in the future; and

G. The parties deem that the terms of this Agreement are unique, and in addition to their other rights and remedies at law, and at equity, either party shall have the right to specifically enforce the terms of this Agreement.

H. This Agreement shall bind the parties’ heirs, successors, representatives, related corporations and assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date written above for the purposes herein contained.

CNB FINANCIAL CORPORATION		MR. BOWER
By:
	President	Joseph B. Bower, Jr.
By:
	Secretary
COUNTY NATIONAL BANK
BY:
	President
By:
	Secretary

EX-13

Table of Contents

1	Consolidated Financial Highlights
2	Message to Shareholders
5	Consolidated Statements of Financial Condition
6	Consolidated Statements of Income
7	Consolidated Statements of Cash Flows
8	Consolidated Statements of Changes in Shareholders’ Equity
9	Notes to Consolidated Financial Statements
27	Report of Independent Registered Public Accounting Firm on Financial Statements
28	Statistical Information
29	Selected Financial Data - Five Year Comparison
31	Management’s Discussion and Analysis of Financial Condition and Results of Operation
41	Executive Management and Board of Directors
42	Officers
43	Shareholder Information

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Consolidated Financial Highlights

(in thousands, except per share data)	2004			2003			% Change
For The Year
Interest Income	$	37,473		$	37,586		(0.3	)%
Interest Expense		13,128			13,400		(2.0	)%
Net Interest Income		24,345			24,186		0.7	%
Non-interest Income		5,622			7,136		(21.2	)%
Non-interest Expense		19,332			17,925		7.8	%
Net Income		7,871			9,057		(13.1	)%
Operating Earnings*		8,781			9,057		(3.0	)%
Net Income Return on:
Average Assets		1.11	%		1.31	%	(15.3	)%
Average Equity		12.04	%		14.79	%	(18.6	)%
Operating Earnings Return on:
Average Assets		1.24	%		1.31	%	(5.3	)%
Average Equity		13.43	%		14.79	%	(9.2	)%
At Year End
Assets	$	725,217		$	701,752		3.3	%
Loans, net of unearned		481,937			458,249		5.2	%
Deposits		596,905			575,438		3.7	%
Shareholders’ Equity		68,710			66,447		3.4	%
Trust Assets Under Management (at market value)		192,361			200,485		(4.1	)%
Per Share Data
Net Income, diluted	$	0.86		$	0.98		(13.1	)%
Dividends		0.52			0.47		10.6	%
Book Value		7.54			7.27		3.7	%
Market Value		15.27			16.83		(9.3	)%

* 2004 Operating Earnings amount is shown before effect of $910 (after tax) non-cash charge due to write-down of other-than-temporary impaired security.

1

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Message to Shareholders

To Our Shareholders, Customers & Friends:

The year of 2004 proved to be one of accomplishment and challenge for our Corporation. The Corporation’s assets grew by 3.4% during the year primarily driven by an increase in loans outstanding of 5.2% as the regional economy of west central Pennsylvania continued a relatively slow rebound. Our strategy during the past year was to remain somewhat conservative in our approach to loan and deposit growth given the continued low interest rate environment. Deposits grew by $21.5 million or 3.7%, which along with capital growth funded our increased assets.

While assets grew modestly during the year, net income as reported under Generally Accepted Accounting Principles in the United States (GAAP) declined by $1.2 million or 13.1%. The principal reason for this decline was a noncash after tax accounting charge of $910 thousand or $0.10 per share resulting from the write-down of perpetual preferred stock of Fannie Mae, a government sponsored entity, held in the Corporation’s available for sale securities portfolio. The value of this preferred stock is closely related to the level of interest rates for investments maturing in two years and due to the extended period of low rates, we revalued this asset based on a conservative approach to the current interpretation of accounting principles.

Excluding the effect of the noncash accounting related charge, our net income for 2004 on a non-GAAP operating basis was $8.8 million representing a decline of 3% from 2003. The principal reason for this decline was the increase of 8.4% in non-interest expenses. One key expense that increased was salary and benefit costs resulting from a change in staff levels and the rising cost of health benefits. We added personnel during the year to staff our Warren Loan Production Office and also in our Main Office to provide administrative support for our continuing growth and to assist in handling additional regulatory requirements. We also incurred higher legal expenses during the year related to action we initiated to protect our trademark from infringement by a newly formed bank using a similar name. We successfully prevailed in this legal action and fully absorbed the related cost in 2004. This was a necessary but unanticipated additional expense.

While the actions of the Federal Reserve created higher short term interest rates in the latter part of the year, the overall level of rates remained at historically low levels for most of 2004. This resulted in us experiencing a nominal growth in net interest income. While longer-term interest rates remained low, our volume of mortgages originated and sold declined significantly from the historically high level experienced in 2003 resulting in lower income from loan sales. The result was that our non-interest income, excluding the $910 thousand non-cash after tax charge discussed above, experienced a small decline.

I am pleased to report that our asset quality remains at a very high level and continues to strengthen. During 2004, we experienced net loan losses of $979 thousand representing 0.21% of average loans, which is consistent with 0.18% in 2003 and 0.21% in 2002 and favorable in comparison to our peer group. Another critical measurement of asset quality is non performing assets which are loans greater than ninety days past due and assets acquired through foreclosure. At year end, our

2

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Message to Shareholders

3

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Message to Shareholders

non performing assets totaled $2.7 million down from $3.2 million at year end 2003. This level of non performing assets as a percentage of total assets was 0.37% at year-end 2004 which compared very favorably to 0.53% for financial institutions of comparable asset size. Finally, total delinquent loans at year-end were 0.95% of total loans down from 1.75% at year-end 2003 and 2.12% at year-end 2002. Maintaining strong asset quality remains a core value at our institution.

Our overall financial performance measured by non-GAAP operating earnings yielded a return on average assets of 1.24% and a return on average equity of 13.43%. Our operating earnings showed good growth in the latter half of the year and we are anticipating this trend to carry forward in 2005. In April 2004, the Corporation declared a two and one half for one stock split in order to provide a lower market price per share and encourage trading activity. In July 2004, our stock no longer was included in the Russell 2000 Index due to the effect of the annual reconstitution of the index which resulted in institutional and mutual fund holders of our stock liquidating their positions with a resulting stock price decline. Since July, the market value increased from $13.57 per share to $15.27 at year-end, an increase of 12.5%. Also during 2004, the Corporation paid dividends totaling $0.518 per share which represented an increase of 9.7% over 2003 and using our current quarterly dividend of $0.13 per share our dividend yield is approximately 3.4%. We remain dedicated to delivering a solid level of financial performance in order to provide continuing value to our shareholders.

As we move forward in 2005, we will be focused on continued growth and expansion of our banking franchise. We will open a full service banking facility in Warren, Pennsylvania in order to expand our presence in that region which we have served by a Loan Production Office since late in 2003. We anticipate further expansion in 2005 by entering one or more new communities with loan production offices. We are also focused on increasing market share in our existing branch network by the continued enhancement and delivery of our products and services.

In closing, the Board of Directors, management and staff are proud to provide this report to you as we look forward to an exciting and rewarding year in 2005.

/s/ William F. Falger

William F. Falger

President and Chief Executive Officer

4

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Consolidated Statements of Financial Condition

	December 31
(in thousands, except share data)	2004			2003
Assets
Cash and due from banks	$	14,296		$	15,239
Interest bearing deposits with other banks		15,616			5,742
CASH AND CASH EQUIVALENTS		29,912			20,981
Securities available for sale		164,202			175,903
Loans held for sale		3,499			3,099
Loans and leases		482,048			458,660
Less: unearned discount		111			411
Less: allowance for loan and lease losses		5,585			5,764
NET LOANS		476,352			452,485
Federal Home Loan Bank and Federal Reserve Stock		4,792			5,032
Premises and equipment, net		13,761			12,934
Bank owned life insurance		13,182			12,682
Mortgage servicing rights		411			481
Goodwill		10,821			10,821
Other intangible assets		630			946
Accrued interest and other assets		7,655			6,388
TOTAL ASSETS	$	725,217		$	701,752
Liabilities
Deposits:
Non-interest bearing deposits	$	71,968		$	63,297
Interest bearing deposits		524,937			512,141
TOTAL DEPOSITS		596,905			575,438
Short-term borrowings		2,000			1,313
Federal Home Loan Bank advances		40,000			40,000
Accrued interest and other liabilities		7,292			8,244
Subordinated debentures		10,310			10,310
TOTAL LIABILITIES		656,507			635,305
Shareholders’ Equity
Common stock $1.00 par value
Authorized 10,000,000 shares
Issued 9,233,750 shares for 2004 and 3,693,500 for 2003		9,234			3,694
Additional paid in capital		4,243			4,123
Retained earnings		54,347			56,787
Treasury stock, at cost (123,240 shares for 2004 and 37,554 shares for 2003)		(1,796	)		(1,309	)
Accumulated other comprehensive income		2,682			3,152
TOTAL SHAREHOLDERS’ EQUITY		68,710			66,447
TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY	$	725,217		$	701,752

The accompanying notes are an integral part of these statements.

5

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Consolidated Statements of Income

	Year ended December 31,
(in thousands, except per share data)	2004			2003		2002
Interest and Dividend Income
Loans including fees	$	31,005		$	30,328	$	30,294
Deposits with banks		117			44		84
Federal funds sold		120			180		267
Securities:
Taxable		3,746			4,457		6,507
Tax-exempt		2,008			2,178		2,136
Dividends		477			399		448
TOTAL INTEREST AND DIVIDEND INCOME		37,473			37,586		39,736
Interest Expense
Deposits		10,551			10,882		12,908
Federal Home Loan Bank advances and other debt		2,075			2,047		2,016
Subordinated debentures		502			471		277
TOTAL INTEREST EXPENSE		13,128			13,400		15,201
Net interest income		24,345			24,186		24,535
Provision for loan losses		800			1,535		1,800
Net interest income after provision for loan losses		23,545			22,651		22,735
Non-interest Income
Trust and asset management fees		1,005			1,001		910
Service charges - deposit accounts		3,988			3,457		3,360
Other service charges and fees		469			511		476
Net security gains (losses)		313			270		(7	)
Loss on other-than-temporarily impaired securities		(1,400	)		—		—
Net gain on sale of loans		162			557		247
Other		1,085			1,340		1,052
TOTAL NON-INTEREST INCOME		5,622			7,136		6,038
Non-interest Expenses
Salaries		6,996			6,733		6,670
Employee benefits		2,995			2,573		2,060
Net occupancy expense of premises		2,607			2,400		2,397
Data processing		1,443			1,411		1,492
State and local taxes		839			771		457
Intangible amortization		509			517		452
Directors fees		332			578		675
Other		3,611			2,942		3,104
TOTAL NON-INTEREST EXPENSES		19,332			17,925		17,307
Income before income taxes		9,835			11,862		11,466
Income tax expense		1,964			2,805		2,800
Net income	$	7,871		$	9,057	$	8,666
EARNINGS PER SHARE
Basic	$	0.86		$	0.99	$	0.95
Diluted	$	0.86		$	0.98	$	0.95

The accompanying notes are an integral part of these statements.

