UNITED STATES                          SECURITIES AND EXCHANGE COMMISSION                                 Washington, D.C.  20549                                                                                     FORM 10-K

(Mark One)    X            AnnualReport Pursuant to Section 13 or 15(d) of the                 SecuritiesExchange Act of 1934                 Forthe fiscal year ended December 31, 2003.                                       or                 TransitionReport Pursuant to Section 13 or 15(d) of the                 SecuritiesExchange Act of 1934 [No Fee Required]                 Forthe Transition Period From           to            .                      Commissionfile number 2-96350                              CNBCORPORATION           (Exact nameof registrant as specified in its charter) South Carolina                      57-0792402(State ofincorporation)            (I.R.S.Employer Identification No.)1400 Third Avenue, P.O. Box 320, Conway, SouthCarolina         29528       (Address of Principal executiveoffices)               (ZipCode)     Registrant's telephone number, including areacode: (843) 248-5721        Securities registered pursuantto section 12(b) of the Act:                                  None        Securities registered pursuantto Section 12(g) of the Act:                                                   Nameof each exchangeTitle of each class                                ofwhich registered  Common Stock, par value $10.00 pershare            None     Indicate by check mark whether the registrant (1)has filed all reports requiredby Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12months and (2) has been subject tosuch filing requirements for the past 90 days.Yes X  No  

     Indicate by check mark if disclosure ofdelinquent filers pursuant to Item405 of Regulation S-K is not containedherein, and will not be contained, to the best of registrant's knowledge, indefinitive proxy or information statements incorporated by reference in Part III of this  Form 10-K or any amendment to thisForm 10-K. [  ]

     Indicate by check mark whether the registrant isan accelerated filer (as definedin Rule 12 b-2 of the ExchangeAct).  Yes___.  No  X .     As of February 29, 2004, 717,657 shares of Common Stock of CNB Corporation wereoutstanding andthe aggregate market value of such Common Stock held by nonaffiliates basedupon the price at which stock was sold during the 60 days prior to the date offiling) was approximately $73,320,564.

No Documents have been incorporated by reference.

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TABLE OF CONTENTS

PART I
|                           |                                                                                                                                | Page             |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|------------------|
| ITEM 1  ITEM 2  ITEM 3  ITEM 4 | Description of Business  and Supplementary Data  Properties  Legal Proceedings  Submission of Matters to a Vote of Security Holders | 1-23  24  24  25 |

PART II
| ITEM 5  ITEM 6  ITEM 7  ITEM 7A  ITEM 8  ITEM 9  ITEM 9A | Market for the  Registrant's Common Stock and Related  Security Holder Matters  Selected Financial Data  Management's Discussion and Analysis of Financial  Condition and Results of Operations  Quantitative and Qualitative Disclosures About Market  Risk  Financial Statements and Supplementary Data  Changes In and Disagreements on Accounting and  Financial Disclosure  Controls and Procedures | 25  26  26-33  33  34-58  59  59 |
|----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|

PART III
| ITEM 10  ITEM 11  ITEM 12  ITEM 13  ITEM 14  ITEM 15 | Directors and Executive  Officers of the Registrant  Executive Compensation  Security Ownership of Certain Beneficial Owners  and Management  Certain Relationships and Related Transactions  Principal Accounting Fees and Services  Exhibits, Financial Statement Schedules, Notes to  Financial Statements, and Reports on Form 8-K | 59-63  64-67  68  68  69  70 |
|------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|

 
| Signature | 71 |
|-----------|----|
| Audit Committee Report | 72 |
|------------------------|----|

  

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                                           PART I                              ITEM 1.   Description of Business                                DESCRIPTION OF CNB CORPORATION

CNBCorporation (the "Company") is a South Carolina businesscorporation organized forthe purpose of becoming a bank holding company forThe Conway National Bank (the "Bank")under the Bank Holding CompanyAct.  The Company was organized with $500 of capital onMarch 8, 1985;received approval from the Board of Governors of the Federal ReserveSystem on May 15, 1985,to become a bank holding company; and on June 10, 1985,acquired, in exchange for its own shares of common stock,substantially all of thecommon stock of the Bank.  The activities of theCompany are subject to the supervisionof the Federal Reserve, and the Companymay engage directly or through subsidiarycorporations in those activitiesclosely related to banking which are specificallypermitted under the BankHolding Company Act and Gramm-Leach-Bliley Act of 1999.  See"Supervisionand Regulation."  Although the Company, after obtaining the requisiteapproval of the Federal Reserve and any other appropriate regulatory agency,may seekto enter businesses closely related to banking or to acquire existingbusinessesalready engaged in such activities, the Company has not conducted,and has no presentintent to conduct, negotiations for the acquisition orformation of any entities toengage in other permissible activities other thanthe acquisition of the Bank. Therecan be no assurance that the Company willform or acquire any other entity. 

The Company and the Bank compete with those banks and other financialinstitutionsthat compete with the Bank.  See "Competition."  Inaddition, if the Company attemptsto form or acquire other entities and engagein activities closely related to bankingthe Company will be competing withother bank holding companies, financial holdingcompanies, and companiescurrently engaged in lines of business or permissibleactivities in which theCompany might engage, many of which have far greater assetsand financialresources than the Company and a greater capacity to raise additionaldebt andequity capital than the Company.

                              DESCRIPTION OF THE SUBSIDIARY

The Bank is an independent community bank engaged in the general commercialbankingbusiness in Horry and Georgetown  Counties, South Carolina. The Bank was organizedon June 5, 1903 as the Bank of Horry located on Main Street in Conway, South CarolinaThe Bank became a national bank operating as TheConway National Bank in 1914. On June10, 1985, the Bank was reorganized into a bank holding company structure whensubstantially all of the common stock of the Bank was acquired by CNBCorporation inexchange for its own shares of common stock.  In 1960, the Bankopened its firstadditional office at 1400  Third Avenue in Conway. Since that time,  the followingoffices have been opened: Coastal Centre inConway, Horry County, (1969); Surfsidein Surfside Beach, Horry County, (1971); Northside, north of Myrtle Beach, HorryCounty, (1977); Red Hill in Conway,Horry County, (1981); Socastee, in the southernportion of Myrtle Beach, HorryCounty, (1986); Aynor in the Town of Aynor, Horry County,(1991), Myrtle Beachin the City of Myrtle Beach, Horry County, (1995), West Conway,in Conway,Horry County, (1998), Murrells Inlet in Murrells Inlet, Georgetown County,(2000) and North Myrtle Beach in the City of North Myrtle Beach, Horry County,(2002).The Surfside office was enlarged in 1977 and 1984, and the CoastalCentre office wasexpanded in 1980.  The Third Avenue office, whichhouses the Bank's administrativeoffices and data processing facilities wasexpanded in 1982 from 11,150 square feetto 33,616 square feet. The Bankemploys approximately 224 full-time-equivalentemployees at its principaloffice and eleven branch offices.

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The Bank performs the full rangeof normal commercial banking functions. Some of themajor services provided include checking accounts, NOW accounts, moneymarketdeposit accounts, IRA accounts, savings and time deposits of varioustypes and loansto individuals for personal use, home mortgages, homeimprovement, automobiles, realestate, agricultural purposes and businessneeds.   Commercial lending operationsinclude various types of credit forbusiness, industry, and agriculture.   In addition,the Bank offers safedeposit boxes, wire transfer services, bank money orders, 24-hourtellermachines on the STAR Network, internet banking, direct deposits and aMasterCard/Visa program. Through a correspondent relationship the Bank offersdiscountbrokerage services.  The Bank does not provide trust services; doesnot sell annuities;and does not sell mutual funds.

The majority of the Bank's customers are individuals and small to medium-sizedbusinesses headquartered within the Bank's service area.  The Bank has nomaterialconcentration of deposits from any single customer or group ofcustomers.  Nosignificant portion of the Bank's loans is concentrated within asingle industry orgroup of related industries.  There are no material seasonalfactors that would haveany adverse effect on the Bank nor does the Bank relyon foreign sources of funds orincome.                                          COMPETITION

The Bank actively competes with other institutions in Horry Countyand the WaccamawNeck region of Georgetown County in providing customers with deposit, credit andotherfinancial services.  The principal competitors of the Bank include localoffices ofsix regional banks, three state-wide banks, ten locally owned banksin Horry andGeorgetown Counties and various other financial and thriftinstitutions. The regionalbanks are Bank of America, RBC Centura, FirstCitizens Bank and Trust Company, BranchBank and Trust, Carolina First SavingsBank, and Wachovia, N.A.  The statewide banksare National Bank of SouthCarolina, First Federal Savings Bank, and First PalmettoSavings Bank.  Thelocally owned banks are Anderson Brothers Bank, Coastal FederalSavings Bank,Horry County State Bank, Sandhills Bank, Beach First National Bank,PlantationFederal Savings Bank, Carolina Bank and Trust, Citizens Bank of Olanta,Crescent Bank, and Sunbank, N.A. The Bank also competes with credit unions,moneymarket funds, brokerage houses, insurance companies, mortgage companies,leasingcompanies, consumer finance companies and other financial institutions.Significantcompetitive factors include interest rates on loans and deposits,prices and feesfor services, office location, customer service, communityreputation, and continuityof personnel.

                                   SUPERVISION AND REGULATION

General

TheCompany and the Bank are subject to an extensive collection of state andfederalbanking laws and regulations which impose specific requirements andrestrictionson, and provide for general regulatory oversight with respect to,virtually all aspectsof the Company's and the Bank's operations.  The Companyand the Bank are also affectedby government monetary policy and by regulatorymeasures affecting the bankingindustry in general.  The actions of the FederalReserve System affect the money supplyand, in general, the Bank's lendingabilities in increasing or decreasing the cost andavailability of funds to theBank.  Additionally, the Federal Reserve System regulatesthe availability ofbank credit in order to combat recession and curb inflationarypressures in theeconomy by open market operations in United  States governmentsecurities,changes in the discount rate on member bank borrowings, and changes inthereserve requirements against bank deposits.

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During 1989 and 1991, the United States Congress enacted two major pieces ofbankinglegislation:  The Financial Institutions Reform, Recovery andEnforcement Act of1989 ("FIRREA") and the Federal Deposit InsuranceCorporation Improvement Act of 1991("FDICIA").  The FIRREA andFDICIA have significantly changed the commercial bankingindustry through,among other things, revising and limiting the types and amountsof investmentauthority, significantly increasing minimum regulatory capitalrequirements,and broadening the scope and power of federal bank and thriftregulators overfinancial institutions and affiliated persons in order to protectthe depositinsurance funds and depositors.  These laws, and the resulting implementingregulations, have subjected the Bank and the Company to extensive regulation,supervision and examination by the Office of the Comptroller of the Currency(OCC).This has resulted in increased administrative, professional andcompensation expensesin complying with a substantially increased number of newregulations and policies.The regulatory structure created by these laws givesthe regulatory authoritiesextensive authority in connection with theirsupervisory and enforcement activities andexamination policies.

The Omnibus Consolidated Appropriations Act was enacted on September 30, 1996.  Amongthe law's many provisions is a resolution of the BIF-SAIFdeposit insurance premiumdisparity, many regulatory burden relief provisionsand other bank-related legislation.  The BIF-SAIF provisions are contained inthe Deposit Insurance Funds Actof 1996. 

The Gramm-Leach-Bliley Financial Modernization Act of 1999, effective March 11, 2000,allows bank holding companies to elect to be treated as financial holdingcompanies.Financial holding companies may engage in a broad range ofsecurities, insurance, andother financial activities.

The following is a brief summary of certain statutes, rules and regulationsaffectingthe Company and the Bank.  This summary is qualified in its entiretyby reference tothe particular statutory and regulatory provisions referred tobelow and is not intended to be an exhaustive description of the statutes orregulations applicableto the business of the Company and the Bank.   Anychange in applicable laws orregulations may have a material adverse effect onthe business and prospects of theCompany and the Bank.

The Company

The Company is a bank holding company within the meaning of the Federal BankHoldingCompany Act of 1956, as amended (the "BHCA") and isregistered as such with the FederalReserve.  The Company is required to fileannual reports and other information regardingits business operations andthose of its subsidiaries.  It is also subject tosupervision and regularexaminations.

The BHCA requires every bank holding company to obtain the prior approval oftheFederal Reserve Board before (i) it or any of its subsidiaries (other thana bank)acquires substantially all of the assets of any bank, (ii) it acquiresownership orcontrol of any voting shares of any bank if after such acquisitionit would own orcontrol, directly  or indirectly, more than 5% of the votingshares of such bank, or(iii) it merges or consolidates with any other bankholding company. 

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TheBHCA and the Federal Change in Bank Control Act, together with regulationspromulgated by the Federal Reserve Board, require that, depending on theparticularcircumstances, either the Federal Reserve Board's approval must beobtained or noticemust be furnished to the Federal Reserve Board and notdisapproved prior to any personor company acquiring control of a bank holdingcompany, such as the Company, subjectto certain exemptions for certaintransactions.

Under the BHCA, a bank holding company is generally prohibited from engagingin, oracquiring direct or indirect control of more than 5% of the votingshares of any companyengaged in, nonbanking activities, unless the FederalReserve Board, by order or regulation, has found those activities to be soclosely related to banking or managingor controlling banks as to be a properincident thereto.  Some of the activitiesthat the Federal Reserve Board has determined by regulation to be proper incidentsto the business of a bankholding company include making or servicing loans and certaintypes of leases,engaging in certain insurance and discount brokerage activities,performingcertain data processing services, acting in certain circumstances as afiduciary or investment or financial adviser, owning savings associations andmakinginvestments in certain corporations or projects designed primarily topromotecommunity welfare.  The Company is also restricted in its activities bythe provisionsof the Glass-Stegall Act of 1933, which prohibits the Companyfrom owning subsidiariesthat are engaged principally in the issue, flotation,underwriting, public sale ordistribution of securities.  The regulatoryrequirements to which the Company is subject also set forth various conditionsregarding the eligibility and qualificationsof its directors and officers.

Under the Gramm-Leach-Bliley Act, the Company may elect to be treated as afinancialholding company which would allow the Company to engage in a broadrange of securities,insurance, and other financial activities.

The Bank

The Bank is subject to regulation and supervision, of which regular bankexaminationsare a part, by the Comptroller of the Currency.  The Bank is amember of the FederalDeposit Insurance Corporation (the "FDIC")which currently insures the deposits of eachmember bank to a maximum of$100,000 per depositor.   For this protection, each bankpays a statutoryassessment and is subject to the rules and regulations of the FDIC.TheCompany is an "affiliate" of the Bank within the meaning of theFederal ReserveAct and the Federal Deposit Insurance Act, which imposesrestrictions on loans by anysubsidiary bank to the Company, on investments byany subsidiary bank in the stock orsecurities of the Company and on the use ofsuch stock or securities as collateralsecurity for loans by any subsidiarybank to any borrower.  The Company will also besubject to certain restrictionswith respect to engaging in the business of issuing, underwriting anddistributing securities.

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                                DESCRIPTION OF BANK STOCK

The Bank is authorized to issue 199,536 shares and has outstanding 193,536shares of Bank Stock.  The holders of Bank Stock are entitled to one vote pershare.  Holdersof shares of Bank Stock have preemptive rights to purchaseadditional shares of BankStock and have cumulative rights in the elections ofdirectors of the Bank.  The National Bank Act generally provides for a majorityvote of the Bank Stock to approvean action by the Bank but a two-thirds voteof the outstanding shares of BankStock is required to approve certainfundamental changes.

