UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]      QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2004

[ ]      TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the transition period from               to
                                       --------------    ------------------

                        Commission file number: 000-50242


                              CFB Bancshares, Inc.
        (Exact name of small business issuer as specified in its charter)

             Tennessee                                        62-1619339
(State of other jurisdiction of                              (IRS Employer
 incorporation or organization)                            Identification No.)

                                1015 Main Street
                            Wartburg, Tennessee 37887
                    (Address of principal executive offices)

                                 (423) 346-2265
                           (Issuer's telephone number)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section  12, 13 or 15(d) of the  Exchange  Act during the past 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 [ ]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date: 309,884 shares of Common Stock
as of November 11, 2004.

     Transitional Small Business Disclosure Format (check one):
                                                               Yes [ ]    No [X]

<PAGE>

<TABLE>
<CAPTION>

CONTENTS

PART I.  FINANCIAL INFORMATION
         ---------------------
<S>      <C>                                                                                                 <C>

         Item 1.  Financial Statements

                  Consolidated Balance Sheets as of September 30, 2004 (Unaudited)
                  and December 31, 2003                                                                          3

                  Consolidated Statements of Income for the Three and Nine Months
                  Ended September 30, 2004 and 2003 (Unaudited)                                                  4

                  Consolidated Statements of Comprehensive Income for the Three and
                  Nine Months Ended September 30, 2004 and 2003 (Unaudited)                                      5

                  Consolidated Statement of Changes in Shareholders' Equity for the
                  Nine Months Ended September 30, 2004 (Unaudited)                                               6

                  Consolidated Statements of Cash Flows for the Nine Months
                  Ended September 30, 2004 and 2003 (Unaudited)                                                  7

                  Notes to Consolidated Financial Statements                                                  8-10

         Item 2.  Management's Discussion and Analysis or Plan of Operation                                  11-16

         Item 3.  Controls and Procedures                                                                       17


PART II.  OTHER INFORMATION
          -----------------

         Item 1.  Legal Proceedings                                                                             18

         Item 2.  Changes in Securities and Use of Proceeds                                                     18

         Item 3.  Defaults Upon Senior Securities                                                               18

         Item 4.  Submission of Matters to a Vote of Security Holders                                           18

         Item 5.  Other Information                                                                             18

         Item 6.  Exhibits and Reports on Form 8-K                                                              18

SIGNATURES                                                                                                      19
</TABLE>

                                       -2-
<PAGE>


                         PART I -- FINANCIAL INFORMATION


Item 1.  Financial Statements

<TABLE>
<CAPTION>

                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

           As of September 30, 2004 (Unaudited) and December 31, 2003
                                                                        September 30, 2004    December 31, 2003
                                                                        ------------------    -----------------
<S>                                                                            <C>                      <C>

Assets:
Cash and Due From Banks......................................                  $ 3,685                  $ 2,860
Federal Funds Sold...........................................                    2,196                    1,866
                                                                                 -----                    -----
Total Cash and Cash Equivalents..............................                    5,881                    4,726

Interest-Bearing Deposits in Other Banks.....................                      597                      497
Investment Securities Available for Sale, At Fair Value......                    8,414                   11,104
Loans, Net...................................................                   64,258                   51,215
Premises and Equipment, Net..................................                    3,037                    2,954
Accrued Interest Receivable..................................                      457                      377
Foreclosed Real Estate.......................................                      167                      136

Prepaid Expenses and Other ..................................                      406                      210
                                                                                   ---                      ---
          Total Assets.......................................                  $83,217                  $71,219
                                                                               =======                  =======

Liabilities and Shareholders' Equity:
Liabilities:
Deposits
      Demand.................................................                  $31,603                  $30,236
      Term...................................................                   35,267                   32,872
                                                                                ------                   ------
          Total Deposits.....................................                   66,870                   63,108

Securities Sold Under Agreements to Repurchase...............                      387                      384
Advances From the Federal Home Loan Bank.....................                    6,997                      340
Trust Preferred Debt.........................................                    4,000                    2,000
Accrued Interest Payable.....................................                      146                      106
Accrued Income Taxes.........................................                      200                      103
Deferred Income Taxes........................................                      238                      244
Other........................................................                       34                       54
                                                                                    --                       --
        Total Liabilities....................................                   78,872                   66,339
                                                                                ------                   ------

Shareholders' Equity :
Common Stock, Par Value $1, Authorized 2,000,000
 Shares;  Issued and Outstanding 310,084 Shares in 2004
 (352,654 Shares in 2003)....................................                      310                      353
Capital in Excess of Par Value...............................                    3,095                    3,988
Retained Earnings............................................                      898                      533
Accumulated Other Comprehensive Income (Loss)................                       42                        6
                                                                                    --                        -
        Total Shareholders' Equity...........................                    4,345                    4,880
                                                                                 -----                    -----
Total Liabilities and Shareholders' Equity...................                  $83,217                  $71,219
                                                                               =======                  =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      -3-

<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                    (In Thousands, Except Earnings Per Share)

         For the Three and Nine Months Ended September 30, 2004 and 2003
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                         For the Three Months Ended            For the Nine Months Ended
                                                                September 30,                        September 30,
                                                      -------------------------------      -------------------------------
                                                              2004            2003                  2004            2003
                                                      --------------  ---------------      --------------  ---------------
<S>                                                           <C>                <C>             <C>               <C>
Interest Income
     Loans..........................................          $1,084             $  894          $2,997            $ 2,583
     Investment Securities..........................              60                 73             204                228
     Federal Funds Sold.............................               3                  3              13                 21
     Interest Bearing Deposits at Other Banks.......               2                  3               9                 10
                                                                   -                  -               -                 --
     Total Interest Income..........................           1,149                973           3,223              2,842