6

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Consolidated Statements of Cash Flows

	Year ended December 31,
(in thousands)	2004			2003			2002
Cash Flows from Operating Activities:
Net income	$	7,871		$	9,057		$	8,666
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses		800			1,535			1,800
Depreciation and amortization		1,764			1,668			1,577
Amortization, accretion and deferred loan fees		49			525			(148	)
Deferred taxes		(735	)		(1,289	)		(1,366	)
Security (gains) losses		(313	)		(270	)		7
Loss on other-than-temporarily impaired securities		1,400			—			—
Gain on sale of loans		(162	)		(557	)		(247	)
Net losses (gains) on dispositions of acquired property		(68	)		(28	)		(12	)
Proceeds from sales of loans		14,481			42,411			34,086
Origination of loans for sale		(14,719	)		(41,029	)		(32,428	)
Increase in bank owned life insurance		(500	)		(488	)		(194	)
Changes in:
Interest receivable and other assets		(1,850	)		(238	)		(2,100	)
Interest payable and other liabilities		(39	)		366			1,400
Net cash provided by operating activities		7,979			11,663			11,041
Cash Flows from Investing Activities:
Proceeds from maturities, prepayments and calls of:
Securities available for sale		42,090			73,351			45,543
Proceeds from sales of securities available for sale		6,805			10,608			1,258
Purchase of securities available for sale		(39,573	)		(76,243	)		(75,754	)
Loan origination and payments, net		(24,073	)		(38,071	)		(34,351	)
Purchase of bank owned life insurance		—			(6,000	)		(6,000	)
Redemption (Purchase) of Federal Reserve Bank Stock and Federal Home Loan Bank Stock		240			(433	)		(1,483	)
Net, purchase of premises and equipment		(2,082	)		(1,956	)		(769	)
Proceeds from the sale of foreclosed assets		529			215			498
Net cash used in investing activities		(16,064	)		(38,529	)		(71,058	)
Cash Flows from Financing Activities:
Net change in:
Checking, money market and savings accounts		8,165			8,987			(12,028	)
Certificates of deposit		13,302			21,314			50,525
Purchase treasury stock		(1,261	)		(1,014	)		(380	)
Proceeds from the sale of treasury stock		894			1,055			636
Cash dividends paid		(4,771	)		(4,335	)		(4,332	)
Advances from other borrowings		—			—			20,000
Issuance of subordinated debentures		—			—			10,000
Net advances (repayments) from short-term borrowings		687			(687	)		(1,268	)
Net cash provided by financing activities		17,016			25,320			63,153
Net increase (decrease) in cash and cash equivalents		8,931			(1,546	)		3,136
Cash and cash equivalents at beginning of period		20,981			22,527			19,391
Cash and cash equivalents at end of period	$	29,912		$	20,981		$	22,527
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	12,568		$	12,971		$	15,505
Income taxes		2,932			3,530			3,730
Supplemental non cash disclosures:
Transfers to other real estate owned	$	1,005		$	257		$	277

The accompanying notes are an integral part of these statements.

7

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Consolidated Statements of Changes in Shareholders’ Equity

(in thousands, except per share data)	Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balance January 1, 2002	$	3,694	$	3,753		$	47,731		$	(1,236	)	$	952		$	54,894
Comprehensive income:
Net income for 2002							8,666									8,666
Other comprehensive income:
Net change in unrealized gains on available for sale securities, net of taxes of $1,311 and adjustment for after tax losses of ( $5)													2,549			2,549
Total comprehensive income																11,215
Treasury stock:
Purchase (16,156 shares)										(380	)					(380	)
Reissue (23,479 shares)				(6	)					642						636
Cash dividends declared ($0.47 per share)							(4,332	)								(4,332	)
Balance December 31, 2002		3,694		3,747			52,065			(974	)		3,501			62,033
Comprehensive income:
Net income for 2003							9,057									9,057
Other comprehensive income:
Net change in unrealized gains on available for sale securities, net of taxes of $180 and adjustment for after tax gains of $176													(349	)		(349	)
Total comprehensive income																8,708
Treasury stock:
Purchase (24,468 shares)										(1,014	)					(1,014	)
Reissue (33,480 shares)				376						679						1,055
Cash dividends declared ($0.47 per share)							(4,335	)								(4,335	)
Balance December 31, 2003		3,694		4,123			56,787			(1,309	)		3,152			66,447
Comprehensive income:
Net income for 2004							7,871									7,871
Other comprehensive income:
Net change in unrealized gains on available for sale securities, net of taxes of $178 and adjustment for after tax losses of $707													(470	)		(470	)
Total comprehensive income																7,401
2 1/2 for 1 stock split (5,540,250 shares)		5,540					(5,540	)
Treasury stock:
Purchase (91,848 shares)										(1,261	)					(1,261	)
Reissue (62,493 shares)				120						774						894
Cash dividends declared ($0.52 per share)							(4,771	)								(4,771	)
Balance December 31, 2004	$	9,234	$	4,243		$	54,347		$	(1,796	)	$	2,682		$	68,710

The accompanying notes are an integral part of these statements.

8

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise indicated, amounts are in thousands, except per share data.

Business and Organization:

CNB Financial Corporation (the “Corporation”), is headquartered in Clearfield, Pennsylvania, and provides a full range of banking and related services through its wholly owned subsidiary, County National Bank (the “Bank”). In addition, the Bank provides trust services, including the administration of trusts and estates, retirement plans, and other employee benefit plans as well as a full range of wealth management services. The Bank serves individual and corporate customers and is subject to competition from other financial institutions and intermediaries with respect to these services. The Corporation and the Bank are subject to examination by Federal regulators. The Corporation’s market area is in the central region of the state of Pennsylvania.

Basis of Financial Presentation:

The financial statements are consolidated to include the accounts of the Corporation and its subsidiaries, County National Bank, CNB Investment Corporation, County Reinsurance Company and CNB Insurance Agency. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Use of Estimates:

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, mortgage servicing rights and fair values of financial instruments are particularly subject to change.

Operating Segments:

Statement of Financial Accounting Standards (“FAS”) No.131 requires disclosures about an enterprise’s operating segments in financial reports issued to shareholders. The Statement defines an operating segment as a component of an enterprise that engages in business activities that generate revenue and incur expense, and the operating results of which are reviewed by the chief operating decision maker in the determination of resource allocation and performance. While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation’s products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, the Corporation’s business activities are currently confined to one segment which is community banking.

Securities:

When purchased, securities are classified as held to maturity, trading or available for sale. Debt securities are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Debt or equity securities are classified as trading when purchased principally for the purpose of selling them in the near term. Available for sale securities are those securities not classified as held to maturity or trading and are carried at their fair market value. Unrealized gains and losses, net of deferred tax, on securities classified as available for sale are recorded as other comprehensive income. Unrealized gains and losses on securities classified as trading are included in other income. Management has not classified any debt or equity securities as trading or held to maturity.

The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for the amortization of premiums and the accretion of discounts over the period through contractual maturity or, in the case of mortgage-backed securities and collateralized mortgage obligations, over the estimated life of the security. Such amortization is included in interest income from securities. Gains and losses on securities sold is based on the specific identification method.

Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) and the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

Loans:

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

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CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Direct Lease Financing:

Financing of equipment, principally consisting of automobiles, is provided to customers under lease arrangements accounted for as direct financing leases. These leases are reported in loans as a net amount, consisting of the aggregate of lease payments receivable and estimated residual values, less unearned income. Income is recognized in a manner which results in an approximate level yield over the lease term.

Allowance for Loan and Lease Losses:

The allowance for loan and lease losses is established through provisions for loan losses which are charged against income. Loans which are deemed to be uncollectible are charged against the allowance account. Subsequent recoveries, if any, are credited to the allowance account.

Management determines the adequacy of the allowance based on historical patterns of charge-offs and recoveries, information about specific borrower situations, industry experience, and other qualitative factors relevant to the collectability of the loan portfolio. While management believes that the allowance is adequate to absorb probable loan losses incurred at the balance sheet date, future adjustments may be necessary due to circumstances that differ substantially from the assumptions used in evaluating the adequacy of the allowance for loan losses.

A loan is impaired when full payment under the loan terms is not expected. Impairment is evaluated in total for smaller-balance loans of similar nature such as residential mortgage, consumer, and credit card loans, and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.

Premises and Equipment:

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment is computed principally by the straight line method. In general, useful lives range from 3 to 39 years with lives for furniture, fixtures and equipment ranging from 3 to 10 years and lives of buildings and building improvements ranging from 15 to 39 years. Amortization of leasehold improvements is computed using the straight-line method over useful lives of the leasehold improvements or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense as incurred.

Foreclosed Assets:

Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value when acquired, establishing a new cost basis. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

Bank Owned Life Insurance:

The Corporation owns insurance on the lives of a certain group of key employees. The cash surrender value of these policies, or the amount that can be realized, is included on the consolidated statements of financial condition and any increase in cash surrender value is recorded as non-interest income on the consolidated statements of income.

Goodwill and Other Intangible Assets:

Goodwill results from prior business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified.

Other intangible assets consist of acquired customer relationship intangible assets arising from the purchase of customer lists. They are initially measured at fair value and then are amortized over their estimated useful lives, which is 10 years.

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CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

Advertising Costs:

Advertising costs are generally expensed as incurred.

Income Taxes:

The Corporation files a consolidated U. S. income tax return that includes all subsidiaries except County Reinsurance Company which files a separate return. Deferred taxes are recognized for the expected future tax consequences of existing differences between the financial reporting and tax reporting bases of assets and liabilities using enacted tax laws and rates. Income tax expense is the total of the current year income tax due or refundable and the changes in deferred tax assets and liabilities.

Mortgage Servicing Rights (MSR’s):

Servicing rights represent the allocated value of retained servicing rights on loans sold and the cost of purchased rights. Servicing assets are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the assets, using groupings of the underlying loans as to interest rates and then, secondarily, as to loan type and investor. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Any impairment of a grouping is reported as a valuation allowance, to the extent that fair value is less than the capitalized amount for a grouping.

Treasury Stock:

The purchase of the Corporation’s common stock is recorded at cost. Purchases of the stock are made both in the open market and through negotiated private purchases based on market prices. 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.

Stock Compensation:

The Corporation has a stock incentive plan for key employees and independent directors. The Stock Incentive Plan, which is administered by a committee of the Board of Directors, provides for up to 625,000 shares of common stock in the form of qualified options, nonqualified options, stock appreciation rights or restricted stock. For key employees, the plan vesting schedule is one-fourth of granted options per year beginning one year after the grant date with 100% vested on the fourth anniversary. For independent directors, the vesting schedule is one-third of granted options per year beginning one year after the grant date with 100% vested on the third anniversary.

The Corporation applies Accounting Principles Board Opinion 25 and related interpretations in accounting for its common stock incentive plan. Accordingly, no compensation expense has been recognized for the plan. Had compensation cost for the plan been determined based on the fair values at the grant dates for awards, consistent with the method of FAS No. 123, net income and earnings per share for 2004, 2003 and 2002 would have been adjusted to the pro forma amounts indicated below:

		2004		2003		2002
Net income	As reported	$	7,871	$	9,057	$	8,666
	Pro forma compensation expense		146		180		111
	Pro forma	$	7,725	$	8,877	$	8,555
Earnings Per Share-Basic	As reported	$	0.86	$	0.99	$	0.95
	Pro forma	$	0.85	$	0.97	$	0.94
Earnings Per Share - Diluted	As reported	$	0.86	$	0.98	$	0.95
	Pro forma	$	0.84	$	0.97	$	0.94

For purposes of the pro forma calculations above, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for grants issued:

	2004		2003		2002
Dividend yield	3.4	%	2.8	%	4.6	%
Expected stock price volatility	23.5	%	23.6	%	24.5	%
Risk-free interest rates	3.8	%	3.4	%	3.0	%
Expected option lives	6.0 years		6.0 years		6.0 years

11

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

Comprehensive Income:

The Corporation presents comprehensive income as part of the Statement of Changes in Shareholders’ Equity. Other comprehensive income (losses) are comprised exclusively of unrealized holding gains (losses) on the available for sale securities portfolio.

Earnings per Share:

Basic earnings per share is determined by dividing net income by the weighted average number of shares outstanding. Diluted earnings per share is determined by dividing net income by the weighted average number of shares outstanding increased by the number of shares that would be issued assuming the exercise of stock options. Earnings and dividends per share are restated to reflect a 2 1/2 for 1 stock split which occurred during 2004.

Cash and Cash Equivalents:

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks, interest bearing deposits with other banks, and Federal funds sold.

Restrictions on Cash:

The Bank is required to maintain average reserve balances with the Federal Reserve Bank. The average amount of these reserve balances for the year ended December 31, 2004 and 2003, was $50, which was maintained in vault cash.

Effect of Newly Issued But Not Yet Effective Accounting Standards:

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“FAS”) No. 123 (Revised 2004), Share-Based Payment. The Statement requires that compensation cost relating to share-based payment transactions be recognized in financial statements and that this cost be measured based on the fair value of the equity or liability instruments issued. FAS No. 123 (Revised 2004) covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. The Corporation will adopt FAS No. 123 (Revised 2004) on July 1, 2005 and is currently evaluating the impact the adoption of the standard will have on the Corporation’s results of operations.