The National Bank Act, 12 U.S.C. Section 55, provides for the pro rataassessment ofholders of common stock of a national bank in the event that itscapital becomes impaired, such assessment to be enforced by sale to the extentnecessary of the stockof the stockholder failing to pay his assessment. However, the Company has been advised that the Comptroller of the Currency hasnot used this provision in recent years.  Accordingly, the shares of Bank Stockare subject to such assessment.However, the Bank's management does notanticipate the Bank Stock being assessed in thismanner in the foreseeablefuture.

The holders of Bank Stock are entitled to receive such dividends as may bedeclared bythe Board of Directors of the Bank out of funds legally available therefor.  Nationalbanking laws and regulations impose restrictions on thepayment of dividends and otherdistributions to stockholders.  The NationalBank Act provides that a national bankcannot pay dividends or otherdistributions to stockholders out of any portion of itscapital and surplus,and that no dividend shall be paid by a bank in an amount greaterthan its "netprofits then on hand" (as defined in the National Bank Act), afterdeduction of statutory "bad debts."  In addition, 12 U.S.C. Section60 provides that the approval of the Comptroller of the Currency is requiredfor the payment of dividends by a national bank if the total of all dividendsdeclared by the bank in anycalendar year shall exceed the total of its "netprofits" of that year combined withits "retained net profits"of the preceding two years.  The same section further provides that, until thesurplus fund of a national bank shall equal its common capital, no dividendsshall be declared unless there has been carried to the surplus fund not lessthan one-tenth part of the bank's net profits of the preceding half yearin thecase of quarterly or semiannual dividends, or not less than one-tenth partofits net dividends.  Also, under 12 U.S.C. Section 1818, the Comptroller of theCurrency can restrict a national bank's dividend payments if they are deemed anunsafeor unsound banking practice.

In the event of the liquidation, dissolution or winding-up of the affairs ofthe Bank,the holders of outstanding shares of Bank Stock will be entitled toshare pro rata according to their respective interests in the Bank's assets andfunds remaining afterpayment or provision for payment of all debts and other liabilitiesof the Bank.

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                                DESCRIPTION OF COMPANY STOCK

General

The Company is authorized to issue 1,500,000 shares of Company Stock and as of December31, 2003, has 718,246 shares issued and 717,409 shares outstanding. The holdersofCompany Stock are entitled to one vote per share.  Holders of shares ofCompany  Stockdo not have pre-emptive rights to purchase any additional sharesof Company Stock and do not have cumulative voting rights in the election ofdirectors.  Without pre-emptiverights, stockholders could experience dilutionof their voting power and of theirequity interest in the Company.

The ability of the Company to pay dividends to the holders of the Company Stockdependsupon the amount of dividends paid by the Bank to the Company. Theholders of sharesof Company Stock will be entitled to receive such dividendsas may be declared by theBoard of Directors of the Company out of the fundslegally available therefor. Thepayment of dividends by the company are subjectto the restrictions of South Carolinalaws applicable to the declaration of dividendsby a business corporation. Under suchprovisions, dividends may be paid in cashor in property of the Company, including theshares of other corporations,except when the Company is insolvent or would thereby bemade insolvent or whenthe declaration of payment thereof would be contrary to anyrestrictions in theCompany Articles.  Dividends may be declared and paid only out oftheunreserved and unrestricted earned surplus of the Company.

In the event of the liquidation, dissolution or winding-up of the affairs ofthe Company, the holders of outstanding shares of Company Stock will beentitled to sharepro rata according to their respective interests in theCompany's assets and fundsremaining after payment or provision for payment ofall debts and other liabilities ofthe Company.

All shares of Company Stock are fully paid and nonassessable.

The Bank is the transfer agent for shares of Company Stock.

                        DISCUSSION OF FORWARD-LOOKING STATEMENTS

Information in the enclosed report, other than historical information, maycontainforward-looking statements that involve risks and uncertainties,including, but notlimited to, timing of certain business initiatives of theCompany, the Company'sinterest rate risk condition, and future regulatoryactions of the Comptroller of theCurrency and Federal Reserve System.  It isimportant to note that the Company'sactual results may differ materially andadversely from those discussed in forward-looking statements.

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SUPPLEMENTARY DATA

QUARTERLY SHAREHOLDER INFORMATION

CNB CORPORATIONQUARTERLY SHAREHOLDER INFORMATION(All Dollar Amounts, Except Per Share Data, in Thousands)

Summaryof Operating Results by Quarter
|                                                                                                                                                                                                                                                                                                              | First Quarter                                                                                                                                                  | Second Quarter                                                                                                                                                 | Third Quarter                                                                                                                                                        | Fourth Quarter                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    Total interest  income  Total interest expense  Net interest income  Provision for possible   loan losses  Total other operating income  Total other operating expenses  Income before income taxes  Income taxes  Net Income  Net income per weighted     average shares outstanding | 2003   $7,593 1,969   5,624 280  1,462 4,044   2,762   854$1,908        $ 2.66 | 2002   $7,648 2,346   5,302 275  1,352 3,685   2,694   838$1,856        $ 2.59 | 2003   $7,681 1,868   5,813 220  1,487 4,168   2,912     914  $1,998          $ 2.78 | 2002   $7,872 2,315   5,557 215  1,300 3,752   2,890     889  $2,001          $ 2.79 | 2003   $7,567 1,750   5,817 250  1,654 4,102   3,119   1,002  $2,117          $ 2.95 | 2002   $8,036 2,303   5,733 270  1,456 3,914   3,005     976  $2,029          $ 2.83 | 2003   $7,625 1,637   5,988 210  1,514 4,923   2,369     727  $1,642          $ 2.29 | 2002   $7,788 2,104   5,684 225  1,355 4,808   2,006     710  $1,296          $ 1.81 |
|                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                |                                                                                                                                                                |                                                                                                                                                                      |                                                                                                                                                                      |  |  |  |  |

 SUPPLEMENTARY INFLATION ADJUSTED FINANCIAL DATA

Inflation-adjusted accounting has not been applied to the Company's financialinformationas management does not believe this type of analysis providesuseful information withinthe financial services industry.  The Companycurrently does not meet the asset sizecriteria which would make detaileddisclosure of inflation adjusted data mandatory.

                         GUIDE 3.   STATISTICAL DISCLOSURE BY BANK                                       HOLDING COMPANIES

The following tables present additionalstatistical information about CNB Corporationand its operation and financialcondition and should be read in conjunction with theconsolidated financialstatements and related notes thereto contained elsewhere in thisreport.

                  DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY:                            INTEREST RATES AND INTEREST DIFFERENTIAL

The tables on the following 5 pages presentselected financial data and an analysis ofnet interest income.

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| CNB Corporation and Subsidiary  Selected Financial Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Assets:    Earning assets:     Loans     Investment securities:      Taxable      Tax-exempt     Federal funds sold and      securities purchased under      agreement to resell        Total earning assets     Other assets        Total assets  Liabilities and stockholder equity:     Interest-bearing liabilities:       Interest-bearing deposits       Federal funds purchased and        securities sold under        agreement to repurchase       Other short-term borrowings          Total interest-bearing           liabilities     Noninterest-bearing deposits     Other liabilities     Stockholders' equity         Total liabilities and           stockholders' equity     Net interest income as a percent       of total earning assets  (1)  Tax-equivalent adjustment       based on a 34% tax rate |   Twelve Months Ended 12/31/03    Average   Interest   Avg.Annual  Balance   Income/     Yield or   Expense(1)    Rate    |
| $346,110  156,783  25,375  24,111          $552,379    40,292  $592,671  $391,856  28,752  1,389            $421,997101,310  4,714  64,650  $592,671  $552,379                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ 22,565  6,623  1,564  246           $30,998                    $  6,877  334  13            $  7,224                                  $ 23,774  $    532 | 6.52%  4.22   6.16   1.02               5.61                           1.75   1.16   .94               1.71                           4.30%  |
| Ratios:  Annualized return on average total assets  Annualized return on average stockholders' equity  Cash dividends declared as a percent of net income  Average stockholders' equity as a percent of:    Average total assets    Average total deposits    Average loans  Average earning assets as a percent of  average total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |    1.29%  11.86   37.44      10.91   13.11   18.68      93.20% |

(2) TheCompany had no out-of-period adjustments or foreign activities.    Loan fees of $282 are included in the above interest income.  Loans    on a non-accrual basis for the recognition of interest income    totalling $351 as of December 31, 2003 are included in loans, net    of unearned income, for purpose of this analysis.

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| CNB Corporation and Subsidiary  Selected Financial Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Assets:    Earning assets:     Loans, net of unearned income     Investment securities:      Taxable      Tax-exempt     Federal funds sold and      securities purchased under      agreement to resell        Total earning assets     Other assets        Total assets  Liabilities and stockholder equity:     Interest-bearing liabilities:       Interest-bearing deposits       Federal funds purchased and        securities sold under        agreement to repurchase       Other short-term borrowings          Total interest-bearing           liabilities     Noninterest-bearing deposits     Other liabilities     Stockholders' equity         Total liabilities and           stockholders' equity     Net interest income as a percent       of total earning assets  (1)  Tax-equivalent adjustment       based on a 34% tax rate |   Twelve Months Ended 12/31/02    Average   Interest   Avg.Annual  Balance   Income/     Yield or   Expense(1)    Rate    |
| $309,351  150,050  26,734  23,970          $510,105    36,512  $546,617  $361,907  27,962  3,160            $393,02990,431  4,260  58,897  $546,617  $510,105                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ 22,343  7,493  1,714  377           $31,927      $  8,458  495  115            $  9,068      $ 22,859   $    583 | 7.22%  4.99   6.41   1.57      6.26         2.34   1.77   3.64      2.31               4.48% |
| Ratios:  Annualized return on average total assets  Annualized return on average stockholders' equity  Cash dividends declared as a percent of net income  Average stockholders' equity as a percent of:    Average total assets    Average total deposits    Average loans, net of unearned income  Average earning assets as a percent of  average total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |    1.31%  12.19   37.45      10.77   13.02   19.04      93.32% |

(2) TheCompany had no out-of-period adjustments or foreign activities.    Loan fees of $284 are included in the above interest income.  Loans    on a non-accrual basis for the recognition of interest income    totalling $697 as of December 31, 2002 are included in loans, net    of unearned income, for purpose of this analysis.

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| CNB Corporation and Subsidiary  Selected Financial Data

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Assets:    Earning assets:     Loans, net of unearned income     Investment securities:      Taxable      Tax-exempt     Federal funds sold and      securities purchased under      agreement to resell        Total earning assets     Other assets        Total assets  Liabilities and stockholder equity:     Interest-bearing liabilities:       Interest-bearing deposits       Federal funds purchased and        securities sold under        agreement to repurchase       Other short-term borrowings          Total interest-bearing           liabilities     Noninterest-bearing deposits     Other liabilities     Stockholders' equity         Total liabilities and           stockholders' equity     Net interest income as a percent       of total earning assets  (1)  Tax-equivalent adjustment       based on a 34% tax rate |   Twelve Months Ended 12/31/01    Average   Interest   Avg.Annual  Balance   Income/     Yield or   Expense(1)    Rate    |
| $294,837  122,060  20,744  32,984          $470,625    33,771  $504,396  $332,870  30,882  3,409            $367,16180,218  4,474  52,543  $504,396  $470,625                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ 24,967  6,778  1,411  1,287           $34,443      $ 13,577  1,070  175            $ 14,822      $ 19,621   $    480 | 8.47%  5.55   6.80   3.90      7.32         4.08   3.46   5.13      4.04               4.17% |
| Ratios:  Annualized return on average total assets  Annualized return on average stockholders' equity  Cash dividends declared as a percent of net income  Average stockholders' equity as a percent of:    Average total assets    Average total deposits    Average loans, net of unearned income  Average earning assets as a percent of  average total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |    1.28%  12.25   38.96      10.42   12.72   17.82      93.30% |

(2) TheCompany had no out-of-period adjustments or foreign activities.    Loan fees of $295 are included in the above interest income.  Loans    on a non-accrual basis for the recognition of interest income    totalling $633 as of December 31, 2001 are included in loans, net    of unearned income, for purpose of this analysis.

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 CNB Corporation andSubsidiaryRate/Volume Variance AnalysisFor the Twelve Months Ended December 31, 2003 and 2002(Dollars in Thousands)
|                                         Earning Assets:       Loans, Net of unearned      income (2)       Investment securities:      Taxable      Tax-exempt       Federal funds sold and      securities purchased   under agreement to resell             Total Earning Assets               Interest-bearing      Liabilities:               Interest-bearing deposits       Federal funds purchased   and securities sold under      agreement to repurchase       Other short-term   borrowings             Total Interest-bearing      Liabilities     Interest-free Funds      Supporting Earning Assets           Total Funds Supporting     Earning Assets           Interest Rate Spread     Impact of Non-interest-      bearing Funds on Net      Yield on Earning Assets           Net Yield on Earning    Assets |     Average   Volume2003                $346,110       156,783   25,375          24,111       $552,379    $391,856           28,752       1,389         421,997     130,382               $552,379 |     Average   Volume2002                $309,351       150,050   26,734          23,970       $510,105    $361,907           27,962       3,160      393,029     117,076               $510,105 |         Yield/Rate2003 (1)                6.52%         4.22%     6.16%          1.02%         5.61%      1.75%             1.16%        .94%       1.71%                  1.31%   3.90%           .40%      4.30%   |         Yield/Rate2002 (1)                7.22%         4.99%     6.41%          1.57%         6.26%               2.34%             1.77%       3.64%          2.31%                        1.78%   3.95%           .53%      4.48%   |     Interest     Earned/Paid 2003 (1)                 $22,565          6,623      1,564               246          $30,998                   $ 6,877              334             13             7,224                            $ 7,224                                 $23,774    |     Interest     Earned/Paid 2002 (1)                 $22,343          7,493      1,714               377          $31,927                   $ 8,458              495            115             9,068                            $ 9,068                                 $22,859    |       Variance            $222        (870)   (150)           (131)       $  (929)                $(1,581)           (161)       (102)         (1,844)                       $(1,844) |     Change    Due to Rate                 $(2,165)       (1,155)   (67)           (132)   4   $(3,519)                $(2,135)           (171)        (85)         (2,391)                       $(2,391) |     Change   Due toVolume            $2,654        336    (87)             2        $2,905                 $  701            14        (64)           651                       $  651  | Change   Due to   Rate XVolume            $(267)       (51)   4            (1)       $(315)                $(147)           (4)       47       (104)                     $(104) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

(1)  Tax-equivalentadjustment based on a 34% tax rate.(2)  Includes non-accruing loans which does not have a materialeffect on the     Net Yield on Earning Assets.

