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 June 30, 2003

[ ]      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 small  business  issuer 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: 352,654 shares of Common Stock
as of August 12, 2003.

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

<PAGE>


CONTENTS

PART I.   FINANCIAL INFORMATION
          ---------------------

          Item 1. Financial Statements

               Consolidated  Balance Sheets as of June 30, 2003
               (Unaudited) and December 31, 2002                               3

               Consolidated  Statements  of  Income  for the Three and
               Six Month Periods Ended June 30, 2003 and 2002 (Unaudited)      4

               Consolidated Statements of Comprehensive Income for the
               Three and Six Month Periods Ended June 30, 2003 and 2002
               (Unaudited)                                                     5

               Consolidated Statement of Changes in Shareholders' Equity
               for the Six Months Ended June 30, 2003 (Unaudited)              6

               Consolidated Statements of Cash Flows for the Six Month Periods
               Ended June 30, 2003 and 2002 (Unaudited)                        7

               Notes to Consolidated Financial Statements for the Three and
               Six Month Periods Ended June 30, 2003 and 2002 (Unaudited)   8-10

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

         Item 3  Controls and Procedures                                      16


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

         Item 1. Legal Proceedings                                            17

         Item 2. Changes in Securities and Use of Proceeds                    17

         Item 3. Defaults upon Senior Securities                              17

         Item 4. Submission of Matters to a Vote of Security Holders          17

         Item 5. Other Information                                            17

         Item 6. Exhibits and Reports on Form 8-K                             17

SIGNATURES                                                                    18


<PAGE>


                         PART I -- FINANCIAL INFORMATION


Item 1.  Financial Statements

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

              As of June 30, 2003 (Unaudited) and December 31, 2002
<TABLE>
<CAPTION>


                                                                         June 30, 2003      December 31, 2002
                                                                         -------------      -----------------
Assets:
<S>                                                                         <C>                     <C>
Cash and Due From Banks......................................               $ 3,419                 $2,476
Federal Funds Sold...........................................                 1,001                  3,369
                                                                            -------                 ------
Total Cash and Cash Equivalents..............................                 4,420                  5,845

Interest-Bearing Deposits in other Banks.....................                   794                    694
Investment Securities Available for Sale.....................                12,303                 10,305
Loans, Net...................................................                46,657                 44,291
Premises and Equipment, Net..................................                 3,082                  3,130
Accrued Interest Receivable..................................                   311                    344
Foreclosed Real Estate.......................................                   235                    175
Prepaid Income Taxes.........................................                     0                     93
Other Prepaid Expenses and Other Assets......................                   181                    163
                                                                            -------                -------
          Total Assets.......................................               $67,983                $65,040
                                                                            =======                =======

Liabilities and Shareholders' Equity:

Liabilities:
Deposits

      Demand.................................................               $31,470                $27,548
      Term...................................................                30,985                 32,254
                                                                            -------                -------
          Total Deposits.....................................                62,455                 59,802

Securities Sold Under Agreements to Repurchase...............                   381                    378
Accrued Interest Payable.....................................                   112                    124
Accrued Income Taxes.........................................                    49                      0
Deferred Income Taxes........................................                   202                    196
Other........................................................                    96                     58
                                                                            -------                -------
        Total Liabilities....................................                63,295                 60,558
                                                                            -------                -------

Shareholders' Equity :
Common Stock, Par Value $1, Authorized 2,000,000 Shares;

     Issued and Outstanding 352,654 Shares (353,904 in 2002).                   353                    354
Capital in Excess of Par Value...............................                 3,989                  4,016
Retained Earnings............................................                   280                     57
Accumulated Other Comprehensive Income.......................                    66                     55
                                                                            -------                -------
        Total Shareholders' Equity...........................                 4,688                  4,482
                                                                            -------                -------
Total Liabilities and Shareholders' Equity...................               $67,983                $65,040
                                                                            =======                =======

</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 Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                        For the Three Months Ended          For the Six Months Ended
                                                                 June  30,                          June 30,
                                                        --------------------------          -------------------------
                                                           2003            2002                2003           2002
                                                        ------------  ------------          ------------  -----------
<S>                                                       <C>             <C>                 <C>           <C>