In December 2003, the American Institute of Certified Public Accountants issued SOP 03-3, “Accounting for Loans or Certain Debt Securities Acquired in a Transfer.” SOP 03-3 applies to a loan that is acquired where it is probable, at acquisition, that a transferee will be unable to collect all contractually required payments receivable. SOP 03-3 requires the recognition, as accretable yield, the excess of all cash flows expected at acquisition over the investor’s initial investment in the loan as interest income on a level-yield basis over the life of the loan. The amount by which the loan’s contractually required payments exceed the amount of its expected cash flows at acquisition may not be recognized as an adjustment to yield, a loss accrual or a valuation allowance for credit risk. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. Early adoption is permitted. SOP 03-3 is not expected to have a material impact on the consolidated financial statements of the Corporation.

Loss Contingencies:

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Fair Value of Financial Instruments:

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Reclassifications:

Certain prior year amounts have been reclassified for comparative purposes.

2. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under stock options. For the years ended December 31, 2004, 2003 and 2002, options to purchase 58,918, 56,250 and 45,625 shares of common stock, respectively, were not considered

12

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

in computing diluted earnings per common share because they were anti-dilutive. Earnings per share calculations for all prior periods presented were restated to reflect a 2 1/2 for 1 stock split for shares owned and recorded on April 21, 2004. The computation of basic and diluted EPS is shown below (in thousands, except per share data):

	Years Ended December 31
	2004		2003		2002
Net income	$	7,871	$	9,057	$	8,666
Weighted-average common shares outstanding (basic)		9,131		9,115		9,095
Effect of stock options		57		75		25
Weighted-average common shares outstanding (diluted)		9,188		9,190		9,120
Earnings per share:
Basic	$	0.86	$	0.99	$	0.95
Diluted	$	0.86	$	0.98	$	0.95

3. SECURITIES

Securities at December 31, 2004 and 2003 were as follows:

	December 31, 2004									December 31, 2003
	Amortized Cost		Unrealized					Fair Value		Amortized Cost		Unrealized					Fair Value
			Gains		Losses							Gains		Losses
Securities available for sale:
U.S. Treasury	$	13,096	$	—	$	(85	)	$	13,011	$	13,282	$	62	$	(6	)	$	13,338
U.S. Government agencies and corporations		30,563		—		(303	)		30,260		30,312		162		(35	)		30,439
Obligations of States and Political Subdivisions		41,712		2,567		—			44,279		45,401		3,294		—			48,695
Mortgage-backed securities		40,489		241		(50	)		40,680		40,197		508		(62	)		40,643
Corporate notes and bonds		26,404		1,558		(97	)		27,865		32,974		1,876		(217	)		34,633
Marketable equity securities		7,811		665		(369	)		8,107		8,962		558		(1,365	)		8,155
Total securities available for sale	$	160,075	$	5,031	$	(904	)	$	164,202	$	171,128	$	6,460	$	(1,685	)	$	175,903

At year end 2004 and 2003, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

Securities with unrealized losses at year-end 2004 and 2003, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

2004	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury	$	11,023	$	(74	)	$	1,988	$	(11	)	$	13,011	$	(85	)
U.S. Gov’t Agencies & Corps		23,282		(243	)		5,977		(60	)		29,259		(303	)
Mortgage-Backed Sec.		11,429		(42	)		2,544		(8	)		13,973		(50	)
Corporate Notes and Bonds		500		(7	)		3,779		(90	)		4,279		(97	)
Marketable Equity Securities		81		(18	)		1,676		(351	)		1,757		(369	)
	$	46,315	$	(384	)	$	15,964	$	(520	)	$	62,279	$	(904	)

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CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

2003	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury	$	3,001	$	(6	)	$	—	$	—		$	3,001	$	(6	)
U.S. Gov’t Agencies & Corps		4,061		(19	)		1,984		(16	)		6,045		(35	)
Mortgage-Backed Sec.		6,648		(61	)		1,111		(1	)		7,759		(62	)
Corporate Notes and Bonds		—		—			7,775		(217	)		7,775		(217	)
Marketable Equity Securities		194		(3	)		5,451		(1,362	)		5,645		(1,365	)
	$	13,904	$	(89	)	$	16,321	$	(1,596	)	$	30,225	$	(1,685	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation. Consideration is given to the length of time and the extent to which fair value has been less than cost, the financial condition and near term prospects of the issuer, and the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Corporation may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and results of reviews of the issuer’s financial condition. The following comments relate to those securities which have been in a continuous unrealized loss position for more than twelve months.

Included in the $520 of unrealized losses at December 31, 2004 on investment securities that have been in continuous unrealized loss positions for 12 months or more is approximately $270 of unrealized losses on investments in preferred stock issuances of Fannie Mae and Freddie Mac. This amount is considered temporary in nature as the market values of these investments recovered to their adjusted carrying value shortly after year-end.

Unrealized losses on other securities were not individually significant and were considered to be temporary in nature.

On December 31, 2004 and 2003, securities carried at $44,579 and $36,099, respectively, were pledged to secure public deposits and for other purposes as provided by law.

The following is a schedule of the contractual maturity of securities available-for-sale excluding equity securities, at December 31, 2004:

	Available for Sale Fair Value
1 year or less	$	23,348
1 year-5 years		34,529
5 years-10 years		18,624
After 10 years		38,914
		115,415
Mortgage-backed securities		40,680
Total securities	$	156,095

Collateralized mortgage obligations and other asset-backed securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

Information pertaining to security sales is as follows:

	Proceeds		Gross Gains		Gross Losses
2004	$	6,805	$	339	$	26
2003	$	10,608	$	306	$	36
2002	$	1,258	$	13	$	20

The tax benefit (provision) related to these net realized gains and losses was $(106), $(95) and $2, respectively.

14

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

4. LOANS

Total Loans at December 31, 2004 and 2003 are summarized as follows:

	2004		2003
Commercial, Financial and Agricultural	$	187,261	$	168,794
Residential Mortgage		149,621		141,720
Commercial Mortgage		115,566		110,951
Installment		27,526		30,910
Lease Receivables		2,074		6,285
	$	482,048	$	458,660

Lease receivables at December 31, 2004 and 2003 are summarized as follows:

	2004			2003
Lease payment receivable	$	748		$	2,328
Estimated residual values		1,326			3,957
Gross lease receivables		2,074			6,285
Less unearned income		(111	)		(411	)
Net lease receivables	$	1,963		$	5,874

At December 31, 2004 and 2003, net unamortized loan costs of $283 and $377, respectively, have been included in the carrying value of loans.

The Bank’s outstanding loans and related unfunded commitments are primarily concentrated within Central Pennsylvania. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer.

Deposit accounts that have overdrawn their current balance, known as overdrafts, are reclassified to loans. Overdrafts included in year-end loans are $2,928 in 2004 and $597 in 2003.

Impaired loans were as follows:

	2004		2003
Year-end loans with no allocated allowance for loan losses	$	825	$	653
Year-end loans with allocated allowance for loan losses		1,421		769
Total	$	2,246	$	1,422
Amount of the allowance for loan losses allocated	$	309	$	35

	2004		2003		2002
Average impaired loans outstanding during the year	$	2,272	$	1,434	$	—
Interest income recognized during impairment		—		—		—
Cash-basis interest income recognized		—		—		—

Nonperforming loans were as follows:

	2004		2003
Loans past due over 90 days still on accrual	$	177	$	1,076
Nonaccrual loans	$	1,683	$	1,873

Nonperforming loans include all (or almost all) impaired loans and smaller balance homogeneous loans, such as residential mortgage and consumer loans, that are collectively evaluated for impairment.

15

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

5. ALLOWANCE FOR LOAN AND LEASE LOSSES

Transactions in the Allowance for Loan and Lease Losses for the three years ended December 31 were as follows:

	2004			2003			2002
Balance, Beginning of Year	$	5,764		$	5,036		$	4,095
Charge-offs		(1,099	)		(924	)		(1,064	)
Recoveries		120			117			205
Net Charge-offs		(979	)		(807	)		(859	)
Provision for Loan and Lease Losses		800			1,535			1,800
Balance, End of Year	$	5,585		$	5,764		$	5,036

6. SECONDARY MORTGAGE MARKET ACTIVITIES

The following summarizes secondary mortgage market activities for each year:

	2004			2003			2002
Activity during the year:
Loans originated for resale, Net of principal pay downs	$	11,724		$	39,306		$	30,854
Proceeds from sales of loans held for sale		11,866			39,819			31,068
Net gains on sales of loans held for sale		142			513			214
Loan servicing fees, net		186			204			333
Total loans serviced for others		69,240			68,784			55,925
Activity for capitalized mortgage servicing rights was as follows:
	2004			2003			2002
Servicing rights:
Beginning of year	$	481		$	512			368
Additions		124			170			280
Amortized to expense		(194	)		(201	)		(136	)
End of year	$	411		$	481			512

No valuation allowance is deemed necessary as of December 31, 2004, 2003 or 2002.

7. PREMISES AND EQUIPMENT

The following summarizes Premises and Equipment at December 31:

	2004		2003
Land	$	2,223	$	1,644
Premises and Leasehold Improvements		12,897		12,114
Furniture and Equipment		10,331		9,668
		25,451		23,426
Less Accumulated Depreciation and Amortization		11,690		10,492
Premises and Equipment, Net	$	13,761	$	12,934

Depreciation on Premises and Equipment amounted to $1,255 in 2004, $1,151 in 2003 and $1,125 in 2002.

16

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

The Corporation is committed under four 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, 2004 are as follows:

2005	$	114
2006		109
2007		107
2008		110
2009		110
Thereafter		1,349
	$	1,899

Rental expense, net of rental income, charged to occupancy expense for 2004, 2003, and 2002 was $209, $217 and $211, respectively.

8. FORECLOSED ASSETS

Foreclosed real estate is reported net of a valuation allowance. Activity was as follows:

	2004			2003			2002
Beginning of year	$	286		$	212		$	394
Additions		1,005			257			277
Direct write-downs		(40	)		—			(10	)
Sales		(421	)		(183	)		(449	)
End of year	$	830		$	286		$	212

9. GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill for the year is as follows:

	2004		2003
Beginning of year	$	10,821	$	10,821
Acquired during the period		—		—
End of year	$	10,821	$	10,821

Acquired Intangible Assets

	2004			2003			2002
Amortized intangible assets:
Other intangibles	$	3,152		$	3,152		$	3,152
Accumulated amortization		(2,522	)		(2,206	)		(1,891	)
Net	$	630		$	946		$	1,261
Aggregate amortization expense	$	316		$	315		$	315
Estimated amortization expense:
2005	$	315
2006	$	315

17

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

10. DEPOSITS

The following table reflects time certificates of deposit and IRA accounts included in total deposits and their remaining maturities at December 31:

	2004
Time Deposits Maturing:
2005	$	152,151
2006		58,330
2007		71,489
2008		8,904
2009		20,784
Thereafter		8,404
	$	320,062

Certificates of Deposit of $100 thousand or more totaled $93,065 and $83,507 at December 31, 2004 and 2003, respectively.

11. BORROWINGS

Borrowings include $2,000 and $1,313 of demand notes payable to the U.S. Treasury Department at December 31, 2004 and 2003, respectively. These notes are issued under the U.S. Treasury Department’s program of investing the treasury tax and loan account balances in interest bearing demand notes insured by depository institutions. These notes bear interest at a rate of .25 percent less than the average Federal funds rate as computed by the Federal Reserve Bank. The Corporation has available a $5 million line of credit with an unaffiliated institution. Terms of the line are floating at 30 day LIBOR plus 180 basis points. The outstanding balance on the loan at year end 2004 and 2003 was $0.