11

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CNB Corporation andSubsidiaryRate/Volume Variance AnalysisFor the Twelve Months Ended December 31, 2002 and 2001(Dollars in Thousands)
|                       Earning Assets:     Loans, Net of unearned      income (2)     Investment securities:      Taxable      Tax-exempt     Federal funds sold and      securities purchased    under agreement to resell           Total Earning Assets           Interest-bearing      Liabilities:           Interest-bearing deposits     Federal funds purchased    and securities sold under      agreement to repurchase     Other short-term    borrowings           Total Interest-bearing      Liabilities       Interest-free Funds      Supporting Earning Assets             Total Funds Supporting       Earning Assets             Interest Rate Spread       Impact of Non-interest-      bearing Funds on Net   Yield on Earning Assets             Net Yield on Earning   Assets |     Average   Volume2002                $309,351       150,050   26,734          23,970       $510,105             $361,907           27,962       3,160      393,029     117,076               $510,105 |     Average   Volume2001                $294,837       122,060   20,744          32,984       $470,625             $332,870           30,882       3,409         367,161     103,464               $470,625 |         Yield/Rate2002 (1)                7.22%         4.99%     6.41%          1.57%         6.26%               2.34%             1.77%       3.64%          2.31%                        1.78%   3.95%           .53%      4.48%   |         Yield/Rate2001 (1)                8.47%         5.55%     6.80%          3.90%         7.32%               4.08%             3.46%      5.13%          4.04%                        3.15%   3.28%           .89%      4.17%   |     Interest     Earned/Paid 2002 (1)                 $22,343          7,493      1,714               377          $31,927                   $ 8,458              495            115             9,068                         $ 9,068                                 $22,859    |     Interest     Earned/Paid 2001 (1)                 $24,967          6,778      1,411             1,287          $34,443                   $13,577              1,070            175            14,822                            $14,822                                 $19,621    |             Variance               $(2,624)       715    303               (910)    $(2,516)                $(5,119)           (575)        (60)         (5,754)                       $(5,754) |     Change    Due to Rate                 $(3,685)       (684)   (81)           (769)       $(5,219)                $(5,792)           (522)        (51)         (6,365)                       $(6,365) |     Change   Due toVolume            $1,229        1,553    407           (352)       $2,837                 $1,185            (101)       (13)         1,071                       $1,071  | Change   Due to   Rate XVolume            $(168)       (154)   (23)          211        $(134)                $(512)           48         4          (460)                     $(460) |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

(1)  Tax-equivalentadjustment based on a 34% tax rate.(2)  Includes non-accruing loans which does not have a materialeffect on the     Net Yield on Earning Assets.

12

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CNB Corporation and SubsidiaryRate/Volume Variance AnalysisFor the Twelve Months Ended December 31, 2001 and 2000(Dollars in Thousands)
|                           Earning Assets:    Loans, Net of unearned     income (2)    Investment securities:     Taxable     Tax-exempt    Federal funds sold and     securities purchased     under agreement to resell         Total Earning Assets         Interest-bearing     Liabilities:         Interest-bearing deposits    Federal funds purchased     and securities sold under     agreement to repurchase    Other short-term     borrowings         Total Interest-bearing     Liabilities    Interest-free Funds     Supporting Earning Assets         Total Funds Supporting    Earning Assets         Interest Rate Spread    Impact of Non-interest-     bearing Funds on Net  Yield on Earning Assets         Net Yield on Earning   Assets |     Average   Volume2001                $294,837       122,060   20,744          32,984       $470,625             $332,870           30,882       3,409         367,161     103,464               $470,625 |     Average   Volume2000                $284,431       118,983   16,344          11,022       $430,780             $299,460           30,953       4,206         334,619      96,161               $430,780 |         Yield/Rate2001 (1)                8.47%         5.55%     6.80%          3.90%         7.32%               4.08%             3.46%       5.13%          4.04%                        3.15%   3.28%           .89%      4.17%   |         Yield/Rate2000 (1)                9.06%         5.92%     7.14%          6.25%         8.05%               4.37%             4.75%       6.49%          4.43%                        3.44%   3.62%           .99%      4.61%   |     Interest     Earned/Paid 2001 (1)                 $24,967          6,778      1,411             1,287          $34,443                   $13,577              1,070            175            14,822                            $14,822                                 $19,621    |     Interest     Earned/Paid 2000 (1)                 $25,771          7,045      1,167               689          $34,672                   $13,082              1,470            273            14,825                            $14,825                                 $19,847    |             Variance            $(804)       (267)   244           598        $(229)                $ 495            (400)      (98)        (3)                     $  (3) |     Change   Due toRate                $(1,678)       (440)   (56)           (255)       $(2,429)                $  (868)           (399)        (57)         (1,324)                       $(1,324) |     Change   Due toVolume            $  943        182    314          1,373        $2,812                 $1,460            (2)       (52)         1,406                       $1,406  | Change   Due to   Rate XVolume            $ (69)       (9)   (14)         (520)       $(612)                $ (97)           1       11           (85)                     $ (85) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

(1)  Tax-equivalentadjustment based on a 34% tax rate.(2)  Includes non-accruing loans which does not have a materialeffect on the     Net Yield on Earning Assets.

 13

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INVESTMENT SECURITIES

 The purpose of the investment policy of the Bankis to ensure that the investment securities portfolio shall be managed tomaximize portfolio yield over the long term in a manner that is consistent withliquidity needs, pledging requirements, asset/liability strategies, andsafety/soundness concerns.  Specific investment objectives include the desireto: ensure adequate liquidity for loan demand, deposit fluctuations, and otherchanges in balance sheet mix; manage interest rate risk; maximize theinstitution's overall return; ensure collateral is available for pledging; andmanage asset-quality diversification of the bank's assets.  During 2002,investment securities grew as a percentage of total assets due to weakened loandemand within our market.  However, loan demand began to increase during thefourth quarter of 2002 and throughout 2003.  At December 31, 2003 and 2002,the Loans/Total Assets ratios were 60.3% and 57.2%, respectively, as comparedto 58.6% at December 31, 2001. Investment securities and federal funds sold havecorrespondingly risen and fallen as a percentage of total assets.

Investmentsecurities with a par value of $85,195, $79,880, and $76,640 at December 31, 2003, 2002, and 2001,respectively, were pledged to secure public deposits and for other purposesrequired by law.

The following summaries reflect the book value, unrealized gains and losses,approximate market value, and tax-equivalent yields on investment securities atDecember 31, 2003, 2002, and 2001.
| AVAILABLE FOR SALE                                                                               |             December 31, 2003            Book      Unrealized     Fair             Value   Gains   Losses   Value Yield(1) |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Federal  agencies      Within one year     One to five years |     $ 8,809 149,917   158,726                                                                                                                                                                                                                                                                                                                                                                  |    $   174  3,484    3,658 |    $    -   273     273 |    $  8,983 153,128 162,111 |    4.36%  4.00%  4.02% |  
  State,  county and     municipal     Within one year     One to five years     Six to ten years     Over ten years        Mortgage Backed     Over ten years    Other restricted       CRA Qualified        Investment Fund       Total available for sale

      185  10,283  6,961     288    17,717               1,071                  311   $177,825

      1  522  492      4    1,019                 -                  -   $ 4,677

      -  -  -     -       -              19                -   $  292

      186  10,805  7,453     292    18,736               1,052                  311   $182,210

      7.03%  5.68%  6.81%5.92%  6.14%         3.59%             -%   4.23%

 
HELD TO  MATURITY    Federal agencies     Within one year

         $  2,000

        $    55

       $    -

         $  2,055

        6.44%

 
     State, county and    municipal     Within one year     One to five years     Six to ten years             Total held to maturity   OTHER INVESTMENTS,AT COST    Federal Reserve &     Federal Home Loan      Bank Stock

         1,562  3,086   1,433     6,081   $  8,081                 $  1,284

         30  227    123      380   $   435                  $     -

         -  -     -       -   $    -                 $    -

         1,592  3,313   1,556     6,461   $  8,516                   $  1,284

         6.98%  7.40%6.97%  7.19%   7.01%                4.64%

 
 (1) Tax equivalent adjustmentbased on a 34% tax rate.As of the quarter ended December 31, 2003, the Bank did not hold any securitiesof anissuer that exceeded 10% of stockholders' equity.                                            14

INVESTMENT SECURITIES, continued

AVAILABLE FOR SALE

            December 31, 2002            Book      Unrealized     Fair             Value   Gains   Losses   Value Yield(1)

 Federal  agencies      Within one year     One to five years     Six to ten years

   $  9,488    122,681    10,000   142,129 

   $   230    4,885      567    5,682

   $    -     -       -       -

   $  9,678   127,566  10,567   147,811

   5.89%  4.80%  5.96%  4.96%

 
  State,  county and     municipal     One to five years     Six to ten years       Other restricted       CRA Qualified        Investment Fund          Total available for sale   

      8,192   8,722    16,914                  298      $159,341

      340    551      891                  -      $ 6,573

      -     -       -                -      $    -

      8,532   9,273    17,805                  298      $165,914

      5.22%6.40%  5.83%             -%      5.05%

 
HELD TO  MATURITY    Federal agencies     Within one year     One to five years

      $  2,000   2,002     4,002

      $     8    131      139

      $    -     -       -

      $  2,008   2,133     4,141

      6.38%6.44%  6.41%

 
     State, county and    municipal     Within one year     One to five years     Six to ten years              Total held to maturity   OTHER INVESTMENTS,AT COST    Federal Reserve &     Federal Home Loan      Bank Stock

         2,675  4,592   1,836     9,103   $ 13,105                   $  1,394

         36  296    126      458   $   597                  $     -

         -  -     -       -   $    -                 $    -

         2,711  4,888   1,962     9,561   $ 13,702                   $  1,394

         6.18%  6.70%6.60%  6.53%   6.49%                5.32%

 
 (1) Tax equivalent adjustmentbased on a 34% tax rate.As of the quarter ended December 31, 2002, the Bank did not hold any securitiesof anissuer that exceeded 10% of stockholders' equity.

15

INVESTMENT SECURITIES, continued 

AVAILABLE FOR SALE

            December 31, 2001            Book      Unrealized     Fair             Value   Gains   Losses   Value Yield(1)

 Federal  agencies      Within one year     One to five years     Six to ten years

   $  9,927   96,652    14,612   121,191

   $   173    2,050      328    2,551

   $    -     174       -     174

   $10,100   98,528   14,940  123,568

   5.60%  5.46%  5.76%  5.51%

 
  State,  county and     municipal     One to five years     Six to ten years     After ten years          Other restricted       CRA Qualified        Investment Fund          Total available for sale

      3,652  11,640     854    16,146                     278      $137,615

      48  149      3      200                     -      $ 2,751

      29  146    10     185                   -      $  359

      3,671  11,643     847    16,161                     278      $140,007

      5.38%  5.89%  6.34%  5.80%           9.45%      5.55%

 
   HELD TO MATURITY    Federal agencies     Within one year     One to five years

         $  3,013   7,011    10,024

         $    31    295      326

         $    -     -       -

         $  3,044   7,306    10,350

         5.07%6.77%  6.26%

 
     State, county and    municipal     Within one year     One to five years     Six to ten years              Total held to maturity   OTHER INVESTMENTS,AT COST    Federal Reserve &     Federal Home Loan      Bank Stock

         1,570  5,931   3,180    10,681   $ 20,705                   $  1,394

         20  187     80      287   $   613                  $     -

         -  -     6       6   $    6                 $    -

         1,590  6,118   3,254    10,962   $ 21,312                   $  1,394

         5.88%  6.39%6.39%  6.31%   6.29%                7.03%

 
 (1) Tax equivalent adjustmentbased on a 34% tax rate.As of the quarter ended December 31, 2001, the Bank did not hold any securitiesof an issuer that exceeded 10% of stockholders' equity.

16

LOAN PORTFOLIOLENDING ACTIVITIES

The Company engages, through the Bank, in a full compliment of lendingactivities, including commercial, consumer, installment and real estate loans.

Real Estate Loans

One of the primary components of the Bank's loanportfolio are loans secured by first or second mortgages on residential andcommercial real estate.  These loans will generally consist of commercial realestate loans, construction and development loans and residential real estateloans (including home equity and second mortgage loans).  Interest rates may befixed or adjustable.  The bank seeks to manage credit risk in the commercialreal estate portfolio by emphasizing loans on owner-occupied office and retail buildingswhere the loan-to-value ratio, established by independent appraisals, generallydoes not exceed 80%. In addition, the Bank typically requires personalguarantees of the principal owners of the property.  The Bank may alsofacilitate mortgage loans for sale into the secondary market, earning a fee,but avoiding the interest rate risk of holding long-term, fixed-rate loans. Theprincipal economic risk associated with all loans, including real estate loans,is the creditworthiness of the Bank's borrowers.  The ability of a borrower torepay a real estate loan will depend upon a number of economic factors,including employment levels and fluctuations in the value of real estate.  Inthe case of a real estate construction loan, there is generally no income fromthe underlying property during the construction period, and the developer'spersonal obligations under the loan may be limited.  Each of these factorsincreases the risk of nonpayment by the borrower.  In the case of a real estatepurchase loan, the borrower may be unable to repay the loan at the end of theloan term and may thus be forced to refinance the loan at a higher interestrate, or, in certain cases, the borrower may default as a result of itsinability to refinance the loan.  In either case, the risk of nonpayment by theborrower is increased.  The Bank will also face additional credit risks to theextent that it engages in making adjustable rate mortgage loans ("ARMs"). In the case of an ARM, as interest rates increase, the borrower's requiredpayments increase periodically, thus increasing the potential for default.  Themarketability of all real estate loans, including ARMs, is also generallyaffected by the prevailing level of interest rates.

Commercial Loans

The Bank makes loans for commercial purposes invarious lines of business.  The commercial loans will include both secured andunsecured loans for working capital (including inventory and receivables),loans for business expansion (including acquisition of real estate and improvements),and loans for purchases of equipment.

17

LOAN PORTFOLIOLENDING ACTIVITIES (Continued)

Consumer Loans

The Bank makes a variety of loans to individualsfor personal and household purposes, including secured and unsecuredinstallment and term loans, home equity loans and lines of credit and unsecuredrevolving lines of credit such as credit cards.  The secured installment andterm loans to consumers will generally consist of loans to purchaseautomobiles, boats, recreational vehicles, mobile homes and householdfurnishings, with the collateral for each loan being the purchased property. The underwriting criteria for home equity loans will generally be the same asapplied by the Bank when making a first mortgage loan, as described above, butmore restrictive for home equity lines of credit. Consumer loans generallyinvolve more credit risks than other loans because of the type and nature ofthe underlying collateral or because of the absence of any collateral. Consumer loan repayments are dependent on the borrower's continuing financialstability and are likely to be adversely affected by job loss, divorce andillness.  Furthermore, the application of various federal and state laws,including federal and state bankruptcy and insolvency laws, may limit theamount which can be recovered on such loans in the case of default.  In mostcases, any repossessed collateral will not provide an adequate source ofrepayment of the outstanding loan balance.  Although the underwriting processfor consumer loans includes a comparison of the value of the security, if any,to the proposed loan amount, the Bank cannot predict the extent to which theborrower's ability to pay, and the value of the security, will be affected byprevailing economic and other conditions.

Loan Approval and Review

The Bank's loan approval policies provide forvarious levels of officer lending authority. When the amount of aggregate loansto a single borrower exceeds an individual officer's lending authority, the loanrequest will be considered and approved by an officer with a higher lendinglimit or by the Credit Committee as established by the Board of Directors. TheLoan Committee of the Board of Directors determines the lending limits for theBank's loan officers.  The Bank has an in-house lending limit to a singleborrower of 10% of capital.  An unsecured limit (aggregate) for the Bank is setat 100% of total capital. 

CLASSIFICATION OF LOANS 

The following is a summary of loans, in thousandsof dollars, at December 31, 2003, 2002, 2001, 2000, and 1999 by majorclassification:

 

  2003 

  2002 

  2001  

  2000  

  1999  

Real Estate Loans-mortgage                   -construction  Loans to farmers  Commercial and industrial loans  Loans to individuals for household    family and other consumer    expenditures  All other loans, including    Overdrafts    Gross Loans      Less unearned income     Less reserve for loan losses      Net loans

$228,556    44,099     1,537    53,559          32,884      1,399   362,034         0  (4,524)$357,510

$214,554    28,297     1,674    47,631          31,953      1,513   325,622         0  (4,155)$321,467

$187,808    28,324     1,316    44,351          32,015      2,800   296,614        (7)  (3,763)$292,844

$191,329    20,590     1,376    45,929          34,775      1,698   295,697       (49)  (3,782)$291,866

$163,614    21,013     1,447    45,742          33,864      1,736   267,416      (275)  (3,451)$263,690

MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

The Company's loan portfolio consisted of approximately $248,691 and $234,201in fixed rate loans as of December 31, 2003 and 2002, respectively. At December 31, 2003, and 2002, fixed rate loans with maturities in excess of one yearamounted to approximately $196,337 and $185,966, respectively. Variable rateloans are those on which the interest rate can be adjusted to changes in theBank's prime rate.  Fixed rate loans are those on which the interest rategenerally cannot be changed for the term of the loan.