Interest Income
     Loans..........................................      $ 850           $ 862               $1,689        $1,730
     Investment Securities..........................         86              95                  155           182
     Federal Funds Sold.............................          8              12                   18            27
     Interest Bearing Deposits at other Banks.......          4               0                    7             0
                                                          -----           -----               ------        ------
     Total Interest Income..........................        948             969                1,869         1,939

 Interest Expense...................................        352             434                  722           878
                                                          -----           -----               ------        ------

Net Interest Income.................................        596             535                1,147         1,061

Provision For Loan Losses...........................         18              86                   32           121
                                                          -----           -----               ------        ------
Net Interest Income After Provision For Loan
     Losses.........................................        578             449                1,115           940
                                                          -----           -----               ------        ------


Noninterest Income

     Loan Fees and Other Service Charges............        105              80                  179           157
     Service Charges on Deposit Accounts ...........        187             147                  340           256
     Other .........................................         13              14                   40            24
                                                          -----           -----               ------        ------
     Total Noninterest Income.......................        305             241                  559           437
                                                          -----           -----               ------        ------

Noninterest Expense

     Salaries and Employee Benefits.................        284             271                  568           561
     Occupancy and Equipment Expense................         94              89                  184           180
     Office Supplies and Postage....................         31              27                   67            60
     Data Processing Expenses.......................         84              96                  169           150
     Advertising and Promotion......................         14              26                   25            37
     Holding Company Organizational Expenses........         46               0                   54             0
     Other..........................................        124              93                  226           176
                                                          -----           -----               ------        ------
     Total Noninterest Expense......................        677             602                1,293         1,164
                                                          -----           -----               ------        ------

Income Before Income Taxes .........................        206              88                  381           213
Income Taxes........................................         93              34                  158            71
                                                          -----           -----               ------        ------
Net Income..........................................      $ 113           $  54               $  223        $  142
                                                          =====           =====               ======        ======

Earnings Per Share:

     Basic..........................................      $0.32           $0.15               $ 0.63        $ 0.40
                                                          =====           =====               ======        ======
     Assuming Dilution..............................      $0.31           $0.15               $ 0.60        $ 0.39
                                                          =====           =====               ======        ======

</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 Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                 For the Three Months Ended         For the Six Months Ended
                                                                          June 30,                          June 30,
                                                               ------------------------------     ------------------------------
                                                                     2003            2002               2003            2002
                                                               --------------  --------------     --------------  --------------
<S>                                                                   <C>             <C>                <C>            <C>

Net income...................................................         $113            $ 54               $223           $142
                                                                      ----            ----               ----           ----
Other comprhensive income (loss), net of tax:
     Unrealized gains (losses) on investment
        securities and available for sale....................           38              57                 17             15
     Reclassification adjustment for gains / losses
        included in net income...............................            0               0                  0              0
     Income taxes related to unrealized gains / losses
        on investment securities available for sale..........          (14)            (22)                (6)            (6)
                                                                      ----            ----               ----           ----
     Other comprehensive income (loss), net of tax...........           24              35                 11              9
                                                                      ----            ----               ----           ----
     Comprehensive income....................................         $137            $ 89               $234           $151
                                                                      ====            ====               ====           ====
</TABLE>


































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

                                       5


<PAGE>


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

                     For the Six Months Ended June 30, 2003
<TABLE>
<CAPTION>
                                                                                       Accumulated
                                                        Capital in                       Other                Total
                                           Common      Excess of Par     Retained     Comprehensive       Shareholders'
                                           Stock           Value         Earnings        Income               Equity
                                          -------      -------------     --------     -------------       -------------
<S>                                        <C>            <C>              <C>            <C>                 <C>
Balances, December 31, 2002                $354           $4,016           $ 57            $55                $4,482
Net Income                                    0                0            223              0                   223
Purchase and Retirement of
  Common Stock (1,250 Shares
   at $23.00 Per Share)                      (1)             (27)             0              0                   (28)
Other Comprehensive Income                    0                0              0             11                    11
                                           ----           ------           ----            ---                ------
Balances, June 30, 2003                    $353           $3,989           $280            $66                $4,688
                                           ====           ======           ====            ===                ======