At year end 2004, the Bank had remaining borrowing capacity with the Federal Home Loan Bank (FHLB) of $129 million. Borrowings with the FHLB are secured by a blanket pledge of selected securities in the amount of $71,138 and certain mortgage loans with a balance of $149,357. Borrowings from the FHLB at December 31, 2004, and 2003 are as follows:

		December 31,
Interest Rate	Maturity	2004		2003
(a)	3/1/10	$	10,000	$	10,000
(b)	1/3/11		10,000		10,000
(c)	1/24/12		20,000		20,000
Total borrowed funds		$	40,000	$	40,000

(a) FHLB has option to float the interest rate based on the 3 month LIBOR +.16, the interest rate was 6.09% at December 31, 2004.

(b) Interest rate is fixed for one year at which time FHLB has option to float the interest rate based on the 3 month LIBOR +.20, the interest rate was 4.95% at December 31, 2004.

(c) Interest rate is fixed for two years at which time FHLB will convert it to a floating interest rate based on the 3 month LIBOR+.18 if the 3 month LIBOR is equal to or greater than 8.0%, the interest rate was 4.52% as of December 31, 2004.

Subordinated Debentures and Trust Preferred Securities:

A trust formed by the Corporation issued $10,000 of floating rate trust preferred securities in 2002 as part of a pooled offering of such securities. The interest rate is determined quarterly and floats based on the 3 month LIBOR plus 3.45% and was 6.00% at December 31, 2004. The Corporation may redeem the debentures, in whole or in part, at face value after June 26, 2007. The Corporation issued subordinated debentures to the trust in exchange for the proceeds of the offering, which debentures represent the sole asset of the trust. The subordinated debentures must be redeemed no later than 2032.

18

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

Under FASB Interpretation No. 46, as revised in December 2003, the trust is not consolidated with the Corporation. Accordingly, the Corporation does not report the securities issued by the trust as liabilities, and instead reports as liabilities the subordinated debentures issued by the Corporation and held by the trust, as these are not eliminated in consolidation.

Following are maturities of borrowed funds as of December 31, 2004:

2005	$	2,000
2006		—
2007		—
2008		—
2009		—
Thereafter	$	50,310
Total Borrowed Funds	$	52,310

12. INCOME TAXES

The following is a summary of the tax provision:

	2004			2003			2002
Current	$	2,699		$	4,094		$	4,166
Deferred		(735	)		(1,289	)		(1,366	)
Net provision for Income Taxes	$	1,964		$	2,805		$	2,800

The components of the net deferred tax liability as of December 31, 2004 and 2003 are as follows:

	2004			2003
Deferred tax assets
Allowance for loan losses	$	1,955		$	2,017
Deferred compensation		618			477
Impaired security valuation		490			—
Post-retirement benefits		212			181
Merger costs		38			46
Intangibles		—			2
Other		90			89
		3,403			2,812
Deferred tax liabilities
Unrealized gain on securities available for sale		1,444			1,623
Premises and equipment		598			520
Vehicle leasing		574			1,474
Intangibles - section 197		297			—
Prepaid expenses		146			—
Intangibles - mortgage servicing rights		144			168
Deferred loan fees/costs		113			—
Other		146			—
		3,462			3,785
Net deferred tax liability	$	(59	)	$	(973	)

19

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

The reconciliation of income tax attributable to continuing operations at the Federal statutory tax rates to income tax expense is as follows:

	2004			%		2003			%		2002			%
Tax at statutory rate	$	3,443		35.0		$	4,152		35.0		$	3,898		34.0
Tax exempt income, net		(1,004	)	(10.2	)		(1,007	)	(8.5	)		(959	)	(8.4	)
Bank owned life insurance		(175	)	(1.8	)		(171	)	(1.5	)		—		—
Other		(300	)	(3.0	)		(169	)	(1.4	)		(139	)	(1.2	)
Income tax provision	$	1,964		20.0		$	2,805		23.6		$	2,800		24.4

13. EMPLOYEE BENEFIT PLANS

The Corporation provides a defined contribution retirement plan that covers all active officers and employees twenty-one years of age or older, employed by the Corporation for one year. Contributions to the plan for 2004, 2003 and 2002 based on current year compensation, are 6 percent of total compensation plus 5.7 percent of the compensation in excess of $88. The Corporation recognized expense of $375 in 2004, $325 in 2003, and $340 in 2002.

In addition, the Corporation sponsors a contributory defined contribution Section 401(k) plan in which substantially all employees participate. The plan permits employees to make pre-tax contributions which are matched by the Corporation, in 2004, 2003 and 2002, at 1% for every 1% contributed up to three percent then 0.5% for every 1% contributed up to four percent in total of the employee’s compensation. The Corporation’s contributions were $148, $171, and $169 in 2004, 2003, and 2002, respectively.

During 2003, the Corporation adopted a non-qualified supplemental executive retirement plan (“SERP”) for certain executives to compensate those executive participants in the Corporation’s retirement plan whose benefits are limited by compensation limitations under current tax law. The SERP is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the SERP are payable from the general assets of the Corporation. At December 31, 2004 and 2003, obligations of $857 and $429, respectively, were included in other liabilities for this plan. Expense related to this plan was $428 and $429 in 2004 and 2003.

During 2003, the Corporation established a Survivor Benefit Plan (the Plan) for the benefit of outside directors. The purpose of the plan is to provide life insurance benefits to beneficiaries of the Corporation’s board of directors who at the time of their death are participants in the plan. The plan is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the plan are payable from the general assets of the Corporation. At December 31, 2004 and 2003, obligations of $226 and $103, respectively, were included in other liabilities for this plan. Expense related to this plan was $123 and $103 in 2004 and 2003.

The Corporation provides certain health care benefits for retired employees and their qualifying dependents. The following table sets forth the change in the benefit obligation and funded status:

December 31	2004			2003			2002
Benefit obligation at beginning of year	$	654		$	637		$	538
Interest cost		42			45			40
Service cost		34			37			32
Actual claim expense		(10	)		(35	)		(14	)
Interest on claim expense		—			(1	)		—
Actuarial (gain)/loss		(140	)		(29	)		41
Benefit obligation at end of year	$	580		$	654		$	637
December 31	2004			2003			2002
Funded status of plan		(580	)	$	(654	)	$	(637	)
Unrecognized actuarial (gain)/loss		(92	)		48			77
Unrecognized prior service cost					—			—
Unrecognized transition obligation		66			73			81
Accrued benefit cost	$	(606	)	$	(533	)	$	(479	)

20

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

December 31	2004		2003		2002
Net periodic post-retirement benefit cost:
Service cost	$	34	$	37	$	32
Interest cost		42		45		40
Amortization of transition obligation over 21 years		7		8		7
	$	83	$	90	$	79

The weighted average discount rate used to calculate net periodic benefit cost and the accrued post-retirement liability was 6.0% in 2004, 6.5% in 2003 and 7.0% in 2002. The health care cost trend rate used to measure the expected costs of benefits for 2005 is 7.0%, 6.0% for 2006, and 5% for 2007 and thereafter. A one percent increase in the health care trend rates would result in an increase of $70 in the benefit obligation of December 31, 2004, and would increase the service and interest costs by $11 in future periods. A similar one percent decrease in health care trend rates would result in a decrease of $69 and $10 in the benefit obligation and service and interest costs, respectively, at December 31, 2004. The presentation above for the years 2004, 2003 and 2002 reflects a policy which grants eligibility to these benefits to employees at least 60 years of age with 30 years of service.

14. DEFERRED COMPENSATION PLANS

Deferred compensation plans cover all directors and certain officers. Under the plans, the Corporation pays each participant, or their beneficiary, the amount of fees or compensation deferred plus gains or net of losses over a maximum period of 10 years, beginning with the individuals termination of service. A liability is accrued for the obligation under these plans. The expense incurred for deferred compensation for 2004, 2003 and 2002 was $39, $308 and $394, respectively, resulting in a deferred compensation liability of $908 and $933 as of year-end 2004 and 2003, respectively.

15. STOCK OPTIONS

A summary of the status of the common stock incentive plan, adjusted retroactively for the effects of stock splits, is presented below:

	Shares			Weighted - average Exercise Price		Remaining Contractual Life
Outstanding, at January 1, 2002		171,568		$	9.17		7 years
Granted		55,625			13.30		8 years
Exercised		(625	)		9.50
Forfeited		(1,455	)		8.77
Outstanding, at December 31, 2002		225,113			10.20
Granted		56,250			17.54		9 years
Exercised		(48,077	)		9.53
Forfeited		(313	)		9.50
Outstanding, at December 31, 2003		232,973			12.08
Granted		54,250			16.04		10 years
Exercised		(11,017	)		8.70
Forfeited		—			—
Outstanding, at December 31, 2004		276,206		$	13.02
	2004			2003		2002
Options exercisable at year-end		155,183			123,347		96,140
Fair value of options granted during the year	$	2.69		$	3.20	$	2.00
Number of authorized shares remaining		289,075			343,325		399,262

21

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

Options outstanding at year-end 2004 were as follows:

	Outstanding		Exerciseable
Range of Exercise Prices	Number	Weighted Average Remaining Contractual Life	Number	Weighted Average Exercise Price
$7.40 - $17.54	276,206	7.9 years	155,183	$	11.04

16. RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has transactions, including loans, with its officers, directors and their affiliated companies. The aggregate of such loans totaled $11,047 on December 31, 2004 compared to $3,619 at December 31, 2003. During 2004, $45,871 of new loans were made and repayments totaled $38,443.

Deposits from principal officers, directors and their affiliates at year-end 2004 and 2003 were $2,040 and $1,720.

17. CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgements by regulators. Failure to meet capital requirements can initiate regulatory action.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of December 31, 2004 and 2003, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

Actual and required capital amounts (in thousands) and ratios are presented below at year-end:

	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
2004
Total Capital to risk weighted assets
Consolidated	$	70,062	12.75	%	$	43,940	8.0	%	$	54,926	10.0	%
Bank	$	57,119	10.65	%	$	42,909	8.0	%	$	53,636	10.0	%
Tier 1 (Core) Capital to risk weighted assets
Consolidated	$	64,345	11.71	%	$	21,970	4.0	%	$	32,955	6.0	%
Bank	$	51,534	9.61	%	$	21,454	4.0	%	$	32,182	6.0	%
Tier 1 (Core) Capital to average assets
Consolidated	$	64,345	9.19	%	$	28,014	4.0	%	$	35,018	5.0	%
Bank	$	51,534	7.44	%	$	27,709	4.0	%	$	34,637	5.0	%

22

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
2003
Total Capital to risk weighted assets
Consolidated	$	67,244	13.08	%	$	41,183	8.0	%	$	51,479	10.0	%
Bank	$	53,415	10.68	%	$	40,016	8.0	%	$	50,003	10.0	%
Tier 1 (Core) Capital to risk weighted assets
Consolidated	$	61,480	11.96	%	$	20,592	4.0	%	$	30,887	6.0	%
Bank	$	47,651	9.53	%	$	20,001	4.0	%	$	30,002	6.0	%
Tier 1 (Core) Capital to average assets
Consolidated	$	61,480	8.93	%	$	27,549	4.0	%	$	34,436	5.0	%
Bank	$	47,651	7.03	%	$	27,114	4.0	%	$	33,892	5.0	%

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. Dividends payable by the Bank to the Corporation without prior approval of the Office of the Comptroller of the Currency (OCC) are limited to the Bank’s retained net profits for the preceding two calendar years plus retained net profits up to the dividend declaration in the current calendar year. Retained net profits are defined by the OCC as net income, less dividends declared during the periods under regulatory accounting principles. As of December 31, 2004, $1.1 million of undistributed earnings of the Bank was available for distribution to the Corporation as dividends, without prior regulatory approval.

18. OFF-BALANCE SHEET ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance-sheet risk was as follows at year end:

	2004				2003
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	11,108	$	69,421	$	14,249	$	67,160
Unused lines of credit and
letters of credit		—		47,034		—		36,498

Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments have interest rates ranging from 2.67% to 12.00% and maturities ranging from 3 months to 20 years.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amount is the estimated fair value for cash and cash equivalents, Federal Home Loan Bank stock, accrued interest receivable and payable, demand deposits, other borrowings, and variable rate loans, deposits or borrowings that reprice frequently

23

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values. Fair value of loans held for sale is based on market quotes. Fair value of debt is based on current rates for similar financing. The fair value of off-balance-sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements. The fair value of off balance sheet items is not materially different from the nominal value.