18

RISK ELEMENTS

The following information relates to certain assets which are defined as riskelements by the Securities and Exchange Commission.  All loans which meet thecriteria set forth by the Securities and Exchange Commission are detailedbelow, regardless of the likelihood of collection in full or in part. All loansclassified for regulatory purposes as loss, doubtful, substandard, orespecially mentioned that have not been disclosed do not represent or resultfrom trends or uncertainties which management reasonably expects willmaterially impact future operating results, liquidity, or capital resources orrepresent material credits about which management is aware of any informationwhich causes management to have serious doubts as to the ability of suchborrower to comply with the loan repayment terms.  As a matter of practice,loans which management has serious concerns about the borrower being able topay are put into a non-accrual status and disclosed under Risk Elements.Management reviews these loans periodically and feels that the current reservefor possible loan losses adequately provides coverage for actual losspotential.  Other interest-bearing assets considered a risk element, if any,are also detailed in this section.

NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS

The following schedule summarizes the amount of nonaccrual, past due, andrestructured loans, in thousands of dollars, for the periods ended December 2003,2002, 2001, 2000, 1999:

 

  2003  

  2002  

  2001  

  2000  

  1999  

   Nonaccrual  loans        Accruing loans which are     contractually past due     90 days or more as to     principal or interest     payments        Restructured trouble debt

$  351                 $   130     None

$  697                 $  118     None

$  633                 $  138     None

$  305                 $  189     None

$  527                 $  142     None

Information relating to interest income on nonaccrual and renegotiated loansoutstanding for the year ended December 31, 2003, 2002, and 2001 is asfollows:

 

2003

2002

2001

   Interest  included in income during the year           Interest which would have been included     at the original contract rates

$  9           $ 26

$ 19           $ 63

$ 12           $ 66

Accruing loans which are contractually past due 90 days or more are gradedsubstandard within the Bank's internal loan grading system and come underheightened scrutiny. Typically, a loan will not remain in the 90 days past duecategory, but will either show improvement or migrate to non-accrual loans. Loans are placed in a non-accrual status when, in the opinion of management,the collection of additional interest is questionable. Thereafter no interestis taken into income unless received in cash or until such time as the borrowerdemonstrates the ability to pay principal and interest.

19

POTENTIAL PROBLEM LOANS

In addition to those loans disclosed under "Risk Elements", there arecertain loans in the portfolio which are presently current but about whichmanagement has concerns regarding the ability of the borrower to comply withpresent loan repayment terms. Management maintains a loan review of the totalloan portfolio to identify loans where there is concern that the borrower willnot be able to continue to satisfy present loan repayment terms.  Such problemloan identification includes the review of individual loans, loss experience,and economic conditions.  Problem loans include both current and past dueloans.

As of December 31, 2003, loans which management had serious concernsabout the borrower being able to repay were put into a non-accrual status whichare disclosed under "Risk Elements".

FOREIGN OUTSTANDINGS

As of the year ended December 31, 2003, the Company had no foreign loans outstanding.

LOAN CONCENTRATIONS

As of the year ended December 31, 2003, the Company did not have any concentration ofloans exceeding 10% of total loans which are not otherwise disclosed as acategory of loans pursuant to Item III. A. of Guide 3.

OTHER INTEREST-BEARING ASSETS

As of December 31, 2003, the Company does not have any interest‐bearingassets that would be required to be disclosed under Item III. C. 1. or 2. ifsuch assets were loans.

20

SUMMARY OF LOAN LOSS EXPERIENCE

Loan loss experience for each reported period, in thousands of dollars, issummarized as follows:

           Year    Ended December 31,             2003     2002      2001     2000     1999  Loans (net of  unearned income):    Average loans outstanding for    the period     Reserve for loan losses:     Balance at the beginning of period    Charge-offs:      Commercial, financial, and agricultural         Real Estate - construction and mortgage         Loans to individuals          Total charge-offs       Recoveries:     Commercial, financial, and agricultural        Real Estate - construction and mortgage        Loans to individuals          Total recoveries     Net charge-offs  Additions charged to operations  Balance at end of period  Ratio of net charge-offs during the period   to average loans outstanding during the   period
      $346,110         $  4,155 431     59        392        882    115   26          150   $    291   $    591  $    960  $  4,524           .17%
        $309,351         $  3,763 412       97        447          956    191   30            142     $    363     $    593    $    985    $  4,155           .19%
        $294,837         $  3,782 383       96        470          949    106   31            168     $    305     $    644    $    625    $  3,763             .22%
       $284,431           $  3,451 186     134        426        746    92   19          146   $    257   $    489  $    820  $  3,782                  .17%
     $248,616           $  3,132 254     3        559        816    103   21          216   $    340   $    476  $    795  $  3,451                  .19%
The reserve for loan losses is maintained at the greater of 1.20% of net loansor an amount that bears the same ratio to eligible loans as net charge-offs toaverage eligible loans over the past six years.  In addition, the Asset/Liability Management Committee and the Loan Committee review the adequacy ofthe reserve quarterly and make recommendations as to the desired amount of thereserve. Determination of the adequacy of the reserve is based on the aboveratios and, but not limited to, considerations of classified and internally-identifiedproblem loans, the current trend in delinquencies, the volume of past-dueloans, and current or expected economic conditions

The Board of Directors maintains an independent Loan Review function which hasestablished controls and procedures to monitor loan portfolio risk on anon-going basis.  Credit reviews on all major relationships are conducted on acontinuous basis as is the monitoring of past-due trends and classifiedassets.  The function utilizes various methodologies in its assessment of theadequacy of the Reserve for Loan Losses.  Three primary measurements arereported to the Board of Directors on a quarterly basis, the Graded Loan Methodbased on a bank-wide risk grading model, the Migration Analysis Method whichtracks risk patterns on charged-off loans for the previous 10 years, and theHistorical Experience Method based on net charge-offs. Additionally, thefunction annually conducts an independent economic assessment, addressesportfolio risk by industry concentration, reviews loan policy changes andmarketing strategies for any effect on portfolio risk, and conducts testsaddressing portfolio performance by type of portfolio, collateral type, andloan officer performance.

Based upon all relevant factors, Management anticipates net charge-offs to beapproximately $670 during 2004.

21

DEPOSITS

AVERAGE DEPOSITS BY CLASSIFICATION

The following table sets forth the classification of average deposits for theindicated period, in the thousands of dollars:

 

     Years Ended  December 31,    

      Noninterest bearing demand deposits  Interest bearing demand deposits  Savings deposits  Time deposits    Total deposits

   2003      $101,310  63,437  44,899 283,520  $493,166

   2002      $ 90,431  58,683  32,874 270,350  $452,338

   2001      $ 80,218  53,225  26,931 252,714  $413,088

AVERAGE RATES PAID ON DEPOSITS

The following table sets forth average rates paid on categories ofinterest-bearing deposits for the periods indicated:

 

      Years Ended  December 31,    

      Interest bearing demand deposits  Savings Deposits  Time deposits

   2003        .29%  1.26%  2.16%

   2002        .30%  1.63%  2.87%

   2001        .72%  2.21%  4.99%

MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE

The following table sets forth the maturity of time deposits of $100,000 ormore, in thousands of dollars, at December 31, 2003: 

 

Maturity  within 3 months or less  Over 3 through 6 months  Over 6 through 12 months  Over 12 months      Total

$37,589  22,833  18,043  8,510  $86,975

22

RETURN ON EQUITY AND ASSETS

The following table presents certain ratios relating to the Company's equityand assets:

 

   Years Ended December 31,  

         Return on average total assets     Return on average stockholders' equity     Cash dividend payout ratio     Average equity to average assets ratio

  2003       1.29%  11.86%  37.44%  10.91%

  2002       1.31%  12.19%  37.45%  10.77%

  2001       1.28%  12.25%  38.96%  10.42%

SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under repurchase agreements areshort-term borrowings which generally mature within 90 days from the dates ofissuance. No other category of short-term borrowings had an average balanceoutstanding during the reported period which represented 30 percent or more ofstockholders' equity at the end of the period.

The following is a summary of short-term borrowings at December 31 of eachreported period, in thousands of dollars:

 

        December  31,         

      Federal funds purchased    and securities sold under agreement to    repurchase

  2003             $24,760

  2002             $26,219

  2001             $32,821

The following information relates to short-term borrowings outstanding during2003, 2002, and 2001:

 

Maximum Amount  Outstanding in Any         Month  End          

Weighted Average  Interest Rate       at December 31,     

     Federal funds     purchased and     securities sold     under agreement     to repurchase

2003          $32,256

2002            $33,091

2001            $36,702

2003             .96%

2002            1.41%

2001            1.91%
 
 
 

    Year ended December 31,   

     Federal funds purchased and     securities sold under     agreement to repurchase-     average daily amount outstanding     Weighted average interest rate paid

2003         $28,752   1.16%

2002         $27,962   1.77%

2001         $30,882   3.46%

23

ITEM 2.   PROPERTIES

The Company's subsidiary, The Conway National Bank, has eleven permanentoffices in Horry County and one permanent office in Georgetown County, for atotal of twelve offices.  The principal office, located at 1400 Third Avenue inConway, houses the Bank's administrative offices and data processingfacilities.  This three-story structure, which was significantly expanded in1982, contains approximately 33,616 square feet.  In addition, the Bank has a 1,128square foot building for express banking services adjacent to the principaloffice.  The Bank has a two-story office on Main Street in Conway containing8,424 square feet. Bank offices are housed in one-story facilities at theCoastal Centre in Conway (3,500 square feet with an adjacent 675 square footbuilding for express banking services), Red Hill in Conway (3,760 square feet)West Conway in Conway (3,286 square feet) Surfside in Surfside Beach (6,339square feet), Northside, north of Myrtle Beach (2,432 square feet), Socastee inthe southern portion of Myrtle Beach (3,498 square feet), Aynor in The Town ofAynor (2,809 square feet), Myrtle Beach in the City of Myrtle Beach (12,000square feet), Murrells Inlet in Murrells Inlet, Georgetown County (3,600 squarefeet) and North Myrtle Beach in the City of North Myrtle Beach (3,600 squarefeet). Of the twelve offices, the bank owns the principal office, the office atRed Hill, West Conway, Surfside Beach, Northside, Main Street, Socastee, Aynor,Myrtle Beach, Murrells Inlet and North Myrtle Beach.  One facility, CoastalCentre in Conway, is leased by the Bank under a long-term lease with renewaloptions. In addition to the existing facilities, the Company has purchased threefuture office sites.  The sites consist of 1.1 acres on Highway 701 north of Conway,3.24 acres on Highway 9 west of North Myrtle Beach, and 2.0 acres on Highway 17in Pawleys Island. The company anticipates building offices on the other siteswithin the next two to six years, depending on market conditions. Additionally,the Bank has contracted to build a new $5.3 million 24,000 square foot bankingoffice at the principal site with plans to convert the existing 33,616 squarefoot building into an operations and administrative center.  Anticipatedcompletion of this project is in the first quarter of 2004.

ITEM 3.   LEGAL PROCEEDINGS

There were no material legal proceedings against the Company or its subsidiary,The Conway National Bank, as of December 31, 2003.

There were no administrative or judicial proceedings arising under Section 8 ofthe Federal Deposit Insurance Act.

There were no material proceedings to which any director, officer, or owner ofrecord of more than 5% of the voting securities of the Company or any associateis a party adverse to the Company.

There are other legal proceedings pending against the Company or itssubsidiary, The Conway National Bank, in the ordinary course of business. Inthe opinion of management, based upon the opinion of counsel, liabilitiesarising from these proceedings, if any, would not have a material adverseeffect on the financial position of the Company.

24

ITEM4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

On May 13, 2003, at the Annual Meeting of CNB Corporation, thesecurity holders:

1) Nominated and elected three directors to serve for athree-year term; and

2) Ratified the appointment of Elliott Davis, LLC asindependent auditors   for the Company and its subsidiary for the year ending December 31,   2003.

PART II

ITEM 5.  MARKET PRICE OF REGISTRANT'S COMMON STOCK ANDRELATED SECURITY HOLDER MATTERS

As of December 31, 2003, there were approximately 736 holders of recordof Company stock. There is no established market for shares of Company stockand only limited trading in such shares has occurred since the formation of theCompany on June 10, 1985.  Most of the limited trading transactions have beeneffected through the efforts of officers of the Company in matching interestedpurchasers with shareholders who have expressed an interest in selling theirshares of Company stock.  Some private trading of Company stock has occurredwithout any participation in the transaction by the officers of the Companyother than to effect the transfer on the Company's shareholder records.Accordingly, management of the Company is not aware of the prices at which allshares of Company stock have traded. The following table sets forth the pricesknown to management of the Company at which shares of Company stock have tradedin each quarter within the two most recent fiscal years.

 

2003

2002

   First  Quarter  Second Quarter  Third  Quarter  Fourth Quarter

High  $116.00  $124.00  $124.00  $141.00

Low  $116.00  $116.00  $124.00  $124.00

High  $107.00  $110.00  $110.00  $116.00

Low  $107.00  $107.00  $110.00  $110.00

Holders of shares of Company stock are entitled tosuch dividends as may be declared from time to time by the Board of Directorsof the Company. The Company paid an annual cash dividend of $4.00 per share in2003, $3.75 per share in 2002, $3.50 per share in 2001, 2000, 1999 and 1998,$3.00 per share in 1997, 1996 and 1995, $2.00 per share in 1994, 1993 and 1992,$1.50 per share in 1991, and $1.00 per share in the years 1985 through 1990. In addition, the Company may from time to time pay a stock dividend. TheCompany paid a 20% stock dividend in September 2000, a 25% stock dividend inSeptember 1997, a 20% stock dividend in September 1994, a 50% stock dividend inJuly 1989, a 20% stock dividend in August 1987 and a 15% stock dividend inNovember 1985.  There can be no assurance, however, as to the payment ofdividends by the Company in the future since payment will be dependent upon theearnings and financial condition of the Company and the Bank and other relatedfactors.

25

ITEM 6. SELECTED FINANCIAL DATACNB CorporationFINANCIAL SUMMARY(All Dollar Amounts, Except Per Share Data, in Thousands)

The following table sets forth certain selected financial data relating to theCompany and subsidiary and is qualified in its entirety by reference to themore detailed financial statements of the Company and subsidiary and notesthereto included elsewhere in this report.

 

Year Ended December 31,

   Selected Income Statement Data:  Total Interest Income  Total Interest Expense  Net Interest Income  Provisions for Possible Loan Losses  Net Interest Income after Provision    for Possible Loan Losses  Total Other Operating Income  Total Other Operating Expense  Income Before Income Taxes  Income Taxes  Net Income  Per Share:  Net Income Per Weighted Average    Shares Outstanding*  Cash Dividend Paid Per Share  Weighted Average Shares    Outstanding*

  2003       $ 30,466   7,224    23,242     960     22,282     6,117  17,237    11,162     3,497$  7,665       $  10.68  $   4.00      717,536

  2002       $ 31,344   9,068    22,276     985     21,291     5,463  16,159    10,595     3,413$  7,182       $  10.02  $   3.75      716,866

  2001       $ 33,963  14,822    19,141     625     18,516     5,337  14,606     9,247     2,812$  6,435       $   9.00  $   3.50      714,618

  2000       $ 34,275  14,825    19,450     820     18,630     4,562  13,961     9,231     2,920$  6,311       $   8.82  $   3.50      715,656

  1999       $ 31,743  13,044    18,699     795     17,904     4,307  13,030     9,181     3,076$  6,105       $   8.53  $   3.50      716,209

*Restated for a 20% stock dividend issued during 2000. 

