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, 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: 309,834 shares of Common Stock
as of August 11, 2004.

     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,  2004
          (Unaudited)  and December 31, 2003                                   3

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

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

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

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

          Notes to Consolidated Financial Statements                        8-10

     Item 2. Management's Discussion and Analysis or Plan of Operation     11-17

     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                                                19

     Item 6. Exhibits and Reports on Form 8-K                                 19

SIGNATURES                                                                    20




<PAGE>

                         PART I -- FINANCIAL INFORMATION


Item 1.  Financial Statements


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

              As of June 30, 2004 (Unaudited) and December 31, 2003
<TABLE>
<CAPTION>
                                                                           June 30, 2004     December 31, 2003
                                                                           -------------     -----------------
<S>                                                                            <C>                  <C>
Assets:
Cash and Due From Banks......................................                  $ 1,950              $ 2,860
Federal Funds Sold...........................................                      137                1,866
                                                                               -------              -------
Total Cash and Cash Equivalents..............................                    2,087                4,726

Interest-Bearing Deposits in Other Banks.......................                    695                  497
Investment Securities Available for Sale, At Fair Value......                    9,099               11,104
Loans, Net....................................................                  60,954               51,215
Premises and Equipment, Net..................................                    2,874                2,954
Accrued Interest Receivable..................................                      379                  377
Foreclosed Real Estate.......................................                      117                  136

Prepaid Expenses and Other ..................................                      176                  210
                                                                               -------              -------
          Total Assets.......................................                  $76,381              $71,219
                                                                               =======              =======
Liabilities and Shareholders' Equity:
Liabilities:
Deposits
      Demand.................................................                  $31,235              $30,236
      Term...................................................                   32,393               32,872
                                                                               -------              -------
          Total Deposits.....................................                   63,628               63,108

Securities Sold Under Agreements to Repurchase...............                      386                  384
Advances From the Federal Home Loan Bank.....................                    5,833                  340
Trust Preferred Debt.........................................                    2,000                2,000
Accrued Interest Payable.....................................                      128                  106
Accrued Income Taxes.........................................                       36                  103
Deferred Income Taxes........................................                      192                  244
Other........................................................                       81                   54
                                                                               -------              -------
        Total Liabilities....................................                   72,284               66,339
                                                                               -------              -------

Shareholders' Equity :
Common Stock, Par Value $1, Authorized 2,000,000
 Shares;  Issued and Outstanding 310,684 Shares in 2004
 (352,654 Shares in 2003)....................................                      311                  353
Capital in Excess of Par Value...............................                    3,107                3,988
Retained Earnings............................................                      759                  533
Accumulated Other Comprehensive Income (Loss)................                      (80)                   6
                                                                               -------              -------
        Total Shareholders' Equity...........................                    4,097                4,880
                                                                               -------              -------
Total Liabilities and Shareholders' Equity...................                  $76,381              $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 Six Months Ended June 30, 2004 and 2003
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                       For the Three Months Ended          For the Six Months Ended
                                                                  June 30,                           June 30,
                                                              2004             2003             2004            2003
                                                      ---------------  --------------  ----------------  -------------
<S>                                                            <C>              <C>              <C>            <C>
Interest Income
     Loans..........................................           $  983           $ 850            $1,913         $1,689
     Investment Securities..........................               67              86               144            155
     Federal Funds Sold.............................                5               8                10             18
     Interest Bearing Deposits at Other Banks.......                4               4                 7              7
                                                               ------           -----            ------         ------
     Total Interest Income..........................            1,059             948             2,074          1,869

 Interest Expense...................................              377             352               709            722
                                                               ------           -----            ------         ------

Net Interest Income.................................              682             596             1,365          1,147

Provision For Loan Losses...........................               88              18               148             32
                                                               ------           -----            ------         ------
Net Interest Income After Provision for Loan
     Losses.........................................              594             578             1,217          1,115
                                                               ------           -----            ------         ------