While these estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates.

In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial instruments typically not recognized on the balance sheet may have value but are not included in the above disclosures. These include, among other items, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, customer goodwill and similar items.

	December 31, 2004						December 31, 2003
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
ASSETS
Cash and short-term assets	$	29,912		$	29,912		$	20,981		$	20,981
Securities		164,202			164,202			175,903			175,903
Net loans		476,352			468,659			446,611			459,029
Federal Home Loan Bank and Federal Reserve stock		4,792			4,792			5,032			5,032
Accrued interest receivable		3,381			3,381			3,541			3,541
LIABILITIES
Deposits	$	(596,905	)	$	(596,052	)	$	(575,438	)	$	(581,593	)
Borrowings		(52,310	)		(55,949	)		(51,623	)		(53,889	)
Accrued interest payable		(1,676	)		(1,676	)		(1,606	)		(1,606	)

20. PARENT COMPANY ONLY FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

	December 31,
	2004			2003
ASSETS
Cash	$	98		$	21
Investment in bank subsidiary		64,791			62,619
Investment in non-bank subsidiaries		13,764			13,009
Other assets		1,017			1,091
TOTAL ASSETS	$	79,670		$	76,740
LIABILITIES
Income taxes payable	$	(262	)	$	(194	)
Deferred tax liability		25			9
Subordinated debt		10,310			10,310
Other liabilities		887			168
TOTAL LIABILITIES		10,960			10,293
TOTAL SHAREHOLDERS’ EQUITY		68,710			66,447
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	79,670		$	76,740

24

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

CONDENSED STATEMENTS OF INCOME

	Year ended December 31,
	2004			2003			2002
INCOME
Dividends from:
Bank subsidiary	$	4,982		$	10,379		$	5,958
Non bank subsidiaries		—			200			—
Other		120			126			130
TOTAL INCOME		5,102			10,705			6,088
EXPENSES		(824	)		(697	)		(543	)
INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED NET INCOME OF SUBSIDIARY		4,278			10,008			5,545
Income tax benefit		246			194			128
Equity in undistributed net income of bank subsidiary		2,702			(1,502	)		2,841
Equity in undistributed net income of non-bank subsidiaries		645			357			152
NET INCOME	$	7,871		$	9,057		$	8,666

CONDENSED STATEMENTS OF CASH FLOWS

	Year ended December 31,
	2004			2003			2002
Cash flows from operating activities:
Net income	$	7,871		$	9,057		$	8,666
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of bank subsidiary		(2,702	)		1,502			(2,841	)
Equity in undistributed net income of non-bank subsidiaries		(645	)		(357	)		(152	)
(Increase) Decrease in other assets		74			68			(263	)
Increase (Decrease) in other liabilities		(33	)		4			(1,284	)
Net cash provided by operating activities		4,565			10,274			4,126
Cash flows from investing activities:
Capital transfer to subsidiaries		—			(6,072	)		(10,319	)
Net cash used in investing activities		—			(6,072	)		(10,319	)
Cash flows from financing activities:
Dividends paid		(4,771	)		(4,335	)		(4,332	)
Purchase of treasury stock		(1,261	)		(1,014	)		(380	)
Proceeds from sale of treasury stock		894			1,055			636
Net advance from subsidiary		700			—			—
Advances from subordinated debentures		—			—			10,310
Other financing activities		(50	)		—			—
Net cash (used in) provided by financing activities		(4,488	)		(4,294	)		6,234
Net increase (decrease) in cash		77			(92	)		41
Cash beginning of year		21			113			72
Cash end of year	$	98		$	21		$	113

21. OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows:

	2004			2003			2002
Unrealized holding gains and losses on available for sale securities	$	(1,735	)	$	(259	)	$	3,853
Less reclassification adjustments for gains and losses later recognized in income		(1,087	)		270			(7	)
Net unrealized gains and losses		(648	)		(529	)		3,860
Tax effect		(178	)		(180	)		1,311
Other comprehensive income (loss)	$	(470	)	$	(349	)	$	2,549

25

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Notes to Consolidated Financial Statements, cont.

22. QUARTERLY FINANCIAL DATA (UNAUDITED)

The unaudited quarterly results of operations for the years ended December 2004 and 2003 are as follows (in thousands, except per share data):

	Quarters Ended
	2004								2003
	March 31		June 30		Sept. 30		Dec. 31		March 31		June 30		Sept. 30		Dec. 31
Total interest income	$	9,236	$	9,267	$	9,317	$	9,653	$	9,591	$	9,514	$	9,296	$	9,185
Net interest income		5,980		6,045		6,066		6,254		6,198		6,119		5,926		5,943
Provision for loan losses		300		300		200		—		540		540		200		255
Non-interest income		1,710		1,552		1,717		643		1,599		1,809		1,895		1,833
Non-interest expense		4,824		4,622		4,961		4,925		4,555		4,373		4,514		4,483
Net income		2,015		2,015		2,032		1,809		2,009		2,284		2,380		2,384
Net income per share, basic		0.22		0.22		0.22		0.20		0.22		0.25		0.26		0.26
Net income per share, diluted		0.22		0.22		0.22		0.20		0.22		0.25		0.26		0.25

26

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Report of Independent Registered

Public Accounting Firm on Financial Statements

Board of Directors and Shareholders

CNB Financial Corporation

Clearfield, PA

We have audited the accompanying consolidated balance sheets of CNB Financial Corporation as of December 31, 2004 and 2003, and the related statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2004. 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.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CNB Financial Corporation as of December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC

Cleveland, Ohio

February 25, 2005

27

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Statistical Information

Quarterly Share Data

The following table sets forth, for the periods indicated, the quarterly high and low bid price of the Corporation’s common stock as reported through the National Quotation Bureau and actual cash dividends paid per share. The stock is traded on the NASDAQ Stock Market under the symbol, CCNE. As of December 31, 2004, the approximate number of shareholders of record of the Corporation’s common stock was 2,600.

Price Range of Common Stock

	2004				2003
	High		Low		High		Low
First Quarter	$	17.73	$	14.46	$	18.48	$	12.76
Second Quarter		17.90		13.29		18.69		16.30
Third Quarter		15.43		13.30		19.34		16.73
Fourth Quarter		16.40		14.70		19.00		15.60

Cash Dividends Paid

	2004		2003
First Quarter	$	0.13	$	0.11
Second Quarter		0.13		0.11
Third Quarter		0.13		0.12
Fourth Quarter		0.13		0.13
	$	0.52	$	0.47

Trust and Asset Management Division Funds under Management (Market Value)

($’s in thousands)	2004		2003
Personal Trusts, Estates and Agency Accounts	$	181,296	$	188,731
Corporate Accounts		11,065		11,754
Total	$	192,361	$	200,485

28

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Selected Financial Data

(dollars in thousands, except per share data)	Year Ended December 31 2004
Interest Income
Loans including fees	$	31,005
Deposits with banks		117
Federal funds sold		120
Investment securities:
U.S. treasury securities		259
Securities of U.S. government agencies and corporations		1,998
Obligations of states and political subdivisions		2,008
Other securities		1,966
Total interest and dividend income		37,473
Interest expense
Deposits		10,551
Other borrowings		2,577
Total interest expense		13,128
Net interest income		24,345
Provision for loan losses		800
Net interest income after provision for loan losses		23,545
Non-interest income		5,622
Non-interest expenses		19,332
Income before taxes		9,835
Applicable income taxes		1,964
Net income	$	7,871
Per share data
Basic	$	0.86
Fully diluted	$	0.86
Dividends declared	$	0.52
Book value per share at year end	$	7.54
At end of period
Total assets	$	725,217
Securities		164,202
Loans, net of unearned discount		481,937
Allowance for loan losses		5,585
Deposits		596,905
Shareholders’ equity		68,710
Key ratios
Return on average assets		1.11	%
Return on average equity		12.04	%
Loan to deposit ratio		79.80	%
Dividend payout ratio		60.61	%
Average equity to average assets ratio		9.20	%

29

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Five Year Comparison

2003			2002			2001			2000
$	30,328		$	30,294		$	31,323		$	32,075
	44			84			169			137
	180			267			434			67
	311			528			1,113			1,378
	2,081			3,140			2,862			2,706
	2,259			2,136			1,526			1,813
	2,383			3,287			3,382			2,470
	37,586			39,736			40,809			40,646
	10,882			12,908			17,971			18,660
	2,518			2,293			1,176			1,174
	13,400			15,201			19,147			19,834
	24,186			24,535			21,662			20,812
	1,535			1,800			1,080			807
	22,651			22,735			20,582			20,005
	7,136			6,038			5,598			4,481
	17,925			17,307			17,374			17,249
	11,862			11,466			8,806			7,237
	2,805			2,800			2,296			1,804
$	9,057		$	8,666		$	6,510		$	5,433
$	0.99		$	0.95		$	0.71		$	0.59
$	0.98		$	0.95		$	0.71		$	0.59
$	0.47		$	0.47		$	0.34		$	0.32
$	7.27		$	6.80		$	5.58		$	5.20
$	701,752		$	668,518		$	592,794		$	555,365
	175,903			185,025			152,757			136,250
	458,249			420,364			386,173			366,156
	5,764			5,036			4,095			3,879
	575,438			545,137			506,640			485,217
	66,447			62,033			54,894			51,203
	1.31	%		1.35	%		1.11	%		0.97	%
	14.79	%		14.83	%		12.15	%		10.80	%
	78.63	%		76.19	%		75.41	%		74.66	%
	47.86	%		49.58	%		52.38	%		56.69	%
	8.87	%		9.07	%		9.17	%		9.01	%

30

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

GENERAL

The following discussion and analysis of the consolidated financial statements of CNB Financial Corporation (the “Corporation”) is presented to provide insight into management’s assessment of financial results. The Corporation’s subsidiary County National Bank (the “Bank”) provides financial services to individuals and businesses within the Bank’s market area made up of the west central Pennsylvania counties of Cambria, Clearfield, Centre, Elk, Jefferson and McKean. County National Bank is a member of the Federal Reserve System and subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”). The financial condition and results of operations are not intended to be indicative of future performance. The Corporation’s subsidiary, CNB Investment Corporation, is incorporated in Delaware. CNB Investment Corporation maintains investments in debt and equity securities. County Reinsurance Company, a subsidiary, is a Corporation of Arizona. County Reinsurance Company provides credit life and disability for customers of County National Bank. Finally, CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. Management’s discussion and analysis should be read in conjunction with the audited consolidated financial statements and related notes.

Risk identification and management are essential elements for the successful management of the Corporation. In the normal course of business, the Corporation is subject to various types of risk, including interest rate, credit, and liquidity risk. These risks are controlled through policies and procedures established throughout the Corporation.

Interest rate risk is the sensitivity of net interest income and the market value of financial instruments to the direction and frequency of changes in interest rates. Interest rate risk results from various repricing frequencies and the maturity structure of the financial instruments owned by the Corporation. The Corporation uses its asset/liability management policy and systems to control, monitor and manage interest rate risk.

Credit risk represents the possibility that a customer may not perform in accordance to contractual terms. Credit risk results from loans with customers and the purchase of securities. The Corporation’s primary credit risk is in the loan portfolio. The Corporation manages credit risk by following an established credit policy and through a disciplined evaluation of the adequacy of the allowance for loan losses. Also, the investment policy limits the amount of credit risk that may be taken in the securities portfolio.

Liquidity risk represents the inability to generate or otherwise obtain funds at reasonable rates to satisfy commitments to borrowers and obligations to depositors. The Corporation has established guidelines within its asset liability management policy to manage liquidity risk. These guidelines include contingent funding alternatives.

FINANCIAL CONDITION

The following table presents ending balances ($’s in millions), growth (reduction) and the percentage change during the past two years:

	2004 Balance		Increase (Decrease)			% Change		2003 Balance		Increase (Decrease)			% Change		2002 Balance
Total assets	$	725.2	$	23.4		3.3		$	701.8	$	32.9		4.9		$	668.8
Total loans, net		476.4		23.9		5.3			452.5		37.2		9.0			415.3
Total securities		164.2		(11.7	)	(6.7	)		175.9		(9.1	)	(4.9	)		185.0
Total deposits		596.9		21.5		3.7			575.4		30.3		5.6			545.1
Total shareholders’ equity		68.7		2.3		3.5			66.4		4.4		7.1			62.0

The above table is referenced for the discussion in this section of the report.