</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 Six Months Ended June 30, 2003 and 2002
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                For the Six Months Ended June 30,
                                                                          ------------------------------------------
                                                                                   2003                  2002
                                                                          ----------------------  ------------------
 Operating Activities:
<S>                                                                                 <C>                      <C>
Net Income ...................................................                      $  223                   $  142
                                                                                    ------                   ------
Adjustments to Reconcile Net Income to Net Cash
        Provided by Operating Activities:
     Depreciation ............................................                         173                      131
     Provision for Loan Losses................................                          32                      121
     Decrease in Accrued Interest Receivable .................                          33                       27
     (Increase) Decrease in Prepaid Expenses and Other........                          75                     (103)
     (Decrease) in Accrued Interest Payable...................                         (12)                     (30)
     Increase in Accrued Income Taxes and Other Liabilities...                          87                       13
                                                                                    ------                   ------

           Total Adjustments..................................                         388                      159
                                                                                    ------                   ------
            Net Cash Provided by Operating Activities.........                         611                      301
                                                                                    ------                   ------

Investing Activities:
 Increase in Interest-Bearing Deposits in Other Banks.........                        (100)                       0
 Investment Securities Available for Sale:
     Purchases................................................                      (9,731)                  (7,905)
     Maturities...............................................                       7,750                    5,750
 Purchases of Premises and Equipment..........................                        (125)                    (459)
Net Increase in Loans.........................................                      (2,458)                  (2,284)
                                                                                    ------                   -------
            Net Cash Used in Investing Activities.............                      (4,664)                  (4,898)
                                                                                    ------                   -------

Financing Activities:
Dividends Paid................................................                           0                      (35)
Purchase and Retirement of Common Stock.......................                         (28)                       0
Increase in Securities Sold Under Agreements to Repurchase....                           3                        5
Net Increase in Deposits......................................                       2,653                    6,876
                                                                                    ------                   ------
           Net Cash Provided by Financing Activities..........                       2,628                    6,846
                                                                                    ------                   ------

Net Increase (Decrease) in Cash and Cash Equivalents..........                      (1,425)                   2,249
Cash and Cash Equivalents at Beginning of Period .............                       5,845                    2,520
                                                                                    ------                   ------
Cash and Cash Equivalents at End of Period ...................                      $4,420                   $4,769
                                                                                    ======                   ======

Supplementary Disclosures of Cash Flow Information:
  Cash Paid During the Period for:
    Interest..................................................                      $  734                   $  908
    Income Taxes..............................................                      $   16                   $   80

Supplementary Disclosures of Non Cash Investing Activities:
    Acquisition of Foreclosed Real Estate.....................                      $   90                   $   38
    Sales of Foreclosed Real Estate by Origination of
      Mortgage Loan...........................................                      $   30                   $   38
    Change in Gross Unrealized Gain / Loss on Investment
      Securities Available for Sale...........................                      $   17                   $   15
    Change in Deferred Taxes Associated with Unrealized
      Gain / Loss on Investment Securities Available for Sale.                      $    6                   $    6
    Change in Net Unrealized Gain/ Loss on Investment Securities
      Available for Sale.......................................                     $   11                   $    9
</TABLE>


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

                                       7
<PAGE>


                      CITIZENS FIRST BANK AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 30, 2003 and 2002 (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. The management of CFB Bancshares, Inc. is in
the process of  organizing  a new bank called  Peoples  Bank of Scott  County in
Oneida,  Tennessee  (see Note 4).  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.

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, was transferred to capital in excess of par
value on a consolidated basis.