 Interest Expense...................................             416                308           1,125              1,030
                                                                 ---                ---           -----              -----

Net Interest Income.................................             733                665           2,098              1,812

Provision For Loan Losses...........................              75                 88             223                120
                                                                  --                 --             ---                ---
Net Interest Income After Provision for Loan
     Losses.........................................             658                577           1,875              1,692
                                                                 ---                ---           -----              -----

Noninterest Income
     Loan Fees and Other Service Charges............             124                 99             335                278
     Service Charges on Deposit Accounts ...........             185                180             569                520
     Other .........................................              34                 23              82                 63
                                                                  --                 --              --                 --
     Total Noninterest Income.......................             343                302             986                861
                                                                 ---                ---             ---                ---

Noninterest Expense
     Salaries and Employee Benefits.................             363                295           1,068                863
     Occupancy and Equipment Expense................             103                 95             307                279
     Office Supplies and Postage....................              34                 28             100                 95
     Data Processing Expenses.......................              96                 83             285                252
     Advertising and Promotion......................              21                 16              65                 41
     Holding Co. and Organizational Expense                        0                 77               0                120
     Other..........................................             157                123             415                360
                                                                 ---                ---             ---                ---
     Total Noninterest Expense......................             774                717           2,240              2,010
                                                                 ---                ---           -----              -----

Income Before Income Taxes .........................             227                162             621                543
Income Taxes........................................              88                 50             256                209
                                                                  --                 --             ---                ---

Net Income..........................................           $ 139              $ 112             365              $ 334
                                                               =====              =====             ===              -----

Earnings Per Share:
     Basic..........................................            $.45               $.32           $1.15               $.95
                                                                ====               ====           =====               ====
     Assuming Dilution..............................            $.42               $.30           $1.09               $.91
                                                                ====               ====           =====               ====
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                      -4-


<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In Thousands)

         For the Three and Nine Months Ended September 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 For the Three          For the Nine
                                                                                  Months Ended          Months Ended
                                                                                  September 30,          September 30,
                                                                               -------------------    ------------------
<S>                                                                               <C>       <C>          <C>      <C>

                                                                                  2004      2003         2004     2003
                                                                                  ----      ----         ----     ----
Net income.................................................................       $139      $112         $365      335
                                                                                  ----      ----         ----     ----
Other comprehensive income (loss), net of tax:
     Unrealized gains (losses) on investment securities....................        194      (162)          56     (145)
     Reclassification adjustment for gains / losses included in net income.          0         0            0        0
     Income taxes related to unrealized gains / losses on investment               (72)       61          (20)      55
     securities............................................................       ----      ----         ----     ----

Other comprehensive income (loss), net of tax..............................        122      (101)          36      (90)
                                                                                  ----      ----         ----     ----
Comprehensive income.......................................................       $261      $ 11         $401     $245
                                                                                  ====      ====         ====     ====
</TABLE>
































   The accompanying notes are an integral part of these financial statements.

                                      -5-
<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (In Thousands)

                  For the Nine Months Ended September 30, 2004

<TABLE>
<CAPTION>
                                                                                       Accumulated
                                                      Capital in                          Other               Total
                                         Common      Excess of Par       Retained     Comprehensive       Shareholders'
                                         Stock           Value           Earnings      Income/(Loss)          Equity
                                         -----       -------------       --------     --------------      -------------
<S>                                      <C>            <C>               <C>                <C>               <C>
Balances, December 31, 2003              $ 353          $ 3,988           $ 533              $  6              $ 4,880

Net Income......................             0                0             365                 0                  365

Purchase and Retirement of
42,570 Shares of Common
Stock...........................           (43)            (893)              0                 0                 (936)

Other Comprehensive Loss........             0                0               0                36                   36
                                         -----          -------           -----              ----              -------

Balances, September 30, 2004             $ 310          $ 3,095           $ 898               $42              $ 4,345
                                         =====          =======           =====              ====              =======
</TABLE>































   The accompanying notes are an integral part of these financial statements.