Selected  Balance Sheet Data:  Assets  Net Loans  Investment Securities  Federal Funds Sold     Deposits:    Non-Interest-Bearing    Interest-Bearing     Total Deposits  Stockholders' Equity

   $599,978   357,510   191,575     1,000        $101,684 401,429  $503,113$ 64,623

   $569,490   321,467   180,413    22,000        $100,225 368,084  $468,309$ 61,125

   $505,725   292,844   162,106     3,950        $ 88,995 321,648  $410,643$ 53,996

   $471,076   291,866   131,190     9,875        $ 76,342 314,388  $390,730$ 48,606

   $455,702   263,690   144,019    11,150        $ 72,728 302,775  $375,503$ 43,712

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

"Management's Discussion and Analysis"is provided to afford a clearer understanding of the major elements of the Company'sfinancial condition, results of operations, liquidity, and capital resources.The following discussion should be read in conjunction with the Company'sfinancial statements and notes thereto and other detailed information appearingelsewhere in this report.

**Critical Accounting Policies**

The Company has adopted  various accounting policies which govern theapplication of accounting principles generally accepted in the United States inthe preparation of the Company's financial statements. The significantaccounting policies of the Company are described in the footnotes to theconsolidated financial statements.

Certain accounting policies involve significant judgments and assumptions bymanagement which have a material impact on the carrying value of certain assetsand liabilities; management considers such accounting policies to be criticalaccounting policies. The judgments and assumptions used by management are basedon historical experience and other factors, which are believed to be reasonableunder the circumstances. Because of the nature of the judgments and assumptionsmade by management, actual results could differ from these judgments andestimates which could have a material impact on the carrying values of assetsand liabilities and the results of operations of the Company.

The Company believes the allowance for loan losses is a critical accountingpolicy that requires the most significant judgments and estimates used inpreparation of its consolidated financial statements. Refer to the MD&A underProvision and Allowance for Loan Losses section for a detailed description ofthe Company's estimation process and methodology related to the allowance forloan losses.

26
Distribution of Assets and Liabilities
The Company maintains a conservative approach in determining the distributionof assets and liabilities.  Loans, net of unearned income, increased 9.8% from$296,607 atDecember 31, 2001to $325,622 atDecember 31, 2002; and11.2% fromDecember 31, 2002to $362,034 atDecember 31, 2003.  Loangrowth is attributed to overall business development efforts to meet businessand personal loan demand in our market area. Loan demand in our market areadeclined in 2001 due to recessionary pressures coupled with the effects of theSeptember 11 terrorist attacks on consumer confidence but showed signs ofrecovery in 2002 which continued through 2003. Loans, net of unearned income,decreased as a percentage of total assets from 58.6% at year-end 2001 to 57.2%at year-end 2002 and increased to 60.3% at year-end 2003. Correspondingly,investment securities and federal funds sold increased as a percentage of totalassets from 32.8% at year-end 2001 to 35.5% at year-end 2002 and decreased to 32.1%at year-end 2003 as investments have been utilized to balance the growth inloan outstandings.  Investments and federal funds sold provide for an adequatesupply of secondary liquidity.  Year-end other assets as a percentage of totalassets increased from 7.3% in 2000 to 8.6% in 2001 due to the purchase of theexistingSurfsideBeachoffice site in early 2001 and increased from7.3% at year-end 2002 to 7.6% at year-end 2003 due to the beginning ofconstruction of a $5.3 million banking office inConway. Management hassought to build the deposit base with stable, relatively non-interest-ratesensitive deposits by offering the small to medium account holders a wide arrayof deposit instruments at competitive rates. Non-interest-bearing demanddeposits have declined as a percentage of total assets from 17.6% atDecember 31, 2001to 16.9% atDecember 31, 2003.  Demand deposits are expected to decline overthe long-term as more customers utilize interest-bearing deposit and repoaccounts. Interest-bearing liabilities as a percentage of total assets declinedfrom 70.5% atDecember 31, 2001to 70.4% atDecember 31, 2002but rose to 71.2% atDecember 31, 2003.

The following table sets forth the percentage relationship to total assets ofsignificant components of the Company's balance sheet as ofDecember 31, 2003, 2002 and 2001:

      Assets:     Earning assets:       Loans        Investment securities:       Taxable       Tax-exempt       Federal funds sold and securities purchased         under agreement to resell          Total earning assets       Other assets          Total assets

       December 31,        2003     2002    2001 

 
      60.3%     27.8   4.1       .2  92.4     7.6   100.0%

      57.2%     26.9   4.7      3.9  92.7     7.3   100.0%

      58.6%     26.7   5.3       .8  91.4     8.6   100.0%

      Liabilities and stockholder's equity:       Interest-bearing liabilities:         Interest-bearing deposits         Federal funds purchased and  securities sold          under agreement to resell         Other short-term borrowings          Total interest-bearing  liabilities       Noninterest-bearing deposits       Other liabilities       Stockholders' equity        Total liabilities and stockholders'  equity

            66.9%     4.1    .2    71.2  16.9   1.1  10.8   100.0%

            64.6%     4.6   1.2    70.4  17.6   1.3  10.7   100.0%

            63.6%     6.5    .4    70.5  17.6   1.2  10.7   100.0%

27

**Results ofOperation**

CNB Corporation and subsidiaryrecognized earnings in 2003, 2002 and 2001 of $7,665, $7,182, and $6,435,respectively, resulting in a return on average assets of 1.29%, 1.31%, and 1.28%and a return on average stockholders' equity of 11.86%, 12.19% and 12.25%. Theearnings were primarily attributable to favorable net interest margins in eachperiod (see Net Income-Net Interest Income). Other factors include management'songoing effort to maintain other income at adequate levels (see Net Income ‐Other Income) and to control other expenses (see Net Income - Other Expenses). These strong earnings, coupled with a conservative dividend policy, havesupplied the necessary capital funds to support bank operations. Total assetswere $599,978 at December 31, 2003 as compared to $569,490 at December 31, 2002 and $505,725 at December 31, 2001. The following table sets forththe financial highlights for fiscal years 2003, 2002, and 2001.

28

**CNB Corporation and SubsidiaryFINANCIAL HIGHLIGHTS(All Dollar Amounts, Except Per Share Data, in Thousands)**

                      

          December 31,    2003

 2002   to   2003  Percent  Increase  (Decrease)

            December 31,   2002

 2001   to   2002  Percent  Increase  (Decrease)

            December 31,   2001
Net interest income after provision       for loan losses  Income before income taxes  Net Income  Per Share (weighted average    of shares outstanding)     Cash dividends declared        Per Share     Total assets  Total deposits  Loans  Investment securities  Stockholders' equity      Book value per share     (actual number of shares      outstanding)        Ratios (1):  Return on average total assets  Return on average stockholders'    equity
   $ 22,282  11,162  7,665     $  10.68     2,870     $   4.00     $599,978  503,113  362,034  191,575  64,623        $  90.08           1.29%  11.86%

   4.7%   5.4    6.7       6.6       6.7       6.7       5.4%   7.4    11.2    6.2    5.7          5.7             1.5    (2.7) 

   $ 21,291  10,595  7,182     $   10.02     2,690     $   3.75     $569,490  468,309  325,622  180,413  61,125        $  85.22            1.31%  12.19%

   15.0%   14.6    11.6       11.3       7.3       7.1       12.6%   14.0    9.8    11.3    13.2          13.0             2.3    (.5) 

   $ 18,516  9,247  6,435     $   9.00     2,507     $   3.50     $505,725  410,643  296,607  162,106  53,996        $  75.40           1.28%  12.25%

 
 (1)  For the fiscal years ended December 31, 2003, 2002, and 2001, average total      assets amounted to $592,671,$546,617, and $504,396 with average stockholders'      equity totaling $64,650, $58,897, and $52,543,respectively.

29
**NET INCOME**
Net Interest Income - Earnings are dependent to a large degree on net interestincome, defined as the difference between gross interest and fees earned onearning assets, primarily loans and investment securities, and interest paid ondeposits and borrowed funds.  Net interest income is affected by the interestrates earned or paid and by volume changes in loans, investment securities,deposits, and borrowed funds.

The Bank maintained net interest margins in 2003, 2002 and 2001 of 4.3%, 4.5%,and 4.2%, respectively, as compared to management's long-term target of 4.5%.The 2001 net interest margin fell to 4.2% due to an unusually rapid decline inmarket interest rates lowering returns available on loans and investments whileinterest costs on liabilities did not decline as quickly due to strongcompetitive pressure. Fully-tax-equivalent net interest income shrank from$19,847 in 2000 to $19,621 in 2001 and grew to 22,859 in 2002 and $23,774 in2003.  During the three-year period, total fully-tax-equivalent interest incomedecreased by 7.3% from $34,443 in 2001 to $31,927 in 2002 and decreased 2.9% in2003 to $30,998.  Over the same period, total interest expense decreased 38.8% from$14,822 in 2001 to $9,068 in 2002 and decreased 20.3% to  $7,224 in 2003. Fully-tax-equivalentnet interest income as a percentage of average total earning assets was 4.2% in2001, 4.5% in 2002 and 4.3% in 2003.

Interest rates paid on deposits and borrowed funds and earned on loans andinvestments have generally followed the fluctuations in market interest ratesin 2003, 2002, and 2001. However, fluctuations in market interest rates do notnecessarily have a significant impact on net interest income, depending on theBank's rate sensitivity position.  A rate sensitive asset (RSA) is any loan orinvestment that can be repriced up or down in interest rate within a certaintime interval.  A rate sensitive liability (RSL) is an interest paying depositor other liability that can be repriced either up or down in interest ratewithin a certain time interval. When a proper balance between RSA and RSLexists, market interest rate fluctuations should not have a significant impacton earnings.  The larger the imbalance, the greater the interest rate riskassumed by the Bank and the greater the positive or negative impact of interestrate fluctuations on earnings. The Bank seeks to manage its assets andliabilities in a manner that will limit interest rate risk and thus stabilizelong-run earning power. The following table sets forth the Bank's static gaprate sensitivity position at each of the time intervals indicated.  The tableillustrates the Bank's rate sensitivity position on specific dates and may notbe indicative of the position at other points in time. Management believes thata rise or fall in interest rates will not materially effect earnings.
Interest Rate Sensitivity Analysis**December 31, 2003** 
  1 Day

  90 Days

  180 Days

  365 Days

Over 1    to  5 Years

    Over  5 Years

Rate Sensitive Assets (RSA)    Federal Funds Sold    Investment Securities    Loans (net of non-accruals $351)  Total, RSA     Rate Sensitive Liabilities (RSL)     Deposits:  Certificates of Deposit of     $100,000 or more  All Other Time Deposits  Federal Funds Purchased and    Securities Sold Under    Repurchase Agreements     Total RSL  RSA-RSL  Cumulative RSA-RSL  Cumulative RSA/RSL

   $  1,000         0 113,343  $114,343    $      0            0    24,760                $ 24,760  $ 89,583  $ 89,583      1.28

   $      0    23,620  22,625$ 46,245        $ 37,589       38,792         0                $ 76,381  $(30,136)  $ 59,447      1.59

    $      0    31,000  14,817$ 45,817          22,833       35,181         0                $ 58,014  $(12,197)  $ 47,250      1.30

     $      0    31,355  14,561$ 45,916              18,043       41,699         0                $ 59,742  $(13,826)  $ 33,424      1.15

   $      0    90,910 132,126$223,036           4,284        9,383         0                $ 13,667  $209,369  $242,793      2.04

   $      0    13,406  64,211$ 77,617           4,226        3,452         0                $  7,678  $ 69,939  $312,732      2.30

                                         30

**NET INCOME (continued)**

Provision for Loan Losses - It is the policy of the bank to maintain thereserve for loan losses at the greater of 1.20% of net loans or the percentagebased on the actual loan loss experience over the previous five years. Inaddition, management may increase the reserve to a level above these guidelinesto cover potential losses identified during the ongoing in-house problem loanidentification process.  The Company includes the provisions of SFAS No. 114, "Accountingby Creditors for Impairment of a Loan", as amended by SFAS 118, in theallowance for loan losses (see NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES).  The provision for loan losses was $960 in 2003, $985 in 2002 and $625in 2001. Net loan charge-offs totalled $591 in 2003, $593 in 2002, and $644 in2001 with net charge-offs being centered in consumer purpose loans during eachperiod.  The reserve for loan losses as a percentage of net loans was 1.27% atDecember 31, 2003, 1.29% at December 31, 2002, and 1.28% at December 31, 2001. The decreased provision during 2001 was due to a decrease in the rate of loangrowth.

Securities Transactions - Net unrealized gains/(losses) in the investmentsecurities portfolio were $4,820 at December 31, 2003, $7,170 at December 31, 2002, and $2,999 at December 31, 2001. Themarket value of investment securities rose in 2001, 2002 and 2003 as overallmarket rates declined. Security gains of $169, $183 and $153 were taken in 2001,2002 and 2003 on sales of $11,213, $6,199 and $6,376 in short-termavailable-for-sale securities, respectively.  2001 gains were taken whileselling securities near maturity and investing further out on a steeply-slopingyield curve.  2002 and 2003 gains were taken to supplement liquidity.

Other Income -  Other income, net of any securities gains/(losses),increased by 2.2% from $5,168 in 2001 to $5,280 in 2002 and grew 13.0% from $5,280in 2002 to $5,964 in 2003.  Other income rose in 2001, 2002 and 2003 due tocontinued growth in deposit account activity, higher merchant discount incomeand increased refinancing volume in the mortgage loan department.  Mortgageloan department income is budgeted to show a significant decrease in 2004 asmortgage refinancing is expected to decline. 

Other Expenses - Other expenses increased by 10.6% from $14,606 in 2001 to $16,159in 2002 and 6.7% from $16,159 in 2002 to $17,237 in 2003.  The components ofother expenses are salaries and employee benefits of $9,282, $10,147, and $10,961;occupancy and furniture and equipment expenses of $1,876, $2,134, and $2,171;and other operating expenses of $3,448, $3,878, and $4,105 for 2001, 2002, and2003, respectively. The increase in salaries and employee benefits reflectscompensation increments, the increased costs of providing employee benefits,and an increase from 210 to 224 full-time equivalent employees over thethree-year period. The addition of the North Myrtle Beach Office in 2002impacted occupancy and furniture and equipment expense and non-interest expenseshould grow in 2004 due to the completion of the new $5.3 million Conway BankingOffice.  

Income Taxes - Provisions for income taxes increased 21.4% from $2,812 in 2001to $3,413 in 2002 and increased 2.5% from $3,413 in 2002 to $3,497 in 2003.  Incometax liability has increased in 2002 and 2003 as income before income taxes hasincreased 14.5% and 5.4%, respectively.