The unaudited interim  consolidated  financial  statements for the three and six
months ended June 30, 2003 and 2002,  and as of June 30, 2003 have been prepared
on the same basis as the Bank's audited financial  statements as of December 31,
2002 and for the year ended December 31, 2002. In the opinion of management, all
adjustments,  consisting  of normal  recurring  accruals,  necessary  to present
fairly the financial position of the Company as of June 30, 2003 and the results
of  operations  and cash flows for the three and six months  ended June 30, 2003
and 2002 have been included.  The results of operations for such interim periods
is 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 Six Months
                                                         Ended June 30                  Ended June 30
                                                        (In thousands)                  (In thousands)
                                                  ----------------------------    ---------------------------
                                                      2003            2002           2003           2002
                                                  -------------   ------------    -----------    ------------
<S>                                               <C>             <C>             <C>            <C>
Net Income, as Reported                           $         113   $         54    $       223    $        142
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                              $         113   $         54    $       223    $        142
                                                  =============   ============    ===========    ============
Earnings Per Share:
 Basic - as Reported                              $        0.32   $       0.15    $      0.63    $       0.40
                                                  =============   ============    ===========    ============
 Basic - Pro Forma                                $        0.32   $       0.15    $      0.63    $       0.40
                                                  =============   ============    ===========    ============
 Diluted - as Reported                            $        0.31   $       0.15    $      0.60    $       0.39
                                                  =============   ============    ===========    ============
 Diluted - Pro Forma                              $        0.31   $       0.15    $      0.60    $       0.39
                                                  =============   ============    ===========    ============
</TABLE>
Earnings Per Share - Earnings per share is based on the following:
<TABLE>
<CAPTION>
                                                      For the Three Months           For the Six Months
                                                          Ended June 30                 Ended June 30
                                                   ----------------------------   --------------------------
                                                      2003            2002           2003           2002
                                                   ------------    ------------   -----------    -----------
<S>                                                   <C>             <C>           <C>            <C>
Weighted Average Number
 of Shares Outstanding
 Used for Basic Calculation                           352,654         353,904       353,379        353,904
Effect of Dilutive Stock Options                       15,429          11,368        15,429         11,368
                                                   ------------    ------------   -----------    -----------
Number of Shares Used for
 Calculation Assuming Dilution                         368,083         365,272       368,808        365,272
                                                   ============    ============   ===========    ===========
</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.

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:

<TABLE>
<CAPTION>
                                                                     Periods Ended December 31,
                                                              ------------------------------------------
                                                                     2003                   2002
                                                              -------------------    -------------------
<S>                                                                  <C>                    <C>
Dividend Yield                                                        0%                     0%
Expected Life                                                         9.9 years              9.9 years
Expected Volatility                                                  16.0%                  16.0%
Risk-Free Interest Rate                                               5.7%                   5.7%
</TABLE>
                                       9

<PAGE>




A summary of the status of the  Company's  stock  option  plans as of June 30 is
presented below:
<TABLE>
<CAPTION>

                                              2003                            2002
                                   ---------------------------    -----------------------------
                                                    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
Exercised                                    0                                0
Forfeited                                    0                                0
                                   ------------                   -------------
 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 June 30, 2003 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           4.8 years       $      15.00        54,000        $        15.00

</TABLE>


NOTE 4 - NEW BANK FORMATION

As  explained  in  Note 1,  the  Company's  management  and  certain  individual
organizers  are in the process of  organizing a new bank called  Peoples Bank of
Scott  County (in  organization)  in Oneida,  Tennessee  ("Peoples  Bank").  The
Company is in the process of an offering of its common stock in connection  with
the new bank organization. The Company and the organizers entered into a line of
credit borrowing  arrangement  with an unrelated  commercial bank on January 16,
2003 to provide funds for organizational costs until the stock offering proceeds
are received.  Each of the organizers has also entered into a stock subscription
agreement  with Peoples Bank in January 2003. The organizers are required to pay
$24 per share  for each  share of common  stock of  Peoples  Bank that they have
purchased.  In the  event  that  the  Company's  offering  of  common  stock  is
completed,  the shares of  Peoples  Bank  purchased  by the  organizers  will be
exchanged  for Company  shares on a one for one basis.  If the Company  does not
complete its offering, the organizers will be entitled to a refund of any amount
paid for the shares of Peoples Bank, less $1.00 per share for the organizational
costs.  As of June 30,  2003,  the  Company  has  received  stock  subscriptions
totaling  $714,744.   CFB's  registration  statement  states  that  the  banking
regulators  will  require  $4,700,016  in  capital  for  Peoples  Bank to  open.
Organizational  and  start-up  costs  totaling  $108,000  have been  incurred by
Peoples  Bank  as of June  30,  2003.  No  amounts  have  been  included  in the
accompanying  financial  statements  in  relation  to Peoples  Bank  because the
exchange  of shares of Peoples  Bank for  Company  stock has not taken place and
will not be completed until all regulatory  approvals for the new bank have been
obtained.  Organizational  and start-up  expenses will be expensed in accordance
with AICPA Statement of Position 98-5 and included in the consolidated financial
statements of the Company after the share exchange is completed.