                                      -6-
<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

              For the Nine Months Ended September 30, 2004 and 2003

<TABLE>
<CAPTION>
                                                                             For the Nine Months Ended September 30,
                                                                                    2004                      2003
                                                                        ----------------------    -------------------
<S>                                                                                   <C>                     <C>
Operating Activities:
Net Income ...................................................                        $    365                $   334
                                                                                      --------                -------
Adjustments to Reconcile Net Income to Net Cash
        Provided by Operating Activities:
     Depreciation ............................................                             261                    256
     Provision for Loan Losses................................                             223                    120
     (Gain) Loss on Sales of Foreclosed Real Estate...........                               1                      0
    (Increase) Decrease in Accrued Interest Receivable .......                             (80)                     1
     Decrease in Prepaid Expenses and Other...................                            (196)                    19
     Increase (Decrease) in Accrued Interest Payable..........                              40                    (12)
     Increase  in Accrued Income Taxes and Other Liabilities..                              51                    226
                                                                                      --------                -------
           Total Adjustments..................................                             300                    610
                                                                                      --------                -------
            Net Cash Provided by Operating Activities.........                             665                    944
                                                                                      --------                -------
Investing Activities:
 Increase in Interest-Bearing Deposits in Other Banks.........                            (100)                  (103)
 Investment Securities Available for Sale:
     Purchases................................................                          (5,552)               (10,966)
     Maturities...............................................                           8,298                 10,600
 Purchases of Premises and Equipment..........................                            (344)                  (135)
Net Increase in Loans.........................................                         (13,298)                (5,514)
                                                                                      --------                -------
            Net Cash Used in Investing Activities.............                         (10,996)                (6,118)
                                                                                      --------                -------
Financing Activities:
Purchase and Retirement of Common Stock.......................                            (936)                   (28)
Increase in Securities Sold Under Agreements to Repurchase....                               3                      4
Proceeds From Issuance of Trust Preferred Debt................                           2,000                      0
Net Increase in Advances From Federal Home Loan Bank..........                           6,657                      0
Net Increase in Deposits......................................                           3,762                  2,508
                                                                                      --------                -------
           Net Cash Provided by Financing Activities..........                          11,486                  2,484
                                                                                      --------                -------
Net Decrease in Cash and Cash Equivalents.....................                           1,155                 (2,690)
Cash and Cash Equivalents at Beginning of Period .............                           4,726                  5,845
                                                                                      --------                -------
Cash and Cash Equivalents at End of Period ...................                        $  5,581                $ 3,155
                                                                                      ========                =======
Supplementary Disclosures of Cash Flow Information:
  Cash Paid During the Period for:
    Interest..................................................                        $  1,085                $ 1,042
    Income Taxes..............................................                        $    138                $    77
Supplementary Disclosures of Noncash Investing Activities:
Acquisition of Foreclosed Real Estate.........................                        $    175                $    90
Sales of Foreclosed Real Estate by Origination of Mortgage
Loans.....                                                                            $    142                $   110
Change in Gross Unrealized Gain / Loss on Investment
     Securities Available for Sale............................                        $     56                $  (145)
Change in Deferred Taxes Associated with Unrealized
     Gain / Loss on Investment Securities Available for Sale..                        $     20                $   (55)
Change in Net Unrealized Gain/ Loss on Investment Securities
     Available for Sale........................................                       $     36                $   (90)
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -7-
<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     September 30, 2004 and 2003 (Unaudited)


NOTE 1 - PRINCIPLES OF CONSOLIDATION, NATURE OF OPERATIONS AND SHARE EXCHANGE

The consolidated  financial  statements  include the accounts of CFB Bancshares,
Inc., a bank holding company, its wholly owned subsidiary,  Citizens First Bank,
and the Bank's wholly owned  subsidiary,  CFB Financial  Services,  Inc.,  which
provides insurance agency services.  All significant  intercompany  balances and
transactions have been eliminated.

Citizens  First Bank was  incorporated  on  October  1, 1995 for the  purpose of
organizing  a  state-chartered  commercial  bank  and  commenced  operations  on
February 10, 1997. Citizens First Bank provides a variety of banking services to
individuals  and  businesses  through  its two  offices in  Wartburg  and Oliver
Springs,  Tennessee.  Its  primary  deposit  products  are demand  deposits  and
certificates  of  deposit;  and its  primary  lending  products  are real estate
mortgage loans,  consumer  installment loans, and commercial  business loans. In
March  2004,  Citizens  First Bank  opened a Loan  Production  Office in Oneida,
Tennessee for the purpose of offering the aforementioned lending products.

In July  2004,  Citizens  First  Bank filed an  application  with the  Tennessee
Department of Financial  Institutions  (TDFI) to open a branch office in Oneida,
Tennessee.  This  application was approved by the TDFI in July 2004. The bank is
currently working toward opening the branch during the first quarter of 2005.

Effective October 24, 2002, Citizens First Bank's shareholders  approved a share
exchange agreement with CFB Bancshares,  Inc. whereby one share of Company stock
was exchanged for one share of Bank stock.  The Bank's  retained  earnings as of
October 24, 2002,  totaling  $656,612,  were transferred to capital in excess of
par value on a consolidated basis.

The unaudited interim  consolidated  financial statements for the three and nine
months ended September 30, 2004 and 2003, and as of September 30, 2004 have been
prepared on the same basis as the Company's audited  financial  statements as of
December 31, 2003 and for the year ended  December  31, 2003.  In the opinion of
management, all adjustments,  consisting of normal recurring accruals, necessary
to present fairly the financial position of the Company as of September 30, 2004
and the results of operations for the three and nine months ended  September 30,
2004 and 2003 and cash flows for the nine months ended  September  30, 2004 have
been  included.  The  results of  operations  for such  interim  periods are not
necessarily indicative of the results expected for the full year.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates - The  preparation  of  consolidated  financial  statements  in
conformity with accounting principles generally accepted in the United States of
America  requires  management  to make  estimates  and  assumptions  that affect
certain reported amounts and disclosures. Actual results could differ from those
estimates.  Material estimates that are particularly  susceptible to significant
change relate to the determination of the allowance for losses on loans.


Stock Option Plans - The Company has two stock option plans which are  described
more fully in Note 3. The Company accounts for those plans under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees,  and related  interpretations.  No stock-based employee  compensation
cost is reflected in consolidated net income, as all options granted under those
plans had an exercise price equal to the market value of the  underlying  common
stock on the date of grant.  The following  table  illustrates the effect on net
income  and  earnings  per  share if the  Company  had  applied  the fair  value
recognition  provisions of FASB Statement No. 123,  Accounting  for  Stock-Based
Compensation, to stock-based employee compensation.