31

**LIQUIDITY**

The bank's liquidity position is primarily dependent on short-term demands forfunds caused by customer credit needs and deposit withdrawals and upon theliquidity of bank assets to meet these needs.  The bank's liquidity sourcesinclude cash and due from banks, federal funds sold and short-terminvestments.  In addition, the bank has established federal funds lines ofcredit from correspondent banks; has the ability, on a short-term basis, toborrow funds from the Federal Reserve System; and has a line of credit from theFederal Home Loan Bank of Atlanta (see NOTE 8-LINES OF CREDIT).  The Companyhas cash balances on hand of $5,282, $5,719, and $5,248 at December 31, 2003,2002, and 2001 with liabilities, consisting of cash dividends payable,totalling $2,870, $2,690, and $2,507, respectively.  Management feels thatliquidity sources are more than adequate to meet funding needs.
OFF-BALANCE SHEET ARRANGEMENTS
The Company, through the operations of the Bank, makes contractual commitmentsto extend credit in the ordinary course of business.  These commitments arelegally binding agreements to lend money to customers of the Bank atpredetermined interest rates for a specified period of time.  In addition tocommitments to extend credit, the Bank also issues standby letters of creditwhich are assurances to a third party that they will not suffer a loss if theBank's customer fails to meet its contractual obligation to a third party.  TheBank may also have outstanding commitments to buy/sell securities.  At December 31, 2003,the Bank had issued commitments to extend credit of $39.3 million, standbyletters of credit of $.8 million, and no commitments to purchase securities(see NOTE 10-FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK). The majorityof the commitments and standby letters of credit typically mature within oneyear and past experience indicates that many of the commitments and standbyletters of credit will expire unused.  However, through its various sources ofliquidity, the Bank believes that it will have the necessary resources to meetthese obligations should the need arise.

Neither the Company nor the Bank is involved in other off-balance sheetcontractual relationships, unconsolidated related entities that haveoff-balance sheet arrangements, or transactions that could result in liquidityneeds or other commitments or significantly impact earnings.

Obligations under noncancelable operating lease agreements totaled $20 thousandat December 31, 2003.  These obligations are payable over several yearsas shown in NOTE 11 - COMMITMENTS AND CONTINGENCIES.
CAPITAL RESOURCES
Total stockholders' equity was $64,623, $61,125, and $53,996 at December 31, 2003, 2002, and 2001, representing 10.77%, 10.73%, and 10.68% of totalassets, respectively. At December 31, 2003, the Bank exceeds quantitativemeasures established by regulation to ensure capital adequacy (see NOTE 15 -REGULATORY MATTERS).  Capital is considered sufficient by management to meetcurrent and prospective capital requirements and to support anticipated growthin bank operations.
EFFECTS OF INFLATION
Inflation normally has the effect of accelerating the growth of both a bank'sassets and liabilities.  One result of this inflationary effect is an increasedneed for equity capital.  Income is also affected by inflation.  While interestrates have traditionally moved with inflation, the effect on net income isdiminished because both interest earned on assets and interest paid onliabilities vary directly with each other.  In some cases, however, rateincreases are delayed on fixed-rate instruments.  Loan demand normally declinesduring periods of high inflation. Inflation has a direct impact on the Bank'snon-interest expense. The Bank responds to inflation changes throughre-adjusting non-interest income by repricing services.

32

**EFFECTSOF REGULATORY ACTION**

Effective March 11, 2000, the Gramm-Leach-Bliley Act of 1999 allows bankholding companies to elect to be treated as financial holding companies whichmay engage in a broad range of securities, insurance, and other financialactivities.  At this time, neither the Company nor the Bank plan to enter thesenew lines of business.  The management of the Company and the Bank is not awareof any other current recommendations by the regulatory authorities which, ifthey were to be implemented, would have a material effect on liquidity, capitalresources, or operations.

**ACCOUNTING ISSUES**

Accounting standards that have been issued or proposed by the FinancialAccounting Standards Board that do not require adoption until a future date arenot expected to have a material impact on the consolidated financial statementsupon adoption.  (See NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANDACTIVITIES).

**RISKS AND UNCERTAINTIES**

In the normal course of its business the Company encounters two significanttypes of risks: economic and regulatory.  There are three main components ofeconomic risk: interest rate risk, credit risk and market risk.  The Company issubject to interest rate risk to the degree that its interest-bearingliabilities mature or reprice at different speeds, or on different basis, thanits interest-earning assets.  Credit risk is the risk of default on theCompany's loan portfolio that results from borrower's inability orunwillingness to make contractually required payments.  Market risk reflectschanges in the value of collateral underlying loans receivable and thevaluation of real estate held by the Company.

The Company is subject to the regulations of various governmental agencies. These regulations can and do change significantly from period to period.  TheCompany also undergoes periodic examinations by the regulatory agencies, whichmay subject it to further changes with respect to asset valuations, amounts ofrequired loss allowances and operating restrictions from the regulators'judgments based on information available to them at the time of theirexamination.

ITEM 7.A QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market prices andrates. The Company's market risk arises principally from interest rate riskinherent in its lending, deposit and borrowing activities.  Management activelymonitors and manages its interest rate risk exposure.  In addition to otherrisks which the Company manages in the normal course of business, such ascredit quality and liquidity risk, management considers interest rate risk tobe a significant market risk that could potentially have a material effect onthe Company's financial condition and results of operations (See Net Income -Net Interest Income).  Other types of market risks, such as foreign currencyrisk and commodity price risk, do not arise in the normal course of theCompany's business activities.

****33

ITEM 8 - FINANCIAL STATEMENTS**CNB CORPORATION AND SUBSIDIARY****REPORT ON CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDEDDECEMBER 31, 2003, 2002 AND 2001******34

***CNB CORPORATION AND SUBSIDIARYCONWAY, SOUTH CAROLINA*****CONTENTS**

**PAGE**

**      REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS           FINANCIAL STATEMENTS     **      Consolidated balance sheets           Consolidated statements of income           Consolidated statements of stockholders' equity           Consolidated statements of comprehensive income           Consolidated statements of cash flows   **      NOTES TO FINANCIAL STATEMENTS**

36        37  38  39  40  41     42 - 58

****35

**Elliott Davis, LLCAdvisors-CPAs-Consultants1901 Main Street, Suite 1650P.O. Box 2227Columbia, SC  29202-2227****INDEPENDENTACCOUNTANTS' REPORT**

The Directors and Stockholders***CNB Corporation***Conway, South Carolina

     We have audited theaccompanying consolidated balance sheets of ***CNB Corporation andSubsidiary*** as of December 31, 2003 and 2002, and the related consolidated statements ofincome, stockholders' equity, comprehensive income and cash flows for each ofthe years in the three year period ended December 31, 2003. These consolidatedfinancial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these consolidated financialstatements based on our audits.

     We conducted our audits in accordance withauditing standards generally accepted in the United States of America.  Those standardsrequire that we plan and perform the audits to obtain reasonable assuranceabout whether the consolidated financial statements are free of materialmisstatement.  An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the consolidated financialstatements.  An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overallfinancial statement presentation.  We believe that our audits provide areasonable basis for our opinion.

     In our opinion, the consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of ***CNB Corporation and Subsidiary*** at December31, 2003 and 2002 and the results of their operations and their cash flows foreach of the years in the three year period ended December 31, 2003, inconformity with accounting principles generally accepted in the United Statesof America.

Elliott Davis,LLC                   

Columbia, South CarolinaJanuary 23, 2004

Internationally-Moore Stephens Elliott Davis, LLC36

***CNB CORPORATION AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(amounts, except share data, in thousands)***

** **

**        December  31,        **

**                                                     *ASSETS*  CASH AND DUE FROM BANKS  FEDERAL FUNDS SOLD  INVESTMENT SECURITIES AVAILABLE FOR SALE  INVESTMENT SECURITIES HELD TO MATURITY**   (fair  value $8,516 in 2003 and $13,702 in 2002)**OTHER INVESTMENTS, AT COST****LOANS     **Less allowance for loan losses        Net loans**PREMISES AND EQUIPMENT  ACCRUED INTEREST RECEIVABLE  OTHER ASSETS                                          *LIABILITIES  AND STOCKHOLDERS' EQUITY*  LIABILITIES     **Deposits        Noninterest-bearing        Interest-bearing           Total deposits     Securities sold under repurchase agreements     United States Treasury demand notes     Other liabilities           Total liabilities**COMMITMENTS AND CONTINGENT LIABILITIES -**Notes 10 and 11**STOCKHOLDERS' EQUITY     **Common stock - $10 par value; authorized 1,500,000  shares;        issued 718,246 shares in 2003 and 2002     Capital in excess of par value of stock     Retained earnings     Accumulated other comprehensive income      Less 837 in 2003 and 951 in 2002 shares held in Treasury at  cost           Total stockholders'  equity

**    2003    **$   25,021  1,000  182,210     8,081  1,284  362,034       4,524   357,510   17,068   4,358        3,446 **$ 599,978          **$ 101,684    401,429   503,113   24,760   970        6,512    535,355            7,182   34,801   20,113        2,631   64,727           104      64,623 **$ 599,978 **

**     2002    **$  25,217   22,000   165,914      13,105   1,394   325,622     4,155   321,467   12,449   4,527       3,417 **$ 569,490 **           $ 100,225   368,084   468,309   26,219   6,509       7,328   508,365            7,182  34,783  15,318       3,944  61,227          102       61,125**$ 569,490**

37

***CNB CORPORATION ANDSUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME(amounts, except per share data, in thousands)***

 

**    For  the years ended December 31,     **

**   INTEREST INCOME**   Loans  and fees on loans     Investment securities        Taxable        Nontaxable           Total interest on  investment securities        Federal funds sold           Total interest income   **INTEREST EXPENSE     **Deposits     Securities sold under repurchase agreements     Federal Home Loan Bank advances     United States Treasury demand notes           Total interest expense              Net interest income   **PROVISION FOR LOAN LOSSES   **         Net interest income  after provision for loan losses   **NONINTEREST INCOME**   Service charges on deposit accounts     Other service and exchange charges     Gain on sale of investment securities available for sale           Total noninterest  income   **NONINTEREST EXPENSES**   Salaries and wages     Pensions and other employee benefits     Occupancy     Furniture and equipment     Examination and professional fees     Office supplies     Credit card operations     Other operating expenses           Total noninterest  expenses              Income before provision  for income taxes   **PROVISION FOR INCOME TAXES   **         Net income   **NET INCOME PER SHARE OF COMMON STOCK**

**     2003    **** **$   22,565     6,623       1,0327,655             246       30,466  6,877  334  -            13         7,224 23,242             960        22,282    3,443  2,521         153        6,117    8,295  2,666  1,027  1,144  308  507  1,077     2,213     17,237 11,162        3,497 **$   7,665   $   10.68**
**    2002     $   22,343     7,493      1,1318,624            377      31,344    8,458  495  88            27         9,068 22,276             985        21,291    3,212  2,068          183         5,463    7,761  2,386  940  1,194  346  411  898       2,223       16,159 10,595         3,413 **$    7,182   $    10.02**
**    2001   $   24,967      6,778        931   7,709         1,287    33,963         13,577   1,070   111          64    14,822      19,141           625       18,516         3,015   2,153        169     5,337         7,212   2,070   853   1,023   218   447   863      1,920    14,606      9,247        2,812    **$  6,435    $    9.00 **
The accompanying notes are an integral part of these consolidated financialstatements.38

***CNB CORPORATION ANDSUBSIDIARYCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFor the years ended December 31, 2003******, 2002, and 2001(amounts, except share data, in thousands)***

** **

                ** Common stock      Shares    Amount**

**         Capital in    excess of    par value     of stock  **

**               Retainedearnings **

**   Accumu-  lated  other  compre-  hensive income**

**               Treasury   stock   **

**         Total   stock-  holders'  equity **

**         BALANCE, DECEMBER 31, 2000            **            Net income              Cash dividend declared, $3.50 per share              Treasury stock transactions, net              Gain on sale of treasury stock              Net change in unrealized holding                  gain, net of income taxes of $891                    **BALANCE,  DECEMBER 31, 2001                    **   Net  income              Cash dividend declared, $3.75 per share              Treasury stock transactions, net              Gain on sale of treasury stock             Net change in unrealized holding                 gain, net of income taxes of $1,672         **         BALANCE, DECEMBER 31, 2002                      **   Net income              Cash dividend declared, $4.00 per share              Treasury stock transactions, net              Gain on sale of treasury stock              Net change in unrealized holding                  gain, net of income taxes of $(875)                    **BALANCE,  DECEMBER 31, 2003**

   718,246     -  -  -                    - 718,246     -  -  -  -               - 718,246     -  -  -  -              - **718,246**
   $7,182     -  -  -  -             -   7,182     -  -  -  -              - 7,182     -  -  -  -             - **$ 7,182**
   $34,732      -   -   -   42                -      34,774     -  -  -  9                - 34,783      -  -  -  18              - **$34,801**
    $ 6,898      6,435   (2,507)  -   -               -      10,826      7,182   (2,690)  -   -                 -      15,318      7,665   (2,870)  -   -                -  **$20,113**** **

   $   98      -   -   -   -       1,337      1,435      -   -   -   -        2,509        3,944      -  -  -  -   (1,313)   **$2,631 **

   $ (304)     -   -   83   -              -      (221)     -   -   119   -                 -           (102)     -   -   (2)  -                -  **$   (104****)**

   $   48,606      6,435   (2,507)  83   42        1,337      53,996      7,182   (2,690)  119   9         2,509      61,125      7,665   (2,870)  (2)  18    (1,313)   **$64,623 **

The accompanying notes are an integral part of these consolidated financialstatements.39

CNB CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(amounts in thousands)

          For  the years ended December 31,   

      NET INCOME     OTHER COMPREHENSIVE INCOME, NET OF TAX     Unrealized holding gains on investment securities        available for sale     Reclassification adjustments for gains included in net income     COMPREHENSIVE INCOME

    2003         $   7,665            (1,209)      (104)   $  6,352 

    2002       $   7,182            2,633       (124) $  9,691 

    2001         $   6,435            1,452       (115)   $  7,772 

The accompanying notes are an integral part of these consolidated financialstatements.40

CNB CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands)

    For the years ended  December 31,  

   OPERATING ACTIVITIES     Net income     Adjustments to reconcile net income to net cash provided        by operating activities        Depreciation and amortization        Provision for loan losses        Provision for deferred income taxes        Loss on disposal of equipment        Gain on sale of investment securities  available for sale        Changes in assets and liabilities:           (Increase) decrease in  accrued interest receivable           Increase in other  assets           Increase (decrease) in  other liabilities              Net  cash provided by operating activities     INVESTING  ACTIVITIES     Proceeds from sales of investment  securities available for sale     Proceeds from maturities and calls of investment securities  held to maturity     Proceeds from maturities and calls of investment securities  available for sale     Purchases of investment securities available for sale     Proceeds from sales of foreclosed assets     Net increase in loans     Premises and equipment expenditures              Net  cash used for investing activities     FINANCING  ACTIVITIES   Dividends paid     Net increase in deposits     Increase (decrease) in securities sold under repurchase  agreements     Repayments of Federal Home Loan Bank advances     Increase (decrease) in United States Treasury demand notes     Treasury stock transactions, net              Net  cash provided by financing activities                 Net  increase (decrease) in cash and due from banks     CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR     CASH AND CASH EQUIVALENTS, END OF YEAR     CASH PAID FOR     Interest     Income taxes

     2003         $    7,665         739   960   (255)  10   (153)     169   (30)        135      9,240         6,529   5,134   80,913   (105,773)  -   (37,003)    (5,368)  (55,568)        (2,690)  34,804   (1,459)   -   (5,539)          16      25,132      (21,196)        47,217      $ 26,021         $  7,552 $  3,695 

     2002         $    7,182         727   985   (165)  7   (183)     (45)  (176)       (489)     7,843         6,382   7,600   52,050   (79,975)  64   (29,750)    (1,898)  (45,527)        (2,507)  57,666   (6,602)  (1,485)  5,856         128      53,056      15,372         31,845      $ 47,217       $  9,699 $  3,623 

     2001    $   6,435         650   625   (222)  -   (169)     617   (265)          (59)      7,612         11,382   21,510   44,192   (105,602)  -   (1,667)    (2,140)  (32,325)        (2,502)  19,913   10,254   (165)  (1,181)        125    26,444      1,731       30,114    $  31,845       $  15,216 $    2,815 

The accompanying notes are an integral part of these consolidated financialstatements.41

***CNB CORPORATION ANDSUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS******NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES***

**     Principles of consolidation and nature of operations**

Theconsolidated financial statements include the accounts of***CNB Corporation***(*"*the Company*"*) and its wholly-owned subsidiary, TheConway National Bank (*"*the Bank*"*).  The Companyoperates as one business segment.  All significant intercompany balances andtransactions have been eliminated.  The Bank operates under a national bankcharter and provides full banking services to customers.  The Bank is subjectto regulation by the Office of the Comptroller of the Currency and the FederalDeposit Insurance Corporation.  The Company is subject to regulation by theFederal Reserve Board.