Noninterest Income
     Loan Fees and Other Service Charges............              109             105               211            179
     Service Charges on Deposit Accounts ...........              199             187               384            340
     Other .........................................               22              13                48             40
                                                               ------           -----            ------         ------
     Total Noninterest Income.......................              330             305               643            559
                                                               ------           -----            ------         ------

Noninterest Expense
     Salaries and Employee Benefits.................              362             284               705            568
     Occupancy and Equipment Expense................              104              94               204            184
     Office Supplies and Postage....................               33              31                66             67
     Data Processing Expenses.......................               96              84               189            169
     Advertising and Promotion......................               24              14                44             25
     Holding Co. and Organizational Expense                         0              46                 0             54
     Other..........................................              122             124               258            226
                                                               ------           -----            ------         ------
     Total Noninterest Expense......................              741             677             1,466          1,293
                                                               ------           -----            ------         ------

Income Before Income Taxes .........................              183             206               394            381
Income Taxes........................................               70              93               168            158
                                                               ------           -----            ------         ------

Net Income..........................................           $  113           $ 113            $  226           $223
                                                               ======           =====            ======         ------

Earnings Per Share:
     Basic..........................................          $   .36           $ .32            $  .70         $  .63
                                                              =======           =====            ======         ======
     Assuming Dilution..............................          $   .34           $ .31            $  .67         $  .60
                                                              =======           =====            ======         ======
</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 Six Months Ended June 30, 2004 and 2003
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                For the Three           For the Six
                                                                                 Months Ended          Months Ended
                                                                                   June 30,              June 30,
                                                                              -------------------    ------------------
<S>                                                                             <C>        <C>          <C>      <C>
                                                                                2004       2003         2004     2003
                                                                                ----       ----         ----     ----
Net income.................................................................     $113       $113         $226     $223
                                                                                ----       ----         ----     ----
Other comprehensive income (loss), net of tax:

     Unrealized gains (losses) on investment securities....................     (168)        38         (138)      17
     Reclassification adjustment for gains / losses included in net income.        0          0            0        0
     Income taxes related to unrealized gains / losses on investment
     securities............................................................       63        (14)          52       (6)
                                                                                ----       ----         ----     ----
Other comprehensive income (loss), net of tax..............................     (105)        24          (86)      11
                                                                                ----       ----         ----     ----
Comprehensive income.......................................................       $8       $137         $140     $234
                                                                                ====       ====         ====     ====
</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 Six Months Ended June 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             226                 0                  226

Purchase and Retirement of
41,970 Shares of Common
Stock...........................            (42)            (881)              0                 0                 (923)


Other Comprehensive Loss........              0                0               0               (86)                 (86)
                                          -----          -------           -----             -----               ------

Balances, June 30, 2004                   $ 311          $ 3,107           $ 759             $ (80)              $4,097
                                          =====          =======           =====             =====               ======
</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, 2004 and 2003
<TABLE>
<CAPTION>