                                      -8-

<PAGE>



<TABLE>
<CAPTION>

                                                     For the Three Months            For the Nine Months
                                                      Ended September 30,            Ended September 30,
                                                        (In thousands)                  (In thousands)
                                                  ----------------------------    ---------------------------
                                                      2004            2003           2004           2003
                                                  -------------    -----------    -----------    ------------
<S>                                               <C>              <C>            <C>            <C>
Net Income, as Reported                           $        139     $      112     $      365     $       334
Less: Total Stock-Based Employee
 Compensation Expense Determined
 Under Fair Value Based Method
 for All Awards, Net of  Related Tax Effects                 0              0              0               0
                                                  -------------    -----------    -----------    ------------
Pro Forma Net Income                              $        139     $      112     $      365     $       334
                                                  =============    ===========    ===========    ============
Earnings Per Share:
 Basic - as Reported                              $        .45     $      .32     $     1.15     $       .95
                                                  =============    ===========    ===========    ============
 Basic - Pro Forma                                $        .45     $      .32     $     1.15     $       .95
                                                  =============    ===========    ===========    ============
 Diluted - as Reported                            $        .42     $      .30     $     1.09     $       .91
                                                  =============    ===========    ===========    ============
 Diluted - Pro Forma                              $        .42     $      .30     $     1.09     $       .91
                                                  =============    ===========    ===========    ============
</TABLE>

       Earnings Per Share - Earnings per share is based on the following:

<TABLE>
<CAPTION>
                                                       For the Three Months            For the Nine Months
                                                        Ended September 30,            Ended September 30,
                                                    ----------------------------    --------------------------
                                                       2004            2003            2004           2003
                                                    ------------    ------------    -----------    -----------
<S>                                                     <C>             <C>            <C>            <C>

Weighted Average Number
 of Shares Outstanding
 Used for Basic Calculation                             310,219         352,654        317,658        353,071
Effect of Dilutive Stock Options                         17,182          15,429         17,182         15,429
                                                    ------------    ------------    -----------    -----------
Number of Shares Used for
 Calculation Assuming Dilution                          327,401         368,083        334,840        368,500
                                                    ============    ============    ===========    ===========
</TABLE>

NOTE 3 - STOCK OPTION PLANS

Key Employee Plan - In April 1998, the shareholders approved a stock option plan
to provide key  employees  with  additional  incentive to contribute to the best
interests of the Bank. The plan terminates in ten years.  The board of directors
has discretion  concerning which eligible persons shall be granted options,  the
term of each  granted  option,  and the number of shares  for which each  option
shall be granted.  Options must be exercised  within ten years from the date the
options are  granted and must  include a price per share of at least 100% of the
fair  market  value of the  Company's  common  stock on the date the  option  is
granted.  The board of directors has reserved  20,000 shares of common stock for
issuance during the term of the plan. The board of directors has granted options
to certain officers  totaling 14,000 shares at a price of $15 per share.  10,000
options  were  granted in April 1998 and 4,000  options were granted in December
1999. No options have been exercised to date.

Director  Plan - In April 1998,  the  shareholders  approved the director  stock
option plan and awarded  nontransferable  stock options to its directors.  These
options  provide for the purchase of 40,000  shares at a price of $15 per share.
All options expire ten years from the date the options were granted.  No options
have been exercised to date.

                                      -9-

<PAGE>

The fair value of each option grant was estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions:
                                                Periods Ended September 30,
                                          --------------------------------------
                                                 2004               2003
                                          ------------------- ------------------
Dividend Yield                                     0%                 0%
Expected Life                                    9.9 years          9.9 years
Expected Volatility                               16%                16%
Risk-Free Interest Rate                          5.7%               5.7%


A summary of the status of the  Company's  stock option plans as of September 30
is presented below:
<TABLE>
<CAPTION>
                                              2004                            2003
                                   ---------------------------    -----------------------------
                                                    Weighted                        Weighted
                                                    Average                          Average
                                                    Exercise                        Exercise
                                     Shares          Price           Shares           Price
                                   ------------    -----------    -------------    ------------
<S>                                <C>             <C>            <C>              <C>
Outstanding at
 Beginning of Period                    54,000     $    15.00           54,000     $     15.00
Granted                                      0           0.00                0            0.00
Exercised                                    0           0.00                0            0.00
Forfeited                                    0           0.00                0            0.00
                                   ------------    -----------    -------------    ------------
Outstanding at                          54,000     $    15.00           54,000     $     15.00
 End of Period
                                   ============    ===========    =============    ============
Options Exercisable                     54,000     $    15.00           54,000     $     15.00
 at Period-End
Weighted-Average Fair
 Value of Options Granted
 During the Period                 $      0.00                    $       0.00
</TABLE>


Information  pertaining  to options  outstanding  at  September  30,  2004 is as
follows:

<TABLE>
<CAPTION>
                                             Options Outstanding                           Options Exercisable
                             ----------------------------------------------------    --------------------------------

                                                   Weighted
                                                    Average           Weighted                            Weighted
                                                   Remaining           Average                            Average
        Range of                 Number           Contractual         Exercise          Number            Exercise
    Exercise Prices            Outstanding           Life               Price         Exercisable          Price
-------------------------    ----------------    --------------      ------------    --------------     -------------
    <S>                           <C>               <C>              <C>                 <C>            <C>
    $15.00 - $15.00               54,000            3.5 years        $   15.00           54,000         $     15.00
</TABLE>


                                      -10-

<PAGE>

Item 2. Management's Discussion And Analysis Or Plan Of Operation.

Forward-Looking Statements

     This  report  contains   forward-looking   statements   under  the  Private
Securities  Litigation Reform Act of 1995 that involve risks and  uncertainties.
When  used  in  this   discussion,   the   words,   "believes",   "anticipates",
"contemplates",  "expects",  and similar  expressions  are  intended to identify
forward-looking  statements.  Such  statements  are subject to certain risks and
uncertainties  which could cause actual results to differ  materially from those
projected.   Although   we  believe   that  the   assumptions   underlying   the
forward-looking  statements  are  reasonable,  any of the  assumptions  could be
inaccurate,  and  therefore,  we  cannot  assure  you that  the  forward-looking
statements set out in this report will prove to be accurate.