                                       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 three and six months
ended June 30, 2003 and 2002.  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  organizing  Peoples  Bank.  The  members  of the boards of
directors  of CFB and the Bank  are the  same  with  the  exception  of  Wendell
Langley, who is a member of the Bank's board of directors only.

Comparison of Financial Condition at June 30, 2003 and December 31, 2002

     Total  assets grew from  December 31, 2002 to June 30, 2003 as total assets
increased $3.0 million or 4.5%, from $65.0 million at December 31, 2002 to $68.0
million at June 30, 2003. The primary  increases in asset categories for the six
month period ended June 30, 2003 were $2.0 million in investment  securities and
a $2.4 million increase in net loans. Total deposits increased $2.7 million,  or
4.4%, from $59.8 million at December 31, 2002 to $62.5 million at June 30, 2003.
CFB is continuing to attract new customers at both of its current locations.

     Total shareholders' equity increased  approximately $206,000 as CFB had net
income of approximately  $223,000,  a net unrealized gain on  available-for-sale
securities  of   approximately   $11,000,   and  retired  stock  at  a  cost  of
approximately $28,000.


                                       11

<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
-----------------------------------------------------------------------

Comparison of Results of Operations

     During the three  months ended June 30,  2003,  the Company  attained a net
income of  approximately  $113,000 or $0.32 per share.  During the three  months
ended June 30, 2002, the Bank had a net income of approximately $54,000 or $0.15
per share.

Net Income

     Net income for the three months  ended June 30, 2003 totaled  approximately
$113,000. This amount is $9,000 less than the budgeted amount. The June 30, 2003
net interest margin  (annualized)  was 4.15% compared to 3.54% for June 30, 2002
as deposit account rates have repriced more quickly than loan rates.  Management
anticipates  substantially achieving the 2003 net income budget of $494,000. Net
income for the three months ended June 30, 2002 totaled  approximately  $54,000.
This amount was equivalent to the budgeted amount.

Net Interest Income

     Net interest  income was $596,000 for the three months ended June 30, 2003,
an increase of approximately  11.4% or $61,000 over the same period in 2002. 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  increased  and the rates on CFB's  interest
bearing  deposits  decreased.  Average  loans net of  unearned  interest  income
increased  approximately  $3.5  million to $45.8  million at June 30,  2003,  as
compared  to $42.3  million  at June 30,  2002.  Average  loans net of  unearned
interest income at June 30, 2003 were approximately 74% of average total earning
assets at June 30, 2003 and 76% at June 30, 2002.

     The yield on total  earning  assets  declined 24 basis points for the three
months  ended June 30, 2003 as compared to the three months ended June 30, 2002.
The  primary  reason  for the  decline  in yields on  earning  assets was due to
declines in the general  interest  rate  environment.  During 2002,  the Federal
Reserve lowered key interest rates 75 basis points in a series of rate cuts. The
Federal  Reserve has lowered key  interest  rates 25 basis  points in 2003.  The
yield on average  loans was 8.17% for the three  months  ended June 30,  2003 as
compared to 8.14% for the three months ended June 30,  2002.  Investment  yields
declined 85 basis  points  during the first three months as compared to the same
period  in  2002  again  due  to  the  decline  in  the  general  interest  rate
environment.  Yields on  federal  funds  sold,  the  rates on which  can  change
overnight,  declined  48 basis  points due to the decline in the  interest  rate
environment.