**Estimates**

The preparation of consolidatedfinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities as of the dates of theconsolidated balance sheets and the consolidated statements of income for theperiods covered.  Actual results could differ from those estimates.

**     Concentrations of credit risk**

The Company, throughits subsidiary, makes commercial and personal loans to individuals and smallbusinesses located primarily in the South Carolina coastal region.  The Company has a diversified loanportfolio and the borrowers' ability to repay their loans is not dependent uponany specific economic sector.

**     Cash and cash equivalents**

Cash and cashequivalents include cash and due from banks and federal funds sold. Generally, both cash and cash equivalents are considered to have maturities ofthree months or less, and accordingly, the carrying amount of such instrumentsis deemed to be a reasonable estimate of fair value.

    ** Investment securities**

The Company accountsfor investment securities in accordance with Statement of Financial AccountingStandards ("SFAS") No. 115, "Accounting for CertainInvestments in Debt and Equity Securities."  This statement requiresthat the Company classify debt securities upon purchase as available for sale,held to maturity or trading.  Such assets classified as available for sale arecarried at fair value.  Unrealized holding gains or losses are reported as acomponent of stockholders' equity (accumulated other comprehensive income) netof deferred income taxes.  Securities classified as held to maturity arecarried at cost, adjusted for the amortization of premiums and the accretion ofdiscounts into interest income using a method which approximates a levelyield.  To qualify as held to maturity the Company must have the intent andability to hold the securities to maturity.  Trading securities are carried atmarket value.  The Company has no trading securities.  Gains or losses ondisposition of securities are based on the difference between the net proceedsand the adjusted carrying amount of the securities sold, using the specificidentification method.

42

***NOTE1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued***

**Loans and interestincome**

Loans are recordedat their unpaid principal balance.  Interest on loans is accrued and recognizedbased upon the interest method.

The Company accounts for impaired loans in accordance with SFAS No. 114, "*Accountingby Creditors for Impairment of a Loan".*  This standard requires thatall creditors value loans at the loan's fair value if it is probable that thecreditor will be unable to collect all amounts due according to the terms ofthe loan agreement. Fair value may be determined based upon the present valueof expected cash flows, market price of the loan, if available, or value of theunderlying collateral.  Expected cash flows are required to be discounted atthe loan's effective interest rate.  SFAS No. 114 was amended by SFAS No. 118to allow a creditor to use existing methods for recognizing interest income onan impaired loan and by requiring additional disclosures about how a creditorrecognizes interest income on an impaired loan.

UnderSFAS No. 114, as amended by SFAS No. 118, when the ultimate collectibility ofan impaired loan's principal is in doubt, wholly or partially, all cashreceipts are applied to principal.  When this doubt does not exist, cashreceipts are applied under the contractual terms of the loan agreement. Oncethe reported principal balance has been reduced to zero, future cash receiptsare applied to interest income, to the extent that any interest has beenforegone.  Further cash receipts are recorded as recoveries of any amountspreviously charged off.

A loanis also considered impaired if its terms are modified in a troubled debtrestructuring.  For these accruing impaired loans, cash receipts are typicallyapplied to principal and interest receivable in accordance with the terms ofthe restructured loan agreement.  Interest income is recognized on these loansusing the accrual method of accounting.

**Allowancefor loan losses**

The allowance for loan losses is based on management'songoing evaluation of the loan portfolio and reflects an amount that, inmanagement's opinion, is adequate to absorb losses in the existing portfolio. In evaluating the portfolio, management takes into consideration numerousfactors, including current economic conditions, prior loan loss experience, thecomposition of the loan portfolio, and management's estimate of anticipatedcredit losses.  Loans are charged against the allowance at such time as theyare determined to be losses.  Subsequent recoveries are credited to theallowance.  Management considers the year-end allowance appropriate andadequate to cover losses in the loan portfolio; however, management's judgmentis based upon a number of assumptions about future events, which are believedto be reasonable, but which may or may not prove valid. Thus, there can be noassurance that charge-offs in future periods will not exceed the allowance forloan losses or that additional increases in the allowance for loan losses willnot be required.

**Non-performingassets**

Non-performing assets include real estate acquiredthrough foreclosure or deed taken in lieu of foreclosure, and loans onnon-accrual status.  Loans are placed on non-accrual status when, in theopinion of management, the collection of additional interest is questionable. Thereafter no interest is taken into income unless received in cash or untilsuch time as the borrower demonstrates the ability to pay principal andinterest.

**Premises andequipment**

Premises andequipment are stated at cost less accumulated depreciation and amortization. Depreciationand amortization are computed over the estimated useful lives of the assetsusing primarily the straight-line method. Additions to premises and equipmentand major replacements or improvements are capitalized at cost. Maintenance,repairs and minor replacements are expensed when incurred.  Gains and losses onroutine dispositions are reflected in current operations.

****43

*NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANDACTIVITIES, Continued*

**Advertising expense**

Advertising,promotional and other business development costs are generally expensed asincurred. External costs incurred in producing media advertising are expensedthe first time the advertising takes place.  External costs relating to directmailing costs are expensed in the period in which the direct mailings are sent.Advertising, promotional and other business development costs of $504,000,$431,000, and $294,000, were included in the Company's results of operationsfor 2003, 2002, and 2001, respectively.

**Income taxes**

Income taxes are accounted for in accordance with SFASNo. 109, *"Accounting for Income Taxes".*Under SFAS No. 109,deferred tax liabilities are recognized on all taxable temporary differences(reversing differences where tax deductions initially exceed financialstatement expense, or income is reported for financial statement purposes priorto being reported for tax purposes).  In addition, deferred tax assets arerecognized on all deductible temporary differences (reversing differences wherefinancial statements expense initially exceeds tax deductions, or income isreported for tax purposes prior to being reported for financial statementpurposes). Valuation allowances are established to reduce deferred tax assetsif it is determined to be *"*more likely than not*"* thatall or some portion of the potential deferred tax assets will not be realized.

**Reclassifications**

Certain amounts in the financial statements for the yearended December 31, 2002and 2001 have been reclassified, with no effect on net income to be consistentwith the classifications adopted for the year ended December 31, 2003.

**Net income per share**

The Company computes net income per share in accordancewith SFAS No. 128, *"Earnings Per Share."*  Net income per shareis computed on the basis of the weighted average number of common sharesoutstanding:  717,536 in 2003, 716,866 in 2002, and 714,618 in 2001.  TheCompany does not have any dilutive instruments and therefore only basic netincome per share is presented.

**Fair values offinancial instruments**

SFAS No. 107, *"Disclosures About Fair Value ofFinancial Instruments,"* as amended by SFAS No. 119 and SFAS No. 133,requires disclosure of fair value information for financial instruments,whether or not recognized in the balance sheet, when it is practicable toestimate the fair value.  SFAS No. 107 defines a financial instrument as cash,evidence of an ownership interest in an entity or contractual obligations whichrequire the exchange of cash or other financial instruments.  Certain items arespecifically excluded from the disclosure requirements, including the Company'scommon stock.  In addition, other nonfinancial instruments such as premises andequipment and other assets and liabilities are not subject to the disclosurerequirements.

Thefollowing methods and assumptions were used by the Company in estimating fairvalues of financial instruments as disclosed herein:

***Cash and due from banks*** - The carryingamounts of cash and due from banks (cash on hand, due from banks and interestbearing deposits with other banks) approximate their fair value.

***Federalfunds sold*** - The carrying amounts of federal funds sold approximate their fairvalue.

***Investment securities available for sale and held tomaturity*** - Fair values for investment securities are based on quoted marketprices.

***Other investments -***No ready marketexists for Federal Reserve and Federal Home Loan Bank Stock and they have noquoted market value.  However, redemption of this stock has historically beenat par value.******

44

***NOTE 1 - SUMMARY OF SIGNIFICANTACCOUNTING POLICIES AND ACTIVITIES, Continued***

**Fair values of financial instruments, continued**

***Loans*** - For variable rate loans that reprice frequently andfor loans that mature within one year, fair values are based on carryingvalues.  Fair values for all other loans are estimated using discounted cashflow analyses, with interest rates currently being offered for loans withsimilar terms to borrowers of similar credit quality.  Fair values for impairedloans are estimated using discounted cash flow analyses or underlyingcollateral values, where applicable.

***Deposits*** - The fair values disclosed for demand deposits are, bydefinition, equal to their carrying amounts. The carrying amounts of variablerate, fixed-term money market accounts and short-term certificates of depositapproximate their fair values at the reporting date.  Fair values for long-termfixed-rate certificates of deposit are estimated using a discounted cash flowcalculation that applies interest rates currently being offered on certificatesto a schedule of aggregated expected monthly maturities.

***Short-term borrowings*** - The carryingamounts of borrowings under repurchase agreements, federal funds purchased, andU. S. Treasury demand notes approximate their fair values.

***Off balance sheetinstruments*** - Fair values of off balance sheet lending commitmentsare based on fees currently charged to enter into similar agreements, takinginto account the remaining terms of the agreements and the counterparties'credit standing.

**Recently issued accounting standards**

InApril 2003, the Financial Accounting Standards Board (FASB) issued SFASNo. 149, *Amendment of Statement 133 on Derivative Instruments andHedging Activities*.  SFAS No. 149 amends and clarifies accounting forderivative instruments, including certain derivative instruments embedded inother contracts and loan commitments that relate to the origination of mortgageloans held for sale, and for hedging activities under SFAS No. 133.  SFASNo. 149 is generally effective for contracts entered into or modifiedafter June 30, 2003.  The adoption of SFAS No. 149 did not have anyimpact on the financial condition or operating results of the Company. 

In May 2003, the FASB issued SFAS No. 150, *Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equity*.SFAS No. 150 establishes standards for how an issuer classifies andmeasures certain financial instruments with characteristics of both liabilitiesand equity.  It requires that an issuer classify a financial instrument that iswithin its scope as a liability (or an asset in some circumstances).  Many ofthose instruments were previously classified as equity. SFAS No. 150 isgenerally effective for financial instruments entered into or modified afterMay 31, 2003, and otherwise is effective at the beginning of the firstinterim period beginning after June 15, 2003.  The adoption of SFASNo. 150 did not have any impact on the financial condition or operatingresults of the Company. 

In November 2002, the FASBissued Interpretation ("FIN") No. 45,*Guarantor's Accounting and Disclosure Requirements for Guarantees, IncludingIndirect Guarantees of Indebtedness of Others.*  FIN No. 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements related to guarantees and warranties.  The initial recognition requirements of FIN No. 45 are effective for guarantees issued or modified after December 31, 2002.  The disclosure requirements are effective for financial statements of periods ending after December 15, 2002.  The adoption of FIN No. 45 did not have any effect on the Company's financial position or results of operations.

45

***NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANDACTIVITIES, Continued***

     **Rec****ently issued accounting standards,continued**

InJanuary 2003, the FASB issued FIN No. 46, *Consolidation ofVariable Interest Entities*.  FIN No. 46 requires a variable interest entityto be consolidated by a company if that company is subject to a majority of therisk of loss from the variable interest entity's activities or entitled toreceive a majority of the entity's residual returns, or both.  FIN No. 46 alsorequires disclosures about variable interest entities that a company is notrequired to consolidate, but in which it has a significant variable interest. FIN No. 46 provides guidance for determining whether an entity qualifies as avariable interest entity by considering, among other considerations, whetherthe entity lacks sufficient equity or its equity holders lack adequatedecision-making ability.  The consolidation requirements ofFIN No. 46 apply immediately to variable interest entities created afterJanuary 31, 2003. The consolidation requirements apply to existingentities in the first fiscal year or interim period beginning afterJune 15, 2003.  Certain of the disclosure requirements apply in allfinancial statements issued after January 31, 2003, regardless of when thevariable interest entity was established.  The adoption of FIN No. 46 did nothave any effect on the Company's financial position or results of operations. 

Other accounting standards that have been issued or proposed by the FASB orother standards-setting bodies that do not require adoption until a future dateare not expected to have a material impact on the consolidated financialstatements upon adoption.

**Risks and Uncertainties**

In the normal course of its business theCompany encounters two significant types of risks: economic and regulatory. There are three main components of economic risk: interest rate risk, creditrisk and market risk. The Company is subject to interest rate risk to thedegree that its interest-bearing liabilities mature or reprice at differentspeeds, or on different basis, than its interest-earning assets.  Credit riskis the risk of default on the Company's loan portfolio that results fromborrower's inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loansreceivable and the valuation of real estate held by the Company.

The Company is subject to the regulations of various governmental agencies. These regulations can and do change significantly from period to period.  TheCompany also undergoes periodic examinations by the regulatory agencies, whichmay subject it to further changes with respect to asset valuations, amounts ofrequired loss allowances and operating restrictions from the regulators'judgments based on information available to them at the time of theirexamination.

***NOTE 2 - RESTRICTIONS ON CASH AND CASH EQUIVALENTS***

The Bank is required to maintain average reserve balances either at the Bank oron deposit with the Federal Reserve Bank.  The average amounts of these reservebalances for the years ended December 31, 2003 and 2002 were approximately$11,823,000 and $10,346,000, respectively.

46

***NOTE3 - INVESTMENT SECURITIES***

          The book value,approximate fair value and expected maturities of investment securities aresummarized as follows (tabular amounts in thousands):

** **

**                                       ****December 31, 2003                            Amortized                    Unrealized Holding                   Fair**

**AVAILABLE FOR SALE**     Federal Agencies        Within one year        One to five years        State, county and municipal        Within one year        One to five years        Six to ten years        Over ten years        Mortgage Backed        Over ten years         CRA Qualified Investment Fund           Total available for sale   **HELD TO MATURITY**     Federal agencies        Within one year        State, county and municipal        Within one year        One to five years        Six to ten years           Total held to maturity

**     Cost      **     $    8,809  149,917    158,726 185  10,283  6,961          288       17,717        1,071             311 **$ 177,825       **$     2,000    1,562  3,086       1,433         6,081**$     8,081**
**  Gains   **     $    174   3,484     3,658 1  522  492          4      1,019        -              - **$ 4,677       **$      55    30  227      123        380**$    435**
** Losses **     $         -      273        273 -  -  -          -            - 19             - **$   292       **$       -    -  -         -           -**$       -**
**  Value      **     $    8,983     153,128       162,111    186     10,805     7,453            292         18,736          1,052               311    **$182,210            **$    2,055       1,592     3,313        1,556          6,461   **$   8,516   **
47

***NOTE 3 - INVESTMENT SECURITIES, Continued***

** **

**                                    ****December 31, 2002                            Amortized                  Unrealized Holding                  Fair**

**AVAILABLE FOR SALE**  Federal Agencies        Within one year        One to five years        Six to ten years        State, county and municipal        One to five years        Six to ten years        Other         CRA Qualified Investment Fund           Total available for sale   **HELD TO MATURITY**     Federal agencies        Within one year        One to five years        State, county and municipal        Within one year        One to five years        Six to ten years              Total held to maturity

**     Cost      **     $    9,448  122,681    10,000    142,129 8,192      8,722      16,914            298 **$ 159,341       **$    2,000      2,002        4,002 2,675  4,592      1,836        9,103 **$  13,105**
**  Gains   **     $      230  4,885       567      5,682 340       551         891               - **$   6,573       **$         8       131         139 36  296       126         458 **$      597**
** Losses **     $        -  -          -            - -          -            -             -**$         -       **$        -          -            - -  -          -            - **$        -**
**  Value      **     $     9,678     127,566       10,567       147,811    8,532         9,273         17,805               298    **$ 165,914            **$    2,008         2,133           4,141    2,711     4,888         1,962           9,561    **$  13,702   **
     Thefollowing table shows gross unrealized losses and fair value, aggregated byinvestment category, and length of time that individual securities have been ina continuous unrealized loss position, at December 31, 2003 (tabular amounts inthousands):

**Available for Sale**

 

**Less****than                     twelve months        UnrealizedFair value       losses    **

**Twelve months                    or  more           UnrealizedFair value       losses    **

**                  Total              UnrealizedFair value       losses    **

     Federal Agencies  Mortgage Backed          Total

   $   28,765       1,052 **$   29,817**
   $        273           19 **$       292**

   $            -             - **$            -**
   $             -              - **$             -**
   $   28,765       1,052 **$   29,817**

   $        273           19 **$       292**
      The Companyhad no securities in a continuous loss position for more than twelve months.