     Factors  that  could  cause  actual  results  to  differ  from the  results
discussed in the forward-looking statements include, but are not limited to:

o    economic conditions (both generally and more specifically in the markets in
     which we operate);

o    competition for our customers from other providers of financial services;

o    government  legislation and regulation (which changes from time to time and
     over which we have no control);

o    changes in interest rates; and

o    material  unforeseen  changes in the liquidity,  results of operations,  or
     financial condition of our customers.

These risks are difficult to predict and many of them are beyond our control.

GENERAL

     The Management's Discussion and Analysis of Financial Condition and Results
of  Operations  of CFB  Bancshares,  Inc.  ("CFB")  covers the nine months ended
September 30, 2004 and 2003.  Citizens First Bank (the "Bank") was  incorporated
on October 1, 1995 and commenced operations on February 10, 1997. On October 24,
2002, a Plan of Share Exchange was consummated between the Bank and CFB in which
holders of Bank common shares  exchanged  them for common shares of CFB on a one
for one basis, as provided for in the Plan of Share Exchange.  The Plan of Share
Exchange was approved by the Bank's shareholders on May 23, 2002. CFB was formed
August 28,  2002  under the laws of the State of  Tennessee  for the  purpose of
acquiring  the Bank by means of the share  exchange,  and  becoming a registered
bank holding  company under the Bank Holding Company Act. CFB's only activity is
owning the Bank and the members of the boards of  directors  of CFB and the Bank
are the same.

Comparison of Financial Condition at September 30, 2004 and December 31, 2003

     Total  assets  grew from  December  31, 2003 to  September  30, 2004 by $12
million,  or 16.8 %, from $71.2 million at December 31, 2003 to $83.2 million at
September 30, 2004.  The primary  change in asset  categories for the nine month
period ended  September 30, 2004 was a $13 million  increase in net loans offset
by a $2.7 million  decrease in investment  securities  available  for sale.  CFB
issued an additional $2 million of trust preferred debt during the third quarter
of 2004.  These  funds  were  invested  in the Bank to fund loan  growth.  Total
deposits increased  approximately $3.8 million,  or 6.0 %, from $63.1 million at
December 31, 2003 to $66.9 million at September  30, 2004.  CFB is continuing to
attract new customers at both of its current locations.

     Total shareholders' equity decreased  approximately $535,000 as CFB had net
income of approximately  $365,000,  a net unrealized gain on  available-for-sale
securities of approximately  $36,000, and purchased and retired shares of common
stock at a cost of approximately $936,000.

                                      -11-
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
----------------------------------------------------------------------------

Comparison of Results of Operations

     During the three months ended  September 30, 2004,  the Company  attained a
net income of approximately $139,000 or $0.45 per share. During the three months
ended September 30, 2003, the Company had a net income of approximately $112,000
or $0.32 per share.

Net Income

     Net  income  for  the  three  months  ended   September  30,  2004  totaled
approximately  $139,000.  This amount is $27,000 less than the budgeted  amount.
The September 30, 2004 net interest margin  (annualized)  was 4.04 % compared to
4.36 % for  September  30,  2003 as deposit  account  rates have  repriced  more
quickly than loan rates.  Net income for the three months  ended  September  30,
2003  totaled  approximately  $112,000.  This amount was  $15,000  less than the
budgeted amount.

Net Interest Income

     Net interest  income was $733,000 for the three months ended  September 30,
2004,  an increase  of  approximately  7.5 % or $68,000  over the same period in
2003.  The increase in net interest  income was due primarily to the increase in
the average  earning assets of CFB. CFB's net interest  margin  decreased due to
the yield on CFB's interest  bearing assets  decreasing while the yield on CFB's
interest bearing liabilities  increased.  Average loans net of unearned interest
income increased  approximately  $14.4 million to $62.5 million at September 30,
2004, as compared to $48.1  million at September 30, 2003.  Average loans net of
unearned interest income were approximately 86 % of average total earning assets
at September 30, 2004 and 79 % at September 30, 2003.

     The yield on total  earning  assets  declined 5 basis  points for the three
months ended  September 30, 2004 as compared to the three months ended September
30, 2003. The primary reason for the decline in yields on earning assets was due
to declines in the general interest rate  environment.  During 2003, the Federal
Reserve  lowered key  interest  rates 25 basis  points.  During the three months
ended September 30, 2004, the Federal Reserve increased key interest rates by 75
basis points. This caused a net decrease in CFB's net interest margin. The yield
on average  loans was 6.94 % for the three  months ended  September  30, 2004 as
compared to 7.44 % for the three months  ended  September  30, 2003.  Investment
yields increased 18 basis points during the three months as compared to the same
period in 2003 due to the  increase in the general  interest  rate  environment.
Yields on federal funds sold, the rates on which can change overnight, increased
21 basis points due to the increase in the interest rate environment.

     Total  interest  expense was $416,000 for the three months ended  September
30,  2004,  a 35 % increase as compared to the same period in 2003.  The average
rate on  interest-bearing  liabilities  was 2.53 % for the  three  months  ended
September   30,  2004,   25  basis  points  higher  than  the  average  rate  on
interest-bearing  liabilities  during the three months ended September 30, 2003.
The  increase  in the rates on  deposits  during 2004 as compared to 2003 can be
attributed to the repricing of our liabilities at higher rates during 2004.

Provision For Loan Losses

     The provision for loan loss was approximately  $75,000 for the three months
ended  September 30, 2004. This was the result of net charge-offs of $16,000 and
maintaining  the  loan  loss  reserve  at  a  level  considered  appropriate  by
management.  This amount was $15,000 more than the budgeted  amount.  Management
anticipates the 2004 provision for loan loss expense to be greater than the 2003
expense of $163,000 on an annual basis.