OVERVIEW OF BALANCE SHEET

The increase in assets during 2004 was primarily the result of continued growth in the loan portfolio. This growth occurred in the commercial loan area. The specific effects to each area are described in the following sections.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents totaled $29.9 million at December 31, 2004 compared to $21.0 million on December 31, 2003. The cash and equivalents has various fluctuations based on timing during the month. The year end balance is considered reasonable to support the expected funding needs in the short term.

31

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

We believe the liquidity needs of the Corporation are satisfied by the current balance of cash and cash equivalents, readily available access to traditional funding sources, Federal Home Loan Bank financing, and the portion of the securities and loan portfolios that matures within one year. These sources of funds will enable the Corporation to meet cash obligations and off-balance sheet commitments as they come due.

SECURITIES

Securities decreased 6.7% since December 31, 2003. A large part of the decrease resulted from maturities of corporate bonds and principal payments from corporate mortgage backed securities. These proceeds were not reinvested in the securities portfolio as they were needed to fund the growth that occurred in the loan portfolio. As previously mentioned, securities are considered as part of the liquidity planning for any funding needs. The Corporation generally buys into the market over time and does not attempt to “time” its transactions. In doing this, the highs and lows of the market are averaged into the portfolio attempting to minimize the overall effect of different rate environments.

The portfolio mix stayed fairly consistent to the prior year with the exception of the corporate notes and bonds discussed above.

We monitor the earnings performance and the effectiveness of the liquidity of the securities portfolio on a regular basis through Asset/Liability Committee (“ALCO”) meetings. The ALCO also reviews and manages interest rate risk for the Corporation. Through active balance sheet management and analysis of the securities portfolio, we maintain a sufficient level of liquidity to satisfy depositor requirements and various credit needs of our customers.

LOANS

The Corporation’s loan volume was strong throughout 2004. Our lending is focused in the west central Pennsylvania market and consists principally of commercial and retail lending, which includes single family residential mortgages and other consumer loans. During the 4th quarter of 2003, the Bank established a loan production office in Warren, Pennsylvania which had grown to over $11.3 million dollars in total loans by the end of 2004. In addition, the Bank has focused on commercial business through the addition of several lenders and a credit analysis staff. This focus on experienced lenders coupled with quality credit analysis and review has led to solid growth in the commercial portfolio with improved asset quality. Retail loan growth has been improved with our marketing efforts related to home equity loans. This product has become the loan of choice for homeowers whenever they have borrowing needs. The increase in residential mortgages of $7.9 million is almost entirely from home equity loans and lines.

Contributing to the growth in loans was an increase of $18.5 million in commercial loans and $4.6 million in commercial mortgages. These loans are not concentrated in one area nor were they in a single industry. The increases helped to offset the anticipated continued paydown of our leased auto portfolio.

LOAN CONCENTRATION

The Corporation monitors loan concentrations by individual industries in order to track potential risk exposures resulting from industry related downturns. At December 31, 2004, no concentration exists within our commercial or real estate loan portfolio as related to a concentration of 10% of the total loans.

LOAN QUALITY

The Corporation has established written lending policies and procedures that require underwriting standards, loan documentation, and credit analysis standards to be met prior to funding a loan. Subsequent to the funding of a loan, ongoing review of credits is required. Credit reviews are performed annually on a minimum of 60% of the commercial loan portfolio by an outsourced loan review partner. In addition, classified assets, past due loans and nonaccrual loans are reviewed by the loan review partner semiannually and monthly by our credit administration staff. See “Allowance for Loan and Lease Losses” for further discussion of credit review procedures.

32

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

The following table sets forth information concerning loan delinquency and other non-performing assets ($ in thousands):

at December 31,	2004			2003			2002
Nonperforming assets:
Non-accrual loans	$	1,683		$	1,873		$	1,830
Accrual loans greater than 89 days past due		177			1,076			1,106
Total nonperforming loans		1,860			2,949			2,936
Other real estate owned		830			286			212
Total nonperforming assets	$	2,690		$	3,235		$	3,148
Total loans, net of unearned income	$	481,937		$	458,249		$	420,364
Nonperforming loans as a percent of loans, net		0.39	%		0.64	%		0.70	%
Total assets	$	725,217		$	701,752		$	668,518
Nonperforming assets as a percent of total assets		0.37	%		0.46	%		0.47	%

ALLOWANCE FOR LOAN AND LEASE LOSSES

The allowance for loan and lease losses is established by provisions for losses in the loan and lease portfolio as well as overdrafts in deposit accounts. These provisions are charged against current income. Loans, leases and overdrafts deemed not collectible are charged-off against the allowance while any subsequent collections are recorded as recoveries and increase the allowance.

The table below shows activity within the allowance account over the past three years:

Allowance for Loan and Lease Losses

	Years Ended December 31,
($’s in thousands)	2004			2003			2002
Balance at beginning of Period	$	5,764		$	5,036		$	4,095
Charge-offs:
Commercial and financial		51			19			152
Commercial mortgages		226			174			82
Residential mortgages		147			109			127
Installment		409			511			468
Lease receivables		30			111			235
Overdraft deposit accounts		236			—			—
		1,099			924			1,064
Recoveries:
Commercial and financial		1			1			1
Commercial mortgages		13			2			52
Residential mortgages		20			—			—
Installment		56			80			87
Lease receivables		9			34			65
Overdraft deposit accounts		21			—			—
		120			117			205
Net charge-offs:		(979	)		(807	)		(859	)
Provision for loan losses		800			1,535			1,800
Balance at end-of-period	$	5,585		$	5,764		$	5,036
Loans, net of unearned	$	481,937		$	458,249		$	420,364
Allowance to net loans		1.16	%		1.26	%		1.20	%

The adequacy of the allowance for loan and lease losses is subject to a formal analysis by the credit administrator of the Bank. As part of the formal analysis, delinquencies and losses are monitored monthly. The loan portfolio is divided into several

33

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

categories in order to better analyze the entire pool. First is a selection of criticized loans that is given a specific reserve. The remaining loans are pooled, by category, into these segments:

Reviewed

• Commercial and financial

• Commercial mortgages

Homogeneous

• Residential real estate

• Installment

• Lease receivables

• Credit cards

• Overdrafts

The reviewed loan pools are further segregated into three categories: substandard, doubtful and unclassified. Historical loss factors are calculated for each pool excluding overdrafts based on the previous eight quarters of experience. The homogeneous pools are evaluated by analyzing the historical loss factors from the most previous quarter end and the two most recent year ends. The historical loss factors for both the reviewed and homogeneous pools are adjusted based on these six qualitative factors:

• Levels of and trends in delinquencies, non-accruals and classified loans

• Trends in volume and terms of loans

• Effects of any changes in lending policies and procedures

• Experience, ability and depth of management

• National and local economic trends and conditions

• Concentrations of credit

The methodology described above was created using the experience of our credit administrator, guidance from the regulatory agencies, expertise of our loan review partner, and discussions with our peers. The resulting factors are applied to the pool balances in order to estimate the inherent risk of loss within each pool. The results of these procedures are listed in the following chart:

Allocation of the Allowance for Loan and Lease Losses

Balance at end of period	2004		2003
Commercial and industrial	$	2,396	$	2,472
Commercial mortgages		1,505		1,342
Residential mortgages		895		700
Installment		384		422
Lease receivables		20		79
Credit cards		62		75
Overdraft deposit accounts		308		—
Unallocated		15		674
Total	$	5,585	$	5,764

The results for the two years indicate higher allocations required for specific pools. This result is based on two main factors. First, the growth of our commercial loan and commercial mortgage portfolios require larger dollars to cover the associated credit risks. Secondly, economic factors both in our market area and nationwide have lead to trends of increased charge-offs in recent years.

With the growth of our commercial portfolios along with the unfavorable economic conditions, the Bank increased the allocation to loan loss reserve. This increase occurred through the first two quarters of 2003, at which time the Corporation determined that the loss history was not unfavorable and deemed that the coverage level was adequate. Management feels that the improved credit quality and low chargeoff history over the past twelve months will create a decrease in the Allowance for Loan and Lease Losses as a percentage of total loans.

34

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

The Bank’s experience in net charge-offs for 2004 when compared to 2003 and 2002 was relatively unchanged in total dollars. However, as a percentage of outstanding loans, there has been a reduction in charge-offs with 2004 at 0.20% compared to 0.18% in 2003 and 0.20% in 2002. The allowance for loan and lease losses is deemed to be adequate to absorb probable incurred losses in the portfolio at December 31, 2004.

BANK OWNED LIFE INSURANCE

The Corporation purchased $6.0 million of Bank Owned Life Insurance (BOLI) in both 2002 and 2003. The policies cover executive officers and a select group of other employees with the Bank being named as beneficiary. Earnings from the BOLI assist the Corporation in offsetting its benefit costs which have increased approximately 45% between 2002 and 2004.

FUNDING SOURCES

The Corporation considers deposits, short-term borrowings, and term debt when evaluating funding sources. Traditional deposits continue to be the most significant source of funds. In addition, term borrowings from FHLB are used to meet short-term funding needs not met by deposit growth. Management plans to maintain access to short-term and long-term FHLB borrowings as an additional funding source.

The Corporation experienced an increase of 3.7% in deposits during 2004. Per the table below, growth was in the certificate of deposit accounts. With lower interest rates, customers are searching for insured deposits paying a reasonable rate of interest. A successful offer during the year was a CD allowing no penalty withdrawals and add-ons to principal during the period of the CD. This allows our customers flexibility in their investments at a competitive price for the Bank. One potential risk for the Bank is that these accounts can reprice immediately if customers so choose. However, the history of these accounts have shown minimal activity as to withdrawals in the portfolio. The following table reflects the Corporation’s deposits by category (in thousands):

	2004		2003		2002
Checking, Non-Interest Bearing	$	71,968	$	63,297	$	56,010
Checking, Interest Bearing		130,989		128,909		128,309
Savings Accounts		73,886		76,472		75,372
Certificates of Deposit		320,062		306,760		285,446
	$	596,905	$	575,438	$	545,137

SHAREHOLDERS’ EQUITY

The Corporation’s capital provided the strong base for our profitable growth. Total shareholders’ equity increased 3.5% in 2004. The increase occurred from the earnings in excess of dividends paid of $3.1 million.

The Corporation has complied with the standards of capital adequacy mandated by the banking industry. Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios. A weight category of either 0% (lowest risk assets), 20%, 50%, or 100% (highest risk assets), is assigned to each asset on the balance sheet. The total risk-based capital ratio of 12.75% as of December 31, 2004 is well above the minimum standard of 8%. The Tier 1 capital ratio of 11.71% also is above the regulatory minimum of 4%. The leverage ratio, 9.19%, was also above the minimum standard of 4%. The Corporation is deemed to be well capitalized under regulatory industry standards as the noted ratios are above the regulatory requirements of 10%, 6% and 5%, respectively. The ratios provide quantitative data demonstrating the strength and future opportunities for use of the Corporation’s capital base. An evaluation of risk-based capital ratios and the capital position of the Corporation is a part of its strategic decision making process.

LIQUIDITY

Liquidity measures an organizations’ ability to meet cash obligations as they come due. The Consolidated Statements of Cash Flows presented on page 7 of the accompanying financial statements provide analysis of the Corporation’s cash and cash equivalents and the sources and uses of cash. Additionally, the portion of the loan portfolio that matures within one year and maturities within one year in the investment portfolio are considered part of the liquid assets. Liquidity is monitored by the

35

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

ALCO which establishes and monitors ranges of acceptable liquidity. Also, the Bank is a member of FHLB. This relationship provides the Bank with a borrowing line of $169 million with only $40 million outstanding at year end 2004. Management feels the Corporation’s current liquidity position is acceptable.