     Total  interest  expense was  $352,000  for the three months ended June 30,
2003, a 18.9%  decrease as compared to the same period in 2002. The average rate
on  interest-bearing  liabilities  was 2.56% for the three months ended June 30,
2003,  85  basis  points  lower  than  the  average  rate  on   interest-bearing
liabilities  during the three months  ended June 30,  2002.  The decrease in the
rates on  deposits  during 2003 as  compared  to 2002 can be  attributed  to the
decline in interest  rates during the latter part of 2002.  Initially,  as rates
began to decline after the Federal Reserve lowered interest rates, CFB's deposit
rates did not lower as quickly as did the rates on earning assets.  However,  as
rates  moderated  during the latter  part of 2002 and  remained  at their  lower
levels, the rate on CFB's deposits continued 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  $18,000 for the three months
ended  June 30,  2003.  This was the result of net  charge  offs of $22,000  and
maintaining the loan loss reserve at a level considered appropriate

                                       12

<PAGE>

by  management.  This  amount  was less  than the  budgeted  amount.  Management
anticipates  the 2003  provision for loan loss expense to be lower than the 2002
expense of $288,000 on an annual basis.

     The provision for loan loss expense was approximately $86,000 for the three
months ended June 30, 2002 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 June 30, 2002 were approximately $76,000.

     As a percentage of average loans,  the annualized  rate of net  charge-offs
was 0.19% for the three months ended June 30, 2003 compared to a 0.09% ratio for
fiscal period 2002. It is management's  expectation that net charge-offs will be
moderate for the remainder of 2003. 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 2003.

     As of June 30, 2003,  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.

Non-Interest Income

     Noninterest  income  for the  three  months  ended  June 30,  2003  totaled
approximately $305,000,  compared to approximately $241,000 for the three months
ended  June  30,  2002,  and was more  than  the  budgeted  amount  by  $21,000.
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 2003 noninterest  income to total $1,126,000.  Amounts achieved through
June 30, 2003 appear to be on target to substantially meet the budgeted amount.

Non-Interest Expense

     Noninterest  expense  totaled  approximately  $677,000 for the three months
ended June 30, 2003.  This amount was  comprised of  approximately  $284,000 for
salaries and benefits, approximately $94,000 for premises and equipment expense,
approximately  $84,000 for data processing expenses,  approximately  $46,000 for
holding company  organizational  expenses,  and approximately $169,000 for other
expense items.

     Noninterest  expense was $601,000 for the three months ended June 30, 2002.
This amount was comprised of  approximately  $271,000 for salaries and benefits,
approximately $89,000 for premises and equipment expense,  approximately $96,000
for data  processing  expenses,  and  approximately  $145,000 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 $93,000  and  $34,000 for the three
months ended June 30, 2003 and 2002,  respectively.  The  effective tax rate for
the three month periods ended June 30, 2003 and 2002 were  approximately 45% and
39%, respectively.

                                       13

<PAGE>

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

Comparison of Results of Operations

     During the six months ended June 30, 2003,  the Bank had a total net income
of $223,000 or $0.63 per share.  During the six months ended June 30, 2002,  the
Bank attained a net income of $142,000 or $0.40 per share.

Net Income

     Net income for the first six months of 2003 totaled $223,000 This amount is
$12,000 less than the budgeted amount.  The Bank's net interest margin increased
during  the first six  months of 2003.  The June 30,  2003 net  interest  margin
(annualized) was 4.02%. Management anticipates  substantially achieving the 2003
net income budget of $494,000.

     Net income for the six months  ended June 30, 2002 totaled  $142,000.  This
amount was $34,000 less than the budgeted  amount  primarily  due to the expense
required to maintain the loan loss reserve at a level considered  appropriate by
management. The Bank's net interest margin at June 30, 2002 was 3.56%.