                                      -12-

<PAGE>


     The provision for loan loss expense was approximately $88,000 for the three
months ended  September 30, 2003 due to the  requirement of maintaining the loan
loss reserve at a level  considered  appropriate by management.  Net charge-offs
for the three months ended September 30, 2003 were approximately $27,000.

     As a percentage of average loans,  the annualized  rate of net  charge-offs
was .03 % for the three months ended  September 30, 2004 compared to a .06 % for
the same period in 2003. It is  management's  expectation  that net  charge-offs
will  be  moderate  for the  remainder  of  2004.  While  this  is  management's
expectation based on its own internal procedures, reviews and knowledge of CFB's
loan portfolio and market area,  there can be no assurances  that net charge-off
levels will not be higher than levels realized thus far during 2004.

     As of September  30, 2004,  management's  review of the  allowance for loan
losses  concluded that the balance was adequate to provide for potential  losses
based upon an  evaluation  of risk in the loan  portfolio.  Despite CFB's credit
standards,  internal controls,  and continuous loan review process, the inherent
risk in the  lending  process  results  in  periodic  charge-offs.  Through  the
provision  for loan  losses,  CFB  maintains  a  reserve  for loan  losses  that
management believes is adequate to absorb losses within the loan portfolio.

Non-Interest Income

     Noninterest  income for the three months ended  September  30, 2004 totaled
approximately $343,000,  compared to approximately $302,000 for the three months
ended  September  30, 2003,  and was more than the  budgeted  amount by $54,000.
Noninterest  income  consists of fees for the sale of credit life  insurance and
other loan fees,  charges  for  insufficient  funds and stop  payments,  service
charges  on  deposit  accounts,  and fees for  other  services.  Management  has
budgeted 2004 noninterest income to total $1.2 million. Amounts achieved through
September  30, 2004 appear to be on target to  substantially  meet the  budgeted
amount.

Non-Interest Expense

     Noninterest  expense  totaled  approximately  $774,000 for the three months
ended  September 30, 2004. This amount was comprised of  approximately  $363,000
for salaries and  benefits,  approximately  $103,000 for occupancy and equipment
expense,  approximately $96,000 for data processing expenses,  and approximately
$212,000 for holding company organizational  expenses and approximately $167,000
for other expense items.

     Noninterest  expense was $717,000 for the three months ended  September 30,
2003.  This amount was  comprised  of  approximately  $295,000  for salaries and
benefits,   approximately   $95,000  for  occupancy   and   equipment   expense,
approximately  $83,000 for data processing expenses,  approximately  $77,000 for
holding company  organizational  expenses and  approximately  $167,000 for other
expense items.

Income Taxes

     CFB  recognizes   income  taxes  under  the  asset  and  liability   method
established in Statement of Financial  Accounting  Standards No. 109, Accounting
for Income Taxes.  Under this method,  deferred tax assets and  liabilities  are
established for the temporary  differences  between the accounting basis and the
tax basis of CFB's assets and liabilities at enacted tax rates expected to be in
effect when the amounts  related to such temporary  differences  are realized or
settled.  CFB's  deferred tax assets are reviewed  quarterly and  adjustments to
such assets are  recognized  as deferred  income tax expense or benefit based on
management's judgment relating to the realizability of such assets.

     CFB  recognized  income tax  expense of $88,000  and  $50,000 for the three
months ended September 30, 2004 and 2003, respectively.  The effective tax rates
for the three month periods ended September 30, 2004 and 2003 were approximately
39 % and 31 %, respectively.

                                      -13-


<PAGE>


RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
---------------------------------------------------------------------------

Comparison of Results of Operations

     During the nine months ended  September 30, 2004, CFB attained a net income
of  approximately  $365,000,  or $1.15 per share.  During the nine months  ended
September 30, 2003, the Bank had a net income of approximately $334,000, or $.95
per share.

Net Income

     Net  income  for  the  nine  months  ended   September   30,  2004  totaled
approximately  $365,000.  This amount is $59,000 less than the budgeted  amount.
The September 30, 2004 net interest margin  (annualized)  was 4.00 % compared to
3.97 % for  September 30, 2003.  Net income for the nine months ended  September
30, 2003 totaled approximately $334,000.

Net Interest Income

     Net interest  income was $2.1  million for the nine months ended  September
30, 2004, an increase of  approximately 16 % or $286,000 over the same period in
2003.  The increase in net interest  income was due primarily to the increase in
the average earning assets of CFB. CFB's net interest margin increased  slightly
as the yield on CFB's interest  bearing assets decreased to a lesser degree than
the rates on CFB's interest bearing  liabilities.  Average loans net of unearned
interest  income  increased  approximately  $11.4  million  to $57.8  million at
September 30, 2004, as compared to $46.4 million at September 30, 2003.  Average
loans net of unearned  interest income were  approximately 83 % of average total
earning assets at September 30, 2004 and 76 % at September 30, 2003.

     The yield on total  earning  assets  declined  9 basis  points for the nine
months ended  September 30, 2004 as compared to the nine months ended  September
30, 2003. The primary reason for the decline in yields on earning assets was due
to declines in the general interest rate  environment.  During 2003, the Federal
Reserve  lowered key  interest  rates 25 basis  points.  During the three months
ended September 30, 2004, the Federal Reserve increased key interest rates by 75
basis  points.  The yield on average  loans was 6.91 % for the nine months ended
September 30, 2004 as compared to 7.42 % for the nine months ended September 30,
2003.  Investment  yields  increased 7 basis points during the nine months ended
September  30, 2004 as  compared  to the same period in 2003.  Yields on federal
funds sold,  the rates on which can change  overnight,  declined 16 basis points
due to the decline in the interest rate environment.