YEAR ENDED DECEMBER 31, 2004

OVERVIEW OF THE INCOME STATEMENT

In 2004, net income was $7,871,000 which is a decrease of 13.1% compared to 2003 net income of $9,057,000. The decrease in earnings is the result of a one time non-cash charge for impairment of a security. The impairment, net of tax, of $910,000 was based on generally accepted accounting principles and does not reflect management’s expectation for the long term value of this investment grade security.

Operating earnings, net of the impairment charge, were $8,781,000 or a decrease in earnings of 3.0% compared to 2003. The decrease in earnings was primarily the reduction in the net interest margin of 9 bps. When applied to our average earning assets for 2004, this reduction of margin from 2003 equates to a loss of $586,000 in net interest income.

INTEREST INCOME AND EXPENSE

Net interest income totaled $24,345,000 for 2004, an increase of 0.7% compared to 2003. The increase in the net interest income stems from an improved level of average earning assets. The increase in average earning assets was $21,415,000. Total interest income for 2004 decreased by $113,000 or (0.3)% while interest expense decreased by $272,000 or (2.0)% when compared to 2003. The main cause of the decreased net interest margin is the more significant drop in the yield on earning assets. Our cost of funds have reached the low end under the current rate environment while assets are just reaching the bottom of the rate cycle.

The Corporation recorded a provision for loan and lease losses of $800,000 for 2004 compared to $1,535,000 for 2003. The decrease in provision is a result of the relatively low level of charge-offs that the Bank has experienced over the past 3 years. Also, the overall credit quality of existing assets continues to show improvement as discussed in the Loan Quality and Allowance for Loan and Lease Losses sections. The provision has given the Bank a 1.16% coverage of loans compared to 1.26% in 2003.

NON-INTEREST INCOME

Total non-interest income was negatively affected by a $1,400,000 before tax non-cash charge for write-down of an other-than-temporarily impaired security. Non-interest income excluding this one time non-cash charge showed a modest decrease of (1.6)% over 2003. The primary factor driving the decrease was a reduction in gain on sale of loans in 2004 compared to 2003. The volume of new and refinanced mortgage generation declined significantly in 2004. This was a direct result in the stabilization of interest rates during the year when compared to the steadily dropping rate scenario in 2003.

NON-INTEREST EXPENSE

The costs associated with operating the Corporation increased by 7.8% to $19,332,000 during 2004 compared to 2003. These costs include but are not limited to salaries, benefits, supplies, data processing expenses, insurance, occupancy, and amortization expenses. The primary factor in the increase is employee related costs which increased $685,000 or 7.4% over 2003. Driving this increase were the Corporation’s health care costs which increased approximately $363,000 as compared to 2003. The remainder is from additional personnel who were hired in late 2003 to staff the Warren Loan Production office and normal compensation increases that occur throughout each year.

The Bank signed a letter of intent to purchase a new office in Warren, PA. This office will provide full service banking and house our existing loan production staff. The estimated total cost of this project is $1,250,000. The building is expected to be completed by the fourth quarter of 2005. The cost associated will cause a slight increase in the annual occupancy expense along with additional employee costs as we staff the office.

36

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

YEAR ENDED DECEMBER 31, 2003

OVERVIEW OF THE INCOME STATEMENT

In 2003, net income was $9,057,000 an increase of 4.5% compared to 2002 net income of $8,666,000. The increase in earnings is the result of enhanced noninterest income, which increased $1,098,000 over 2002.

INTEREST INCOME AND EXPENSE

Net interest income totaled $24,186,000 for 2003, a decrease of (1.4)% compared to 2002. The decline in the net interest income stems primarily from a reduced tax equivalent net interest margin which was 4.04% in 2003 compared to 4.29% in 2002. Total interest income for 2003 decreased by $2,150,000 or (5.4)% while interest expense decreased by $1,801,000 or (11.8)% when compared to 2002. The main cause of the decreased net interest margin is the more significant drop in the yield on earning assets. Our cost of funds are virtually as low as possible under the current rate environment while assets continued to price downward.

The Corporation recorded a provision for loan and lease losses of $1,535,000 for 2003 compared to $1,800,000 for 2002. The decrease in provision is a result of the relatively low level of charge-offs that the Bank has experienced over the past 3 years. The provision has given the Bank a 1.26% coverage of loans compared to 1.20% in 2002.

NON-INTEREST INCOME

Non-interest income increased 18.2% over 2003 providing the Corporation with its growth in earnings for the year. All areas had increases. The gain on sale of loans increased 97.6% or $241,000. This was driven by refinancings of residential mortgages to take advantage of lower interest rates. Also, the Corporation began selling fixed annuities in 2003 and earned $259,000. Finally, security gains increased $277,000 over 2002. The gains are comparable to gains taken in 2001. Two sales were responsible for the majority of the gains. First, a corporate bond that had suffered a downgraded rating was sold at a profit of $151,000. Second, several equity securities were sold to take advantage of some high value positions.

NON-INTEREST EXPENSE

The costs associated with operating the Corporation increased by 3.6% to $17,925,000 during 2003 compared to 2002. These costs include but are not limited to salaries, benefits, supplies, data processing expenses, insurance, occupancy, and amortization expenses. The primary factor in the increase is the cost of employee benefits. These costs increased $513,000 or 24.9% over 2002. A new supplemental retirement plan was established in 2003 to provide retirement benefits to key employees at an increase cost of $429,000. This cost was offset by income from an investment utilized to fund increasing benefit costs (see Bank Owned Life Insurance). This investment earned the Corporation $488,000 of tax free earnings.

RETURN ON EQUITY

The return on average shareholder’s equity (“ROE”) for 2004 was 12.04% compared to 14.79% and 14.83% for 2003 and 2002 respectively. The decrease in 2004 can be attributed to the non-cash charge for impairment as previously discussed. ROE was 13.43% for 2004 excluding the effects of the $910,000 non-cash charge for impairment of a security.

RETURN ON ASSETS

The Corporation’s return on average assets (“ROA”) was 1.11%, 1.24% on an operating basis, in 2004 down from 1.31% in 2003 and 1.35% recorded in 2002. Decreased ROA can be attributed to the growth in assets outpacing the growth in earnings including the effects of the non-cash charge for impairment as previously discussed.

FEDERAL INCOME TAX EXPENSE

Federal income taxes decreased to $1,964,000 in 2004 compared to $2,805,000 in 2003. The effective tax rates were 19.9%, 23.6% and 24.4% for 2004, 2003 and 2002, respectively.

MARKET RISK MANAGEMENT

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest

37

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

rates, exchange rates, and equity prices. As a financial institution, the Corporation is primarily sensitive to the interest rate risk component. Changes in interest rates will affect the levels of income and expense recorded on a large portion of the Bank’s assets and liabilities. Additionally, such fluctuations in interest rates will impact the market value of all interest sensitive assets. The Asset/Liability Committee (ALCO) is responsible for reviewing the interest rate sensitivity position and establishing policies to control exposure to interest rate fluctuations. The primary goal established by this policy is to increase total income within acceptable risk limits.

The Corporation monitors interest rate risk through the use of two models: earnings simulation and static gap. Each model standing alone has limitations, however taken together they represent a reasonable view of the Corporation’s interest rate risk position.

STATIC GAP: Gap analysis is intended to provide an approximation of projected repricing of assets and liabilities at a point in time on the basis of stated maturities, prepayments, and scheduled interest rate adjustments within selected time intervals. A gap is defined as the difference between the principal amount of assets and liabilities which reprice within those time intervals. The cumulative one year gap at December 31, 2004 was 7.72% of total earning assets compared to policy guidelines of plus or minus 15.0%. The ratio was 10.78% at December 31, 2003.

Fixed rate securities, loans and CDs are included in the gap repricing based on time remaining until maturity. Mortgage prepayments are included in the time frame in which they are expected to be received.

Certain shortcomings are inherent in the method of analysis presented in Static Gap. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may not react correspondingly to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate with changes in market interest rates, while interest rates on other types of assets may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate loans, have features, like annual and lifetime rate caps, which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate from those assumed in the table. Finally, the ability of certain borrowers to make scheduled payments on their adjustable-rate loans may decrease in the event of an interest rate increase.

EARNINGS SIMULATION: This model forecasts the projected change in net income resulting from an increase or decrease in the level of interest rates. The model assumes a one time shock of plus or minus 200 basis points or 2%.

The model makes various assumptions about cash flows and reinvestments of these cash flows in the different rate environments. Generally, repayments, maturities and calls are assumed to be reinvested in like instruments and no significant change in the balance sheet mix is assumed. Actual results could differ significantly from these estimates which would produce significant differences in the calculated projected change in income. The limits stated above do not necessarily represent measures that would be taken by management in order to stabilize income results. The instruments on the balance sheet do react at different speeds to various changes in interest rates as discussed under Static Gap. In addition, there are strategies available to management that minimize the decline in income caused by a rapid rise in interest rates.

The following table below summarizes the information from the interest rate risk measures reflecting rate sensitive assets to rate sensitive liabilities at December 31, 2004 and 2003:

	2004		2003
Static 1-Yr. Cumulative Gap	7.72	%	10.78	%
Earnings Simulation
- 200 bps vs. Stable Rate	6.90	%	(7.35	)%
+200 bps vs. Stable Rate	(3.53	)%	(5.62	)%

The interest rate sensitivity position at December 31, 2004 was asset sensitive in the short-term. Management measures the potential impact of significant changes in interest rates on both earnings and equity. By the use of computer generated models, the potential impact of these changes has been determined to be acceptable with modest affects on net income and equity given an interest rate shock of an increase or decrease in rates of 2.0%. We continue to monitor the interest rate sensitivity through the ALCO and use the data to make strategic decisions.

38

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

FUTURE OUTLOOK

Management’s focus for 2005 is to maintain a favorable cost of funds. During analysis showing CNB versus our peer group, it was noted that we compare well in all other areas. Management will approach this focus from all aspects including acquiring more demand deposit accounts and lowering the cost of funds for our certificates of deposit.

In 2004, the Bank began offering wealth management services. In just six months, the program has more than $5.2 million under management. Earnings from this program are expected to eclipse 5% of non-interest income in 2005. Management continues to be encouraged by the growth in market areas served by the Bank. In addition to deposits, the traditional funding source for the Corporation, we will continue to manage potential earning enhancement opportunities using other borrowings with the Federal Home Loan Bank of Pittsburgh. There are certain interest rate environments that allow for pricing opportunities from such borrowings.

Loan growth was moderate during 2004. Expectations for 2005 is projected moderate growth while continuing to improve overall credit quality. While the main focus for 2005 is cost of funds, the Bank will continue to use a loan pricing approach that projects a return on investment for each proposal. This discipline has given the Bank profitable growth in its loan portfolio.

During 2002, the Bank established a loan production office (LPO) in Johnstown, Pennsylvania and in 2003, another LPO was established in Warren, Pennsylvania. By the end of 2004, the Johnstown and Warren LPO’s have grown to $62.2 million and $11.3 million, respectively, in total loans. During 2005, the Bank may develop additional LPO’s as a low cost profitable means to enter new markets.

Non-interest income should be enhanced in several areas including improved mortgage sale income, trust fees, and as previously mentioned, wealth management fees. A known area of increased costs will be the personnel and occupancy costs related to the 2005 opening of a full-service branch in Warren, Pennsylvania. As mentioned above, the Bank successfully entered the Warren market in 2003 with a LPO and earnings from this venture will help the Corporation offset the cost of the new full-service branch.

The interest rate environment always plays an important role in the future earnings of the Corporation. The net interest margin in 2004 declined compared to 2003 as a result of a drop in yield on earning assets. Management will closely monitor the net interest margin in 2005 as much of the earnings of the Corporation continue to be derived from interest income. To assist the net interest margin, the previously mentioned consumer loan focus should provide higher yields overall. Funding for expected loan growth may come from the investment portfolio which again will shift assets to a higher yielding product.

Management concentrates on return on average equity and earnings per share evaluations, plus other methods to measure and direct the performance of the Corporation. While past results are not an indication of future earnings, we feel the Corporation is positioned to enhance performance of normal operations through 2005.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The Corporation has various financial obligations, including contractual obligations and commitments, that may require future cash payments.