                                                                           For the Six Months Ended June 30,
                                                                                2004                   2003
                                                                       ---------------------   ------------------
<S>                                                                                <C>                    <C>
Operating Activities:
Net Income ...................................................                     $  226                 $  223
                                                                                   ------                 ------
Adjustments to Reconcile Net Income to Net Cash
        Provided by Operating Activities:
     Depreciation ............................................                        171                    173
     Provision for Loan Losses................................                        148                     32
    (Increase) Decrease in Accrued Interest Receivable .......                         (2)                    33
     Decrease in Prepaid Expenses and Other...................                         34                     75
     Increase (Decrease) in Accrued Interest Payable..........                         22                    (12)
     Increase  in Accrued Income Taxes and Other Liabilities..                         40                     87
                                                                                   ------                 ------
           Total Adjustments..................................                        413                    388
                                                                                   ------                 ------
            Net Cash Provided by Operating Activities.........                        639                    611
                                                                                   ------                 ------
Investing Activities:
 Increase in Interest-Bearing Deposits in Other Banks.........                       (198)                  (100)
 Investment Securities Available for Sale:
     Purchases................................................                     (5,052)                (9,731)
     Maturities...............................................                      6,919                  7,750
 Purchases of Premises and Equipment..........................                        (91)                  (125)
Net Increase in Loans.........................................                     (9,948)                (2,458)
                                                                                   ------                 ------
            Net Cash Used in Investing Activities.............                     (8,370)                (4,664)
                                                                                   ------                 ------
Financing Activities:
Purchase and Retirement of Common Stock................................              (923)                   (28)
Increase in Securities Sold Under Agreements to Repurchase....                          2                      3
Net Increase in Advances From Federal Home Loan Bank..........                      5,493                      0
Net Increase in Deposits......................................                        520                  2,653
                                                                                   ------                 ------
           Net Cash Provided by Financing Activities..........                      5,092                  2,628
                                                                                   ------                 ------
Net Decrease in Cash and Cash Equivalents.....................                     (2,639)                (1,425)
Cash and Cash Equivalents at Beginning of Period .............                      4,726                  5,845
                                                                                   ------                 ------
Cash and Cash Equivalents at End of Period ...................                     $2,087                 $4,420
                                                                                   ======                 ======
Supplementary Disclosures of Cash Flow Information:
  Cash Paid During the Period for:
    Interest..................................................                     $  687                 $  734
    Income Taxes..............................................                     $   60                 $   16
Supplementary Disclosures of Noncash Investing Activities:
Acquisition of Foreclosed Real Estate.........................                     $  117                 $   90
Sales of Foreclosed Real Estate by Origination of Mortgage
Loans.....                                                                         $   56                 $   30
Change in Gross Unrealized Gain / Loss on Investment
     Securities Available for Sale............................                     $ (138)                $   17
Change in Deferred Taxes Associated with Unrealized
     Gain / Loss on Investment Securities Available for Sale..                     $  (52)                $    6
Change in Net Unrealized Gain/ Loss on Investment Securities
     Available for Sale........................................                    $  (86)                $   11
</TABLE>

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

                                       7
<PAGE>


                      CFB BANCSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       June 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.

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, 2004 and 2003,  and as of June 30, 2004 have been prepared
on the same basis as the Bank'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 June 30, 2004 and the results
of  operations  and cash flows for the three and six months  ended June 30, 2004
and 2003 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)
                                                  ----------------------------    ---------------------------
                                                        2004            2003           2004           2003
                                                  -------------    -----------    -----------    ------------
<S>                                               <C>              <C>            <C>            <C>
Net Income, as Reported                           $        113     $      113     $      226     $       223
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     $      113     $      226     $       223
                                                  =============    ===========    ===========    ============
Earnings Per Share:
 Basic - as Reported                              $        .36     $      .32     $      .70     $       .63
                                                  =============    ===========    ===========    ============
 Basic - Pro Forma                                $        .36     $      .32     $      .70     $       .63
                                                  =============    ===========    ===========    ============
 Diluted - as Reported                            $        .34     $      .31     $      .67     $       .60
                                                  =============    ===========    ===========    ============
 Diluted - Pro Forma                              $        .34     $      .31     $      .67     $       .60
                                                  =============    ===========    ===========    ============
</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,
                                                    ----------------------------    --------------------------
                                                        2004            2003            2004           2003
                                                    ------------    ------------    -----------    -----------
<S>                                                     <C>             <C>            <C>            <C>
Weighted Average Number
 of Shares Outstanding
 Used for Basic Calculation                             310,949         352,654        321,439        353,904
Effect of Dilutive Stock Options                         17,182          15,429         17,182         15,429
                                                    ------------    ------------    -----------    -----------
Number of Shares Used for
 Calculation Assuming Dilution                          328,131         368,083        338,621        369,333
                                                    ============    ============    ===========    ===========
</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 June 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 June 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
 End of Period                          54,000     $    15.00           54,000     $     15.00
                                   ============    ===========    =============    ============
Options Exercisable
 at Period-End                          54,000     $    15.00           54,000     $     15.00
Weighted-Average Fair
 Value of Options Granted
 During the Period                 $      0.00                    $       0.00
</TABLE>