     Total interest expense was $1.1 million for the nine months ended September
30,  2004,  a 9 % increase as  compared to the same period in 2003.  The average
rate on  interest-bearing  liabilities  was  2.37 % for the  nine  months  ended
September   30,   2004,   25  basis  points  lower  than  the  average  rate  on
interest-bearing  liabilities  during the nine months ended  September 30, 2003.
The  decrease  in the rates on  deposits  during 2004 as compared to 2003 can be
attributed to the rate on CFB's  deposits  continuing to decline as CFB repriced
maturing  time  deposits  into lower rates and  attracted  new deposits at lower
rates.

Provision For Loan Losses

     The provision for loan loss was approximately  $223,000 for the nine months
ended  September 30, 2004. This was the result of net charge-offs of $60,000 and
maintaining  the  loan  loss  reserve  at  a  level  considered  appropriate  by
management.  This  amount  was  greater  than the  budgeted  amount.  Management
anticipates the 2004 provision for loan loss expense to be greater than the 2003
expense of $163,000 on an annual basis.

                                      -14-

<PAGE>


     The provision for loan loss expense was approximately $120,000 for the nine
months ended  September 30, 2003 due to the  requirement of maintaining the loan
loss reserve at a level  considered  appropriate by management.  Net charge-offs
for the nine months ended September 30, 2003 were approximately $80,000.

     As a percentage of average loans,  the annualized  rate of net  charge-offs
was .11 % for the nine months ended September 30, 2004 compared to a .17 % ratio
for fiscal period 2003. It is management's expectation that net charge-offs will
be moderate for the remainder of 2004.  While this is  management's  expectation
based on its own  internal  procedures,  reviews  and  knowledge  of CFB's  loan
portfolio and market area, there can be no assurances that net charge-off levels
will not be higher than levels realized thus far during 2004.

     As of September  30, 2004,  management's  review of the  allowance for loan
losses  concluded that the balance was adequate to provide for potential  losses
based upon an evaluation of risk in the loan portfolio. Despite the CFB's credit
standards,  internal controls,  and continuous loan review process, the inherent
risk in the  lending  process  results  in  periodic  charge-offs.  Through  the
provision  for loan  losses,  CFB  maintains  a  reserve  for loan  losses  that
management believes is adequate to absorb losses within the loan portfolio.

Noninterest Income

     Noninterest  income for the nine months  ended  September  30, 2004 totaled
approximately  $986,000  compared to approximately  $861,000 for the nine months
ended  September  30, 2003,  and was more than the budgeted  amount by $119,000.
Noninterest  income  consists of fees for the sale of credit life  insurance and
other loan fees,  charges  for  insufficient  funds and stop  payments,  service
charges  on  deposit  accounts,  and fees for  other  services.  Management  has
budgeted 2004 noninterest income to total $1.2 million. Amounts achieved through
September 30, 2004 appear to be on target to meet the budgeted amount.

Noninterest Expense

     Noninterest expense totaled  approximately $2.2 million for the nine months
ended September 30, 2004. This amount was comprised of approximately  $1,068,000
for salaries and  benefits,  approximately  $307,000 for occupancy and equipment
expense,  approximately $285,000 for data processing expenses, and approximately
$580,000 for other expense items.

     Noninterest  expense was $2.0 million for the nine months  ended  September
30, 2003. This amount was comprised of  approximately  $863,000 for salaries and
benefits,   approximately   $279,000  for  occupancy   and  equipment   expense,
approximately $252,000 for data processing expenses,  approximately $120,000 for
holding company  organizational  expenses and  approximately  $496,000 for other
expense items.

Income Taxes

     CFB  recognizes   income  taxes  under  the  asset  and  liability   method
established in Statement of Financial  Accounting  Standards No. 109, Accounting
for Income Taxes.  Under this method,  deferred tax assets and  liabilities  are
established for the temporary  differences  between the accounting basis and the
tax basis of CFB's assets and liabilities at enacted tax rates expected to be in
effect when the amounts  related to such temporary  differences  are realized or
settled.  CFB's  deferred tax assets are reviewed  quarterly and  adjustments to
such assets are  recognized  as deferred  income tax expense or benefit based on
management's judgment relating to the realizability of such assets.

     CFB  recognized  income tax expense of $256,000  and  $209,000 for the nine
months ended September 30, 2004 and 2003, respectively.  The effective tax rates
for the nine months ended  September 30, 2004 and 2003 were  approximately  41 %
and 38 %,  respectively.  The  increase  in  the  effective  tax  rate  for  the
nine-month  period  ended  September  30,  2004  was  primarily  due to  certain
nondeductible  costs  associated  with the purchase and retirement of our common
stock.


                                      -15-

<PAGE>

Interest Rate Sensitivity

     The Bank's  profitability  is dependent to a large extent upon net interest
income,  which is the difference between its interest income on interest-earning
assets and interest expense on  interest-bearing  liabilities.  In recent years,
the banking industry has experienced  steady interest rates, which have likewise
produced  steady growth in net interest  income as the Bank has grown.  The Bank
will be  affected  by changes  in levels of  interest  rates and other  economic
factors beyond its control,  particularly to the extent that such factors affect
the overall volume of its lending and deposit  activities.  A sudden increase in
interest  rates could have a negative  impact on the Bank's net income through a
narrower interest margin and/or reduced lending volume.