Contractual Obligations: The following table presents, as of December 31, 2004, significant fixed and determinable contractual obligations to third parties by payment date. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

				Payments Due In
(In thousands)	Note Reference	One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
Deposits without a stated maturity		$	276,843	$	—	$	—	$	—	$	276,843
Certificates of deposits	10		152,151		129,819		29,688		8,404		320,062
Borrowed funds	11		2,000		—		—		—		2,000
Long-term debt	11		—		—		—		40,000		40,000
Operating fees	7		120		326		110		1,349		1,905
Subordinated debentures			—		—		—		10,310		10,310

39

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

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

The Corporation’s operating lease obligations represent short and long-term lease and rental payments for facilities.

The Corporation also has obligations under its postretirement plan as described in Note 13 to the consolidated financial statements. The postretirement benefit payments represent actuarially determined future benefit payments to eligible plan participants. The Corporation reserves the right to terminate the postretirement benefit plan at any time.

Commitments to extend credit, including loan commitments, standby letters of credit, and commercial letters of credit do not necessarily represent future cash requirements, in that these commitments often expire without being drawn upon. Further discussion of these commitments is included in Note 18 to the consolidated financial statements.

APPLICATIONS OF CRITICAL ACCOUNTING POLICIES

The Corporation’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow general practices within the industries in which it operates. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments. Certain policies inherently have a greater reliance on the use of estimates, and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates or judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal cash flow modeling techniques.

The most significant accounting policies followed by the Corporation are presented in Note 1 to the consolidated financial statements. These policies, along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements. Management currently views the determination of the allowance for loan losses, fair value of securities and the valuation of mortgage servicing assets to be critical accounting policies.

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The statements above which are not historical fact are forward looking statements that involve risks and uncertainties, including, but not limited to, the interest rate environment, the effect of federal and state banking and tax regulations, the effect of economic conditions, the impact of competitive products and pricing, and other risks detailed in the Corporation’s Securities and Exchange Commission filings.

40

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Executive Management and Board of Directors

CORPORATE OFFICERS

William F. Falger

President & Chief Executive Officer

Joseph B. Bower, Jr.

Secretary and Treasurer

EXECUTIVE OFFICERS

William F. Falger

President & Chief Executive Officer

Joseph B. Bower, Jr.

Executive Vice President & Chief Operating Officer

Mark D. Breakey

Senior Vice President & Credit Risk Manager

Richard L. Sloppy

Senior Vice President & Senior Loan Officer

Donald E. Shawley

Senior Vice President & Senior Trust Officer

BOARD OF DIRECTORS

CNB FINANCIAL CORPORATION AND COUNTY NATIONAL BANK

William R. Owens

Chairman of the Board Retired, Formerly Vice President, Secretary and Treasurer, CNB Financial Corporation and President & Chief Executive Officer, County National Bank

Robert E. Brown

Vice President, E. M. Brown, Inc. (Coal Producer, Auto Dealer and Concrete Supplier)

Joseph B. Bower, Jr. (County National Bank only)

Secretary and Treasurer, CNB Financial Corporation; Executive Vice President, and Chief Operating Officer, County National Bank

William F. Falger

President and Chief Executive Officer, CNB Financial Corporation; President and Chief Executive Officer, County National Bank

James J. Leitzinger

Retired, Formerly President, Leitzinger Realty (Real Estate Investments)

Michael F. Lezzer

President, Lezzer Holdings, Inc. (Lumber and Building Supplies Retailer)

Dennis L. Merrey

Retired, Formerly President, Clearfield Powdered Metals, Inc. (Manufacturer)

James P. Moore

Retired, Formerly President & Chief Executive Officer, CNB Financial Corporation and Chairman of the Board, County National Bank

Deborah Dick Pontzer

Director of Outreach Services, University of Pittsburgh, Bradford Campus

Jeffrey S. Powell

President, J.J. Powell, Inc. (Petroleum Distributor)

James B. Ryan

Retired, Formerly Vice President of Sales, Marketing, Windfall Products, Inc. (Manufacturer)

Peter F. Smith

Attorney at Law

DIRECTOR EMERITUS

L. E. Soult, Jr.

41

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Officers

ADMINISTRATIVE SERVICES

Mary Ann Conaway

Vice President, Human Resources

Charles R. Guarino

Vice President, Chief Financial Officer

Helen G. Kolar

Vice President, Marketing & Sales

Rachel E. Larson

Vice President, Operations

Edward H. Proud

Vice President, Information Systems

Thomas J. Ammerman, Jr.

Bank Security Officer

Donna J. Collins

Compliance Officer

Leanne D. Kassab

Marketing Officer

Susan B. Kurtz

Customer Service Officer

Dennis J. Sloppy

Information Systems Officer

Richard L. Greslick, Jr.

Banking Officer & Controller

Brenda L. Terry

Banking Officer

Carolyn B. Smeal

Operations Officer

Susan M. Warrick

Operations Officer

BRANCH DIVISION

Michael C. Sutika

Vice President, Retail Banking, Branch Administration

Ruth Anne Ryan-Catalano

Assistant Vice President, Regional Branch Administration

Vickie L. Baker

Assistant Vice President, Regional Branch Administration, Bradford Main Street Office

Mary A. Baker

Assistant Vice President, Northern Cambria Office

Deborah M. Young

Assistant Vice President, Washington Street and BiLo Offices, St. Marys

Denise J. Greene

Community Office Manager, DuBois Office

Paul A. McDermott

Banking Officer, Community Banking, Clearfield

Francine M. Papa

Community Office Manager, Ridgway Office

Larry A. Putt

Community Office Manager, Industrial Park Road, Clearfield

Mary Ann Roney

Banking Officer, Bradford

Douglas M. Shaffer

Community Office Manager, Punxsutawney Office

Susan J. Shimmel

Community Office Manager, Old Town Road Office, Clearfield

Steven C. Tunall

Community Office Manager, Kane Office

Gregory R. Williams

Banking Officer, Community Banking, Clearfield

LENDING DIVISION

Robert S. Berezansky

Vice President, Corporate Lending

James M. Baker

Vice President, Commercial Banking, DuBois

Robin L. Hay

Vice President, Commercial Banking

Jeffrey A. Herr

Vice President, Commercial Banking, Philipsburg

William J. Mills

Vice President, Commercial Banking, St. Marys

Charles C. Shrader

Vice President, Commercial Banking, Warren

Joseph H. Yaros

Vice President, Commercial Banking Bradford

Duane P. Shifter

Vice President, Downtown Office, Clearfield

Christopher L. Stott

Vice President, Mortgage Lending

Kristen L. Howard

Assistant Vice President, Commercial Banking, Warren

David W. Ogden

Assistant Vice President, Credit Administration

Rodger L. Read

Assistant Vice President, Dealer Center

Richard L. Bannon

Credit Administration Officer

Christopher N. Norris

Collection Officer

Tammy C. Wagner

Staff Commercial Lender

TRUST & ASSET MANAGEMENT SERVICES

Calvin R. Thomas, Jr.

Vice President, Trust Officer

Jane M. Gnan

Assistant Trust Officer

Glenn R. Pentz

Trust Officer

WEALTH MANAGEMENT SERVICES

Georgia A. Gertz

Vice President, Wealth Management

42

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

Shareholder Information

ANNUAL MEETING

The Annual Meeting of the Shareholders of CNB Financial Corporation will be held Tuesday, April 19, 2005 at 2:00 p.m. at the Corporation’s Headquarters in Clearfield, PA.

CORPORATE ADDRESS

CNB Financial Corporation

1 S. Second Street

P.O. Box 42

Clearfield, PA 16830

(814) 765-9621

STOCK TRANSFER AGENT & REGISTRAR

County National Bank

1 S. Second Street

P.O. Box 42

Clearfield, PA 16830

(814) 765-9621

FORM 10-K

Shareholders may obtain a copy of the Annual Report to the Securities and Exchange Commission on Form 10-K by writing to:

CNB Financial Corporation

1 S. Second Street

P.O. Box 42

Clearfield, PA 16830

ATTN: Shareholder Relations

QUARTERLY SHARE DATA

For information regarding the Corporation’s quarterly share data, please refer to page 28 in the 2004 Annual Report Financial Section.

MARKET MAKERS

The following firms have chosen to make a market in the stock of the Corporation. Inquiries concerning their services should be directed to:

Ferris Baker Watts, Inc.

6 Bird Cage Walk

Hollidaysburg, PA 16648

(800) 343-5149

E. E. Powell & Company, Inc.

1100 Gulf Tower

Pittsburgh, PA 15219

(412) 391-4594

Parker Hunter, Inc.

484 Jeffers Street

P.O. Box 1105

DuBois, PA 15801

(800) 238-0067

F. J. Morrissey & Co.

1700 Market Street, Ste 1420

Philadelphia, PA 19103

(800) 842-8928

Ryan, Beck & Co.

401 City Avenue Ste 902

Bala Cynwyd, PA 19004-1122

(800) 223-8969

CORPORATE PROFILE

County National Bank, a subsidiary of CNB Financial Corporation, is a leader in providing integrated financial solutions, which creates value for both consumers and businesses. These solutions consist of a family of products and services developed to support the evolving needs of our customers from traditional to innovative. For nearly 140 years, we have prided ourselves in building long-term customer relationships by being reliable and competitively priced.

Being a regional independent community bank in North Central Pennsylvania, we have approximately 240 employees who make our customer service more responsive and reliable. We strive to be more customer-driven than our competitors.

Hometown banking has always been our philosophy. Hometown people who are equipped to make quick decisions while, at the same time, make our customers feel ‘welcome’ is where it all begins. With another component of our hometown philosophy, community involvement, the Bank has played an integral role in all of our communities by contributing financial, in-kind and volunteer assistance to nonprofit organizations that enhance the quality of life and promote public interest.

In addition, CNB continues to rank technology as vital in executing our personal, quality service strategy by maintaining the latest data processing and information systems. We offer a variety of delivery channels, which includes 20 full-service offices, 17 ATMs, 2 loan production offices, telephone banking (1-888-641-6554), Internet banking (www.bankcnb.com) and a centralized customer service center (1-800-492-3221).

The common stock of the Corporation trades over-the-counter on the NASDAQ under the symbol CCNE.

43

CNB FINANCIAL CORPORATION AND SUBSIDIARIES 2004 ANNUAL REPORT

EX-21

EXHIBIT 21

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2004

Subsidiaries of the Registrant

Name	Jurisdiction of Incorporation or Organization
County National Bank	National Banking Association
	Incorporated in Pennsylvania
CNB Investment Corporation	Investment Holding Company
	Incorporated in Delaware
County Reinsurance Company	Reinsurance Company
	Incorporated in Arizona
CNB Insurance Agency	Insurance & Annuity Agency
	Incorporated in Pennsylvania

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, William F. Falger, certify that:

1. I have reviewed this report on Form 10-K of CNB Financial Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statement were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of December 31, 2004; and

c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: March 15, 2005

/s/ William F. Falger

William F. Falger

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Joseph B. Bower, Jr., certify that:

1. I have reviewed this report on Form 10-K of CNB Financial Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statement were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of December 31, 2004; and

c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: March 15, 2005

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted, Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned executive officer of the registrant hereby certifies that this Form 10-K fully complies with the requirements of Section 13(a) or 13(d) of the Securities Exchange Act of 1934 and that the information contained herein fairly presents, in all material respects, the financial condition and results of operations of the registrant.

/s/ William F. Falger

William F. Falger

President

(Principal Executive Officer)

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

Treasurer

(Principal Financial Officer)

Dated: March 15, 2005

COVER

CNB Financial Corporation

One South Second Street

Clearfield, PA 16830

March 15, 2005

Securities & Exchange Commission

450 Fifth Street, NW

Washington, DC 20549

RE:   CNB Financial Corporation Report on Form 10-K for the Year Ended December 31, 2004

Ladies and Gentlemen:

Pursuant to the requirements, we are transmitting our report on Form 10-K, including exhibits, for the year ended December 31, 2004.

CNB Financial Corporation has not had a change in their accounting methods during 2004. In addition, attached are the certifications of the chief executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

If you have any questions regarding these documents, please contact the undersigned.

Respectfully,

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

Treasurer