Net Interest Income

     Net interest  income was $1,147,000 for the six months ended June 30, 2003,
an increase of  approximately  8.1% or $86,000 over the same period in 2002. 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 as the yield on CFB's
interest  bearing  assets  decreased to a lesser  degree than the rates on CFB's
interest  bearing  deposits.  Average  loans  net of  unearned  interest  income
increased  approximately  $3.5  million to $45.3  million at June 30,  2003,  as
compared  to $41.8  million  at June 30,  2002.  Average  loans net of  unearned
interest income at June 30, 2003 were approximately 75% of average total earning
assets at June 30, 2003 and 76% at June 30, 2002.

     The yield on total  earning  assets  declined  40 basis  points for the six
months  ended June 30, 2003 as compared to the six months  ended June 30,  2002.
The  primary  reason  for the  decline  in yields on  earning  assets was due to
declines in the general  interest  rate  environment.  During 2002,  the Federal
Reserve lowered key interest rates 75 basis points in a series of rate cuts. The
Federal  Reserve has lowered key  interest  rates 25 basis  points in 2003.  The
yield on  average  loans was 8.12% for the six  months  ended  June 30,  2003 as
compared  to 8.27% for the six months  ended June 30,  2002.  Investment  yields
declined  114 basis  points  during the first six months as compared to the same
period  in  2002  again  due  to  the  decline  in  the  general  interest  rate
environment.  Yields on  federal  funds  sold,  the  rates on which  can  change
overnight,  declined  34 basis  points due to the decline in the  interest  rate
environment.

     Total interest expense was $722,000 for the six months ended June 30, 2003,
a 17.8%  decrease as compared  to the same period in 2002.  The average  rate on
interest-bearing  liabilities  was 2.66% for the six months ended June 30, 2003,
87 basis  points  lower than the average  rate on  interest-bearing  liabilities
during the six months ended June 30, 2002. The decrease in the rates on deposits
during  2003 as compared  to 2002 can be  attributed  to the decline in interest
rates during the latter part of 2002. Initially, as rates began to decline after
the Federal Reserve lowered interest rates, CFB's deposit rates did not lower as
quickly as did the rates on earning assets.  However,  as rates moderated during
the latter part of 2002 and  remained at their lower  levels,  the rate on CFB's
deposits  continued to decline as CFB repriced maturing time deposits into lower
rates and attracted new deposits at lower rates.

Noninterest Income

     Noninterest  income  through  June 30, 2003  totaled  $559,000  compared to
$437,000 for the six months ended June 30, 2002.  Noninterest income for the six
months ended June 30, 2003 was  equivalent to the budgeted  amount.  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

                                       14

<PAGE>
has budgeted  2003  noninterest  income to total  $1,126,000.  Amounts  achieved
through June 30, 2003 appear to be on target to substantially  meet the budgeted
amount.

Noninterest Expense

     Noninterest  expense  totaled  approximately  $1,293,000  for the first six
months of 2003. This amount was comprised of $568,000 for salaries and benefits,
$184,000 for  occupancy  and  equipment  expense,  $169,000 for data  processing
expense,  approximately $54,000 for holding company organizational expenses, and
$318,000 for other expense items.

     Noninterest  expense  totaled  approximately  $1,164,000  for the first six
months of 2002. This amount was comprised of $561,000 for salaries and benefits,
$180,000 for  occupancy  and  equipment  expense,  $150,000 for data  processing
expense, and $273,000 for other expense items.

Provision for Loan Losses

     The provision for loan losses was approximately  $32,000 for the six months
ended  June 30,  2003.  This was the result of net  charge  offs of $52,000  and
maintaining  the  loan  loss  reserve  at  a  level  considered  appropriate  by
management.  This amount was $58,000 less than the budgeted  amount.  Management
anticipates  the 2003  provision for loan loss expense to be lower than the 2002
expense of $288,000 on an annual basis.

     The provision for loan losses was approximately $121,000 for the six months
ended  June 30,  2002.  This was the result of net  charge  offs of $85,000  and
maintaining  the  loan  loss  reserve  at  a  level  considered  appropriate  by
management.  This amount was $49,000 more than the budgeted  amount.  Management
anticipates  the 2003  provision for loan loss expense to be lower than the 2002
expense of $288,000 on an annual basis.

Income Tax Expense

     The Bank's effective tax rate for the first six months of 2003 and 2002 was
41% and 33%, respectively.