     Investment securities with anaggregate par value of $85,195,000 at December 31, 2003 and $79,880,000 atDecember 31, 2002 were pledged to secure public deposits and for otherpurposes.

48

***NOTE 3 -INVESTMENT SECURITIES, Continued***

**Other Investments, at Cost** - The Bank, as a member institution, isrequired to own certain stock investments in the Federal Home Loan Bank ofAtlanta ("FHLB") and the Federal Reserve Bank.  The stock isgenerally pledged against any borrowings from these institutions (see Note 8). No ready market exists for the stock and it has no quoted market value. However, redemption of these stocks has historically been at par value.  

The Company's investments in stock are summarized below (tabular amounts inthousands):

 

**            December  31,     **

      Federal Reserve Bank  FHLB

**   2003    $    116   1,168**$ 1,284**
**     2002    **     $    116   1,278**$ 1,394**

***NOTE 4- LOANS AND ALLOWANCE FOR LOAN LOSSES***

 
       Following is asummary of loans by major classification (tabular amounts in thousands):

 

**          December  31,          **

      Real estate - mortgage  Real estate - construction  Commercial and industrial  Loans to individuals for household, family and    other consumer expenditures  Agriculture  All other loans, including overdrafts

**     2003    **     $  228,556  44,099  53,559     32,884  1,537       1,399**$ 362,034**

**     2002   **     $ 214,554  28,297  47,631     31,953  1,674       1,513**$ 325,622**

       TheBank's loan portfolio consisted of $248,691,000  and $234,201,000 in fixed rateloans as of December 31, 2003 and 2002, respectively.  Fixed rate loans withmaturities in excess of one year amounted to $196,337,000 and $185,966,000 atDecember 31, 2003 and 2002,respectively.  The Bank has an available line of credit from the FHLB. Securing the line is a blanket lien on qualifying 1-4 family mortgages.
       Changes in the allowance for loanlosses are summarized as follows (tabular amounts in thousands):
**For the years endedDecember 31,****        **

** **

**   2003  **

**   2002  **

**   2001  **

Balance, beginning of year  Recoveries of loans previously charged    against the allowance  Provided from current year's income  Loans charged against the allowance  Balance, end of year

$  4,155      291   960      (882)**$  4,524 **

$ 3,763      363   985     (956)**$ 4,155 **

$   3,782      305   625      (949)**$   3,763 **

      AtDecember 31, 2003and 2002, non-accrual loans totaled $351,000 and $697,000, respectively.  Thetotal amount of interest earned on non-accrual loans was $9,000 in 2003, $19,000in 2002, and $12,000 in 2001.  The gross interest income which would have beenrecorded under the original terms of the non-accrual loans amounted to $26,000in 2003, $63,000 in 2002, and $66,000 in 2001.  As of December 31, 2003 and 2002,the Company had no impaired loans.

**49**

***N******OTE 5 - PREMISES AND EQUIPMENT***     Premises and equipment at December 31 issummarized as follows (tabular amounts in thousands):

** **

**   2003   **

**   2002   **

Land and buildings  Furniture, fixtures and equipment     Less accumulated depreciation and amortization     Construction in progress

$ 15,866    6,92322,789 10,09212,697   4,371**$17,068**

$ 14,735    6,63521,370    9,51711,853       596**$12,449**

     Depreciationand amortization of premises and equipment charged to operating expense totaled$739,000 in 2003, $727,000 in 2002 and $650,000 in 2001.
***NOTE 6 - DEPOSITS***
     Asummary of deposits, by type, as of December 31 follows (tabular amounts inthousands):

** **

**    2003   **

**    2002   **

Transaction accounts  Savings deposits  Insured money market accounts  Time deposits over $100,000  Other  time deposits         Total deposits

$ 164,802  43,897  78,932  86,975   128,507**$ 503,113**

$ 154,432  35,269  67,974  84,729   125,905**$ 468,309**

     Interestpaid on certificates of deposit of $100,000 or more totaled $1,929,000 in 2003,$2,448,000 in 2002, and $4,627,000 in 2001.
*     At December 31, 2003 the scheduled maturities oftime deposits are as follows (dollar amounts in thousands):*
             2004               2005               2006               2007               2008

$ 194,137  11,640  2,027  4,172       3,506**$ 215,482**

 
*NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS*
      Securities sold underrepurchase agreements are summarized as follows (tabular amounts in thousands):

 

**At and for the  year ended         December  31,        **

      Amount outstanding at year end  Average amount outstanding during year  Maximum outstanding at any month-end  Weighted average rate paid at year-end  Weighted average rate paid during year

**    2003    ****    **$24,760     28,752     32,256     0.96%  1.16%

**    2002    ****  **$26,219     27,926     33,091     1.41%  1.66%** **

**50**
 
***NOTE 7 - SECURITIES SOLD UNDER REPURCHASEAGREEMENTS, Continued***

      The Bank enters into sales of securitiesunder agreements to repurchase. These obligations to repurchase securities soldare reflected as liabilities in the consolidated balance sheets.  The dollaramount of securities underlying the agreements are book entry securitiesmaintained at The Bankers Bank.  Federal Agency securities with a book value of$34,100,000 ($35,341,000 fair value) and $28,235,000 ($30,123,000 fair value)at December 31, 2003and 2002, respectively, are used as collateral for the agreements.

***NOTE 8 - LINES OF CREDIT***

      At December 31, 2003, the Bank hadunused short-term lines of credit totaling $27,000,000 to purchase FederalFunds from unrelated banks.  These lines of credit are available on a one toseven day basis for general corporate purposes of the Bank.  All of the lendershave reserved the right to withdraw these lines at their option.

      TheBank has a demand note through the U.S. Treasury, Tax and Loan system with theFederal Reserve Bank of Richmond.  The Bank may borrow up to $7,000,000under the arrangement at an interest rate of 0.73 percent. The note is securedby Federal Agency securities with a market value of $6,248,500 at December 31,2003.  The amount outstanding under the note totaled $970,000 and$6,509,000 at December 31, 2003 and 2002, respectively.

      TheBank also has a line of credit from the FHLB for $89,805,000 secured by a lienon the Bank's qualifying 1-4 family mortgages and the Bank's investment in FHLBstock.  Allowable terms range from overnight to 20 years at varying rates setdaily by the FHLB.  At  'font-size:10.0pt;line-height:95%;font-family:"Times New Roman";letter-spacing:-.1pt; layout-grid-mode:line; font-weight:normal; font-style:normal; '>December 31, 2003 and 2002, respectively, there were no borrowings underthe agreement.

***NOTE 9 - INCOMETAXES***

      Theprovision for income taxes is reconciled to the amount of income tax computedat the federal statutory rate on income before income taxes as follows (dollaramounts in thousands):

 **                           Forthe years ended December 31,                        **

****

**            2003             **

**          2002             **

**           2001              **

**    **Tax  expense at statutory rate  Increase (decrease) in taxes resulting from:     Tax exempt interest     State bank tax (net of federal benefit)     Other -net        Tax provision

**Amount $3,795      (373)   229   (154)   **$3,497 **
**   %     ****    **34.0%         (3.34)       2.05      (1.38)      **31.33%**

**Amount $3,602      (411)  215          7    **$3,413 **
**   %     ****   **34.0%      (3.9)     2.0         .1       ** 32.2%**

**Amount $3,144      (352)  193   (173)   **$2,812 **
**   %   **  **** ****34.0%      (3.8)      2.1       (1.9)      ** 30.4%**

51
***NOTE 9 - INCOME TAXES,Continued*
         The sources and taxeffects of temporary differences that give rise to significant portions of thedeferred tax assets and deferred tax liabilities are as follows:

** **

**       December  31,     **
 'font-size:10.0pt;font-family:Courier;letter-spacing:-.1pt;layout-grid-mode:line; line-height:95%; font-weight:normal; font-style:normal; '> 
**   Deferred tax assets:     **Allowance for loan losses deferred for tax purposes     Other           Gross deferred tax assets        Less valuation allowance           Net deferred tax assets   **Deferred tax liabilities:     **Unrealized net gains on securities available for sale     Depreciation for income tax reporting in excess of amount        for financial reporting        Gross deferred tax liabilities           Net deferred tax liability

**  2003   $ 1,538      475  2,013      557      1,456     (1,754)       (359) (2,113)**$  (657)**
**   2002  **** **     $ 1,407      271      1,678       626       1,052         (2,629)        (337)  (2,966)   **$ (1,914)**

 **      **The net deferred taxliability is included in other liabilities at December 31, 2003 and 2002.

      A portion of the change in net deferredtaxes relates to the change in unrealized net gains and losses on securitiesavailable for sale.  The related 2003 deferred tax benefit of $875,000 and the2002 deferred tax expense of $1,672,000 have been recorded directly tostockholders' equity.  The balance of the change in net deferred taxes resultsfrom the current period deferred tax benefit.

      The following summary of the provision forincome taxes includes tax deferrals which arise from temporary differences inthe recognition of certain items of revenue and expense for tax and financialreporting purposes (amounts in thousands):

**    For the years ended December 31, ****    **

** **Income  taxes currently payable    Federal    State        Deferred income taxes         Provision for income taxes

**    2003   **     $ 3,524       347  3,871    (374)   **$ 3,497 **

**    2002    **     $   3,252        326      3,578       (165)   **$   3,413 **

**    2001    **     $   2,742        292  3,034       (222) **$   2,812**** **
 
52

***NOTE 10 - FINANCIALINSTRUMENTS WITH OFF BALANCE SHEET RISK***

         The Bank is a party tofinancial instruments with off balance sheet risk in the normal course ofbusiness to meet the financing needs of its customers.  These financialinstruments include commitments to extend credit and standby letters ofcredit.  Those instruments involve, to varying degrees, elements of credit andinterest rate risk in excess of the amount recognized in the accompanyingconsolidated balance sheets. The contract amounts of those instruments reflectthe extent of involvement the Bank has in particular classes of financial instruments.The Bank uses the same credit policies in making commitments and conditionalobligations as it does for on balance sheet instruments.

Thecontract value of the Bank's off balance sheet financial instruments is asfollows as of December 31, 2003 (amounts in thousands): 

**       **Commitments  to extend credit     Standby letters of credit

**Contract amount  **$ 39,308     $      828

      Commitmentsto extend credit are agreements to lend as long as there is no violation of anycondition established in the contract.  Commitments generally have fixedexpiration dates or other termination clauses and may require payment of afee.  Since many of the commitments are expected to expire without being drawnupon, the total commitment amounts do not necessarily represent future cashrequirements.  The Bank evaluates each customer's creditworthiness on acase-by-case basis.  The amount of collateral obtained if deemed necessary bythe Bank upon extension of credit is based on management's credit evaluation.

***NOTE 11 - COMMITMENTS AND CONTINGENCIES***

      At December 31, 2003, the Bank wasobligated under a number of non-cancelable operating leases on land used for a branchoffice and a billboard contract that had initial or remaining terms of morethan one year. Future minimum payments under these agreements at December 31, 2003 were (tabularamounts in thousands):
 
**Payable in year  ending       2004        2005        2006         2007         2008 and thereafter           Total future minimum  payments required
**  Amount    $    5  4  4  4      3**$  20**
      Leasepayments under all operating leases charged to expense totaled $5,000 in 2003, $5,000in 2002, and $5,000 in 2001.  The leases provide that the lessee pay propertytaxes, insurance and maintenance cost.

      The Company is partyto litigation and claims arising in the normal course of business.  Management,after consultation with legal counsel, believes that the liabilities, if any,arising from such litigation and claims will not be material to the Company's financialposition.

      The Company has entered into a constructioncontract to build a retail banking office and estimated costs will beapproximately $5,275,000.  The expected date of completion is February 2004.

53

***NOTE 12 - RESTRICTION ON DIVIDENDS***

         The ability of theCompany to pay cash dividends is dependent upon receiving cash in the form ofdividends from the Bank.  Federal banking regulations restrict the amount ofdividends that can be paid and such dividends are payable only from theretained earnings of the Bank.  At December 31, 2003 the Bank's retainedearnings were $53,861,000.

***NOTE 13 - TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND ASSOCIATES***

         Directors and executiveofficers of the Company and the Bank and associates of such persons arecustomers of and had transactions with the Bank in the ordinary course ofbusiness.  Additional transactions may be expected to take place in thefuture.  Also, included in such transactions are outstanding loans and commitments,all of which were made on comparable terms, including interest rates andcollateral, as those prevailing at the time for other customers of the Bank,and did not involve more than normal risk of collectibility or present otherunfavorable features. 

         Totalloans to all executive officers and directors, including immediate family andbusiness interests, at December 31, were as follows (tabular amounts inthousands):

** **

**    December  31,     **

 **   Balance, beginning of year**     New loans     Less loan payments**Balance, end of year**

**   2003  **** **     $  2,927  466    2,088**$  1,305**

**   2002  **** **     $ 1,170  1,970     213**$ 2,927**

***NOTE 14 - EMPLOYEE BENEFIT PLAN***

         The Bank has a definedcontribution pension plan covering all employees who have attained agetwenty-one and have a minimum of one year of service.  Upon ongoing approval ofthe Board of Directors, the Bank matches one-hundred percent of employeecontributions up to three percent of employee salary deferred and fifty percentof employee contributions in excess of three percent and up to five percent ofsalary deferred.  The Board of Directors may also make discretionarycontributions to the Plan.  For the years ended December 31, 2003, 2002, and 2001, $558,000, $510,000, and $426,000, respectively, were charged to operations under theplan.

         Supplemental benefits areprovided to certain key officers under The Conway National Bank ExecutiveSupplemental Income Plan (ESI) and the Long-Term Deferred Compensation Plan(LTDC).  These plans are not qualified under the Internal Revenue Code.  Theplans are unfunded.  However, certain benefits under the ESI Plan areinformally and indirectly funded by insurance policies on the lives of thecovered employees.

54

***NOTE 15 - REGULATORY MATTERS***

         The Bank is subject tovarious regulatory capital requirements administered by the federal bankingagencies. Failure to meet minimum capital requirements can initiate certainmandatory and possibly additional discretionary actions by regulators that, ifundertaken, could have a direct material effect on the Bank's financialstatements. Under capital adequacy guidelines and the regulatory framework forprompt corrective action, the Bank must meet specific capital guidelines thatinvolve quantitative measures of the Bank's assets, liabilities