Information pertaining to options outstanding at June 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            3.8 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 six months ended June
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 June 30, 2004 and December 31, 2003

     Total  assets grew from  December 31, 2003 to June 30, 2004 as total assets
increased  $5.2  million,  or 7.2%,  from $71.2  million at December 31, 2003 to
$76.4 million at June 30, 2004. The primary increase in asset categories for the
six month period  ended June 30, 2004 was a $9.7 million  increase in net loans.
Total deposits increased  approximately  $500,000, or .8%, from $63.1 million at
December  31,  2003 to $63.6  million at June 30,  2004.  CFB is  continuing  to
attract new customers at both of its current locations.

     Total shareholders' equity decreased  approximately $783,000 as CFB had net
income of approximately  $226,000,  a net unrealized loss on  available-for-sale
securities of approximately  $86,000, and purchased and retired 41,970 shares of
common stock at a cost of approximately $923,000.

                                       11


<PAGE>

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

Comparison of Results of Operations

     During the three  months ended June 30,  2004,  the Company  attained a net
income of  approximately  $113,000 or $0.36 per share.  During the three  months
ended June 30,  2003,  the Bank had a net income of  approximately  $ 113,000 or
$0.32 per share.

Net Income

     Net income for the three months  ended June 30, 2004 totaled  approximately
$113,000.  This amount is $22,000  less than the budgeted  amount.  The June 30,
2004 net interest margin  (annualized)  was 3.87% compared to 3.60% for June 30,
2003 as deposit  account  rates have  repriced  more  quickly  than loan  rates.
Management  anticipates  substantially  achieving  the 2004 net income budget of
$602,000.  Net  income  for  the  three  months  ended  June  30,  2003  totaled
approximately $113,000. This amount was $9,000 less than the budgeted amount.

Net Interest Income

     Net interest  income was $682,000 for the three months ended June 30, 2004,
an increase of approximately  14.4% or $86,000 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 yield on
CFB's  interest  bearing  liabilities.  Average  loans net of unearned  interest
income increased  approximately $12.6 million to $58.4 million at June 30, 2004,
as compared to $45.8  million at June 30,  2003.  Average  loans net of unearned
interest income at June 30, 2003 were approximately 82% of average total earning
assets at June 30, 2004 and 74% at June 30, 2003.

     The yield on total  earning  assets  declined 21 basis points for the three
months  ended June 30, 2004 as compared to the three months ended June 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.  The yield on average loans
was 6.74% for the three  months ended June 30, 2004 as compared to 7.42% for the
three  months ended June 30, 2003.  Investment  yields  declined 20 basis points
during the first  three  months as compared to the same period in 2003 again due
to the decline in the general interest rate environment. Yields on federal funds
sold, the rates on which can change  overnight,  declined 12 basis points due to
the decline in the interest rate environment.

     Total  interest  expense was  $377,000  for the three months ended June 30,
2004, a 7.1%  increase as compared to the same period in 2003.  The average rate
on  interest-bearing  liabilities  was 2.07% for the three months ended June 30,
2004,  49  basis  points  lower  than  the  average  rate  on   interest-bearing
liabilities  during the three months  ended June 30,  2003.  The decrease in the
rates on  deposits  during 2004 as  compared  to 2003 can be  attributed  to the
repricing of our liabilities at lower rates during 2003.