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

     CFB's  equity  capital  was  approximately  $4.7  million at June 30,  2003
compared  to $4.5  million  at year end 2002.  This  increase  of  approximately
$206,000  consists  primarily  of CFB's net income for the six months ended June
30, 2003 of approximately  $223,000, a net unrealized gain on available-for-sale
securities  of  approximately  $11,000,  less  retirement  of stock at a cost of
approximately  $28,000.  CFB is subject to certain restrictions on the amount of
dividends that it may declare without prior regulatory approval.

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 six month period ended June 30, 2003,  CFB  increased  available
for sale  securities  by  approximately  $2.0 million from  approximately  $10.3
million  at year end  2002 to  approximately  $12.3  million  at June 30,  2003.
Deposits  increased  approximately $2.7 million during the six months ended June
30,  2003.   CFB  has  $2.5  million  in  available   federal  funds  lines  and
approximately  $7.5 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 June 30,  2003,  CFB had  $381,000  in
repurchase agreement balances outstanding.

     At June 30, 2003, CFB had capital of $4.7 million, or 6.89% of total assets
as compared to $4.5  million,  or 6.89% at December 31, 2002.  CFB is subject to
minimum  capital  maintenance  requirements.  Regulatory  guidelines

                                       15

<PAGE>
define the minimum amount of qualifying  capital an institution must maintain as
a percentage of risk-weighted assets and average total assets. At June 30, 2003,
CFB exceeded the required capital levels.

     On April  14,  2003,  CFB's  Registration  Statement  on Form  SB-2  became
effective  with  the  Securities  and  Exchange  Commission.   Pursuant  to  the
Registration  Statement,  CFB is offering  its shares of common stock to current
shareholders of CFB and to the general public at a price of $24.00 per share. If
the offering is  successful,  we will use the first  $4,700,016 we raise in this
offering to capitalize  Peoples Bank of Scott County, a new bank in organization
that will be a  wholly-owned  subsidiary of CFB.  This is the minimum  amount of
capital our banking  regulators  will require for the new bank to open.  We will
use the remaining  net proceeds of the offering,  if any, to pay our expenses of
the  offering  and of  organizing  the new bank and to provide  us with  general
working capital. We cannot assure you that the offering will be successful, that
the new bank will obtain all required regulatory  approvals or that the new bank
will be profitable.

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

     The financial  statements and related  financial data presented herein have
been prepared in accordance with accounting principles generally accepted in the
United States of America,  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.

     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.

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.




                                       16

<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

     The annual shareholders' meeting of Citizens First Bank was held on May 13,
2003.  Of  the  outstanding  353,904  shares  of  stock,   201,363  shares  were
represented by proxy or in person. Two items were acted upon at the meeting:

     1.   Election of directors


     The following is a tabulation of the votes for and against each nominee:

     Clyde Darnell              For - 200,806         Withhold Authority -   557
     William D. Goodman         For - 200,913         Withhold Authority -   450
     Samuel L. Hull             For - 200,913         Withhold Authority -   450
     Billy M. Rice              For - 200,813         Withhold Authority -   550
     Church H. Smith            For - 200,913         Withhold Authority -   450
     Stephen N. Smith           For - 200,913         Withhold Authority -   450
     James F. Wilson            For - 198,821         Withhold Authority - 2,542

     2. Appointment of independent auditors

     Ratification  of the  appointment  of Pugh & Company,  P.C. as  independent
auditors for fiscal year ending December 31, 2003:

     For - 198,011              Against - 0              Abstain - 3,352


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 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 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 June 30, 2003.

                                       17

<PAGE>

                                   SIGNATURES

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

                                  CFB BANCSHARES, INC.
                                  (Registrant)


                                  /s/ Billy M. Rice
Date: August 13, 2003             ---------------------------------------------
                                  Billy M. Rice, President and Chief Executive
                                  Officer (principal executive officer)

Date: August 13, 2003             /s/ Wendell S. Langley
                                  ---------------------------------------------
                                  Wendell S. Langley, Chief Financial Officer



















                                       18