     The matching of assets and  liabilities  may be analyzed by  examining  the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of  interest-earning  assets
maturing  or  repricing  within  a  specific  time  period  and  the  amount  of
interest-bearing  liabilities  maturing or repricing  within that time period. A
gap is considered  positive when the amount of interest  rate  sensitive  assets
exceeds the amount of interest rate sensitive  liabilities.  A gap is considered
negative  when the amount of interest  rate  sensitive  liabilities  exceeds the
amount of interest rate  sensitive  assets.  During a period of rising  interest
rates, a negative gap would tend to adversely affect net interest income while a
positive gap would tend to result in an increase in net interest income.  During
a period of falling  interest  rates,  a negative gap would tend to result in an
increase in net  interest  income  while a positive  gap would tend to adversely
affect net interest income.

CAPITAL REQUIREMENTS
--------------------

     CFB's equity capital was  approximately  $4.3 million at September 30, 2004
compared  to $4.9  million  at year end 2003.  This  decrease  of  approximately
$535,000  consists  primarily  of CFB's net  income  for the nine  months  ended
September  30,  2004  of  approximately  $365,000,  a  net  unrealized  gain  on
available-for-sale  securities of  approximately  $36,000,  and the purchase and
retirement of common stock at a cost of approximately  $936,000.  CFB is subject
to certain  restrictions  on the amount of dividends that it may declare without
prior regulatory approval.

     Citizens First Bank is subject to minimum capital maintenance requirements.
Regulatory  guidelines  define  the  minimum  amount of  qualifying  capital  an
institution  must maintain as a percentage of  risk-weighted  assets and average
total assets.  At September 30, 2004,  Citizens First Bank exceeded the required
capital levels.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     Liquidity  management  focuses on the need to meet both short-term  funding
requirements  and long-term  growth  objectives.  Primary  sources for liquidity
include deposits, loan repayments and investment security repayments or sales of
available for sale securities.

     During the nine months ended  September 30, 2004,  CFB decreased  available
for sale  securities  by  approximately  $2.7 million from  approximately  $11.1
million at year end 2003 to  approximately  $8.4 million at September  30, 2004.
Deposits increased approximately $3.8 during the nine months ended September 30,
2004.  CFB has $2.5 million in available  federal funds lines and  approximately
$1.1 million in available borrowings from the Federal Home Loan Bank. Management
believes  that we have cash on hand and other funding  sources  adequate to fund
operations for the next 12 months.

     CFB can also enter into repurchase  agreement  transactions should the need
for additional  liquidity  arise.  As of September 30, 2004, CFB had $387,000 in
repurchase  agreement  balances  outstanding.  CFB also issued an  additional $2
million  of trust  preferred  debt  which it  invested  in the Bank to fund loan
growth.

EFFECTS OF INFLATION AND CHANGING PRICES
----------------------------------------

     The financial  statements and related  financial data presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial  position and operating results in terms of
historical  dollars,  without  considering  changes in relative purchasing power
over time due to inflation.

                                      -16-

<PAGE>

     Unlike  most  industrial  companies,   virtually  all  of  the  assets  and
liabilities  of a financial  institution  are  monetary in nature.  As a result,
interest  rates  generally  have  a  more  significant  impact  on  a  financial
institution's  performance  than does the effect of  inflation.  In the  current
interest rate environment,  the liquidity and maturity  structures of the Bank's
assets and  liabilities  are critical to maintenance  of acceptable  performance
levels.



































                                      -17-
<PAGE>


Item 3.  Controls and Procedures.

(a)  Evaluation  of  Disclosure  Controls and  Procedures.  As of the end of the
     period covered by this report,  CFB's Chief Executive Officer and its Chief
     Financial  Officer  have  evaluated  the  effectiveness  of the  design and
     operation  of CFB's  disclosure  controls  and  procedures  (as  defined in
     Exchange Act Rule 13a-14(c)). Based on that evaluation, the Chief Executive
     Officer  and  the  Chief  Financial   Officer  have  concluded  that  CFB's
     disclosure  controls and  procedures  are effective to ensure that material
     information  relating to CFB and CFB's  consolidated  subsidiaries  is made
     known to such officers by others within these entities, particularly during
     the period this  quarterly  report was  prepared,  in order to allow timely
     decisions regarding required disclosure.

(b)  Changes in Internal Controls.  There have not been any significant  changes
     in CFB's  internal  controls or in other  factors that could  significantly
     affect these controls subsequent to the date of their evaluation.



























                                      -18-
<PAGE>


                          PART II -- OTHER INFORMATION




Item 1.   Legal Proceedings

          None.

Item 2.   Changes in Securities

          None.

Item 3.   Defaults Upon Senior Securities

          None.

Item 4.   Submission of Matters to a Vote of Security Holders

          None.

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits:

          31.1 Certification  of Billy M. Rice,  President  and Chief  Executive
               Officer of CFB Bancshares,  Inc.,  Pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002.

          31.2 Certification  of Billy M. Rice,  Wendell S.  Langley,  the Chief
               Financial  Officer of CFB Bancshares,  Inc.,  Pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

          32.1 Certification  of Billy M. Rice,  President  and Chief  Executive
               Officer of CFB Bancshares,  Inc.,  Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

          32.2 Certification  of Billy M. Rice,  Wendell S.  Langley,  the Chief
               Financial  Officer of CFB Bancshares,  Inc.,  Pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

          (b)  Reports on Form 8-K:

               There have been no Current  Reports on Form 8-K filed  during the
          three months ended September 30, 2004.


                                      -19-
<PAGE>




                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                     CFB BANCSHARES, INC.
                                     (Registrant)

Date: November 12, 2004               /s/ Billy M. Rice
                                     -------------------------------------------
                                     Blly M. Rice, President and Chief Executive
                                     Officer (principal executive officer)

Date: November 12, 2004              /s/ Wendell S. Langley
                                     -------------------------------------------
                                     Wendell S. Langley, Chief Financial Officer
                                     (principal accounting officer)




























                                      -20-