Provision For Loan Losses

     The provision for loan loss was approximately  $88,000 for the three months
ended June 30,  2004.  This was the  result of net  charge-offs  of $14,000  and
maintaining  the  loan  loss  reserve  at  a  level  considered  appropriate  by
management.   This  amount  was  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.

     The provision for loan loss expense was approximately $18,000 for the three
months ended June 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 June 30, 2003 were approximately $22,000.


                                       12

<PAGE>

     As a percentage of average loans,  the annualized  rate of net  charge-offs
was 0.10% for the three months ended June 30, 2004 compared to a 0.19% 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 June 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  June 30,  2004  totaled
approximately $330,000,  compared to approximately $305,000 for the three months
ended  June  30,  2003,  and was more  than  the  budgeted  amount  by  $41,000.
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
June 30, 2004 appear to be on target to substantially meet the budgeted amount.

Non-Interest Expense

     Noninterest  expense  totaled  approximately  $741,000 for the three months
ended June 30, 2004.  This amount was  comprised of  approximately  $362,000 for
salaries and  benefits,  approximately  $104,000  for  occupancy  and  equipment
expense,  approximately $96,000 for data processing expenses,  and approximately
$179,000 for other expense items.

     Noninterest  expense was $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 occupancy 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.

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 $70,000  and  $93,000 for the three
months ended June 30, 2004 and 2003,  respectively.  The effective tax rates for
the three month periods ended June 30, 2004 and 2003 were  approximately 38% and
45%, respectively.

                                       13

<PAGE>



RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
---------------------------------------------------------------------

Comparison of Results of Operations

     During the six months  ended June 30,  2004,  CFB  attained a net income of
approximately  $226,000, or $.70 per share. During the six months ended June 30,
2003, the Bank had a net income of approximately $223,000, or $.63 per share.

Net Income

     Net income for the six months  ended June 30,  2004  totaled  approximately
$226,000.  This amount is $32,000  less than the budgeted  amount.  The June 30,
2004 net interest margin  (annualized)  was 4.02% compared to 3.51% for June 30,
2003 as deposit  account  rates have  repriced  more  quickly  than loan  rates.
Management  anticipates  substantially  achieving  the 2004 net income budget of
$602,000.   Net  income  for  the  six  months   ended  June  30,  2003  totaled
approximately $223,000.

Net Interest Income

     Net  interest  income was $1.4  million  for the six months  ended June 30,
2004, an increase of approximately 19% or $218,000 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 $10.7 million to $56 million at June 30,
2004,  as  compared  to $45.3  million at June 30,  2003.  Average  loans net of
unearned  interest  income at June 30,  2004 were  approximately  81% of average
total earning assets at June 30, 2004 and 74% at June 30, 2003.

     The yield on total  earning  assets  declined  15 basis  points for the six
months  ended June 30, 2004 as compared to the six months  ended June 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.  The yield on average loans
was 6.83% for the six months  ended June 30,  2004 as  compared to 7.45% for the
six months  ended June 30,  2003.  Investment  yields  increased 10 basis points
during the six months  ended June 30,  2004 as  compared  to the same  period in
2003.  Yields on federal  funds sold,  the rates on which can change  overnight,
declined 21 basis points due to the decline in the interest rate environment.

     Total interest expense was $709,000 for the six months ended June 30, 2004,
a 1.8%  decrease as compared  to the same  period in 2003.  The average  rate on
interest-bearing liabilities was 2.0% for the six months ended June 30, 2004, 66
basis points lower than the average rate on interest-bearing  liabilities during
the six months ended June 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  $148,000 for the six months
ended June 30,  2004.  This was the  result of net  charge-offs  of $44,000  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.

     The provision for loan loss expense was  approximately  $32,000 for the six
months ended June 30, 2003 due to the  requirement of maintaining  the loan loss
reserve at a level considered appropriate by management. Net charge-offs for the
six months ended June 30, 2003 were approximately $52,000.


                                       14

<PAGE>

     As a percentage of average loans,  the annualized  rate of net  charge-offs
was .16% for the six months  ended  June 30,  2004  compared  to a 23% 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 June 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  six  months  ended  June  30,  2004  totaled
approximately  $643,000,  compared to approximately  $559,000 for the six months
ended  June  30,  2003,  and was more  than  the  budgeted  amount  by  $65,000.
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
June 30, 2004 appear to be on target to meet the budgeted amount.

Noninterest Expense

     Noninterest  expense totaled  approximately $1.5 million for the six months
ended June 30, 2004.  This amount was  comprised of  approximately  $705,000 for
salaries and  benefits,  approximately  $204,000  for  occupancy  and  equipment
expense,  approximately $189,000 for data processing expenses, and approximately
$368,000 for other expense items.

     Noninterest  expense  was $1.3  million  for the six months  ended June 30,
2003.  This amount was  comprised  of  approximately  $568,000  for salaries and
benefits,   approximately   $184,000  for  occupancy   and  equipment   expense,
approximately  $169,000 for data processing expenses, and approximately $372,000
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 $168,000 and $158,000 for the six
months ended June 30, 2004 and 2003, respectively. The effective tax rates for
the six months ended June 30, 2004 and 2003 were approximately 42.6% and 41.5%,
respectively. The increase in the effective tax rate for the six-month period
ended June 30, 2004 was primarily due to certain nondeductible costs associated
with the purchase and retirement of our common stock.

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

                                       15
<PAGE>
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  $4.1  million at June 30,  2004
compared  to $4.9  million  at year end 2003.  This  decrease  of  approximately
$783,000  consists  primarily  of CFB's net income for the six months ended June
30, 2004 of approximately  $226,000, a net unrealized loss on available-for-sale
securities of approximately  $86,000,  and the purchase and retirement of common
stock  at  a  cost  of  approximately   $923,000.  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 months ended June 30, 2004, CFB decreased available for sale
securities by approximately $2 million from approximately  $11.1 million at year
end 2003 to  approximately  $9.1  million at June 30, 2004.  Deposits  increased
approximately  $520,000  during the six months ended June 30, 2004. CFB has $2.5
million in  available  federal  funds lines and  approximately  $2.1  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 June 30,  2004,  CFB had  $386,000  in
repurchase agreement balances outstanding.

     At June 30, 2004, CFB had capital of $4.1 million,  or 5.4% of total assets
as compared to $4.9  million,  or 6.8% at December 31,  2003.  CFB 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 June 30, 2004,
CFB exceeded the required capital levels.

                                       16

<PAGE>

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.

     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.








                                       17
<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 CFB Bancshares,  Inc. was held on
          May 4,  2004.  Of the  outstanding  311,669  shares of stock,  190,073
          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:

                                                  Votes
                                                  -----
                  Nominee             For        Against     Abstain
                  -------             ---        -------     --------
          Clyde Darnell               189,673                400
          William D. Goodman          189,673                400
          Samuel L. Hull              189,673                400
          Billy M. Rice               189,673                400
          Church H. Smith             189,673                400
          Stephen N. Smith            189,673                400
          James F. Wilson             189,673                400
          Wendell S. Langley          189,673                400

          2.   Appointment of Auditors

          Ratification  of  the  appointment  of  Pugh  and  Company,  P.C.,  as
          independent auditors for the fiscal year ending December 31, 2004:

           For           189,005
           ---
           Against
           -------
           Abstain         1,068
           -------



                                       18
<PAGE>

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 June 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: August 16, 2004               /s/ Billy M. Rice
                                    -------------------------------------
                                    Billy M. Rice, President and Chief Executive
                                    Officer (principal executive officer)

Date: August 16, 2004               /s/ Wendell S. Langley
                                    -------------------------------------
                                    Wendell S. Langley, Chief Financial Officer
                                    Officer (principal accounting officer)















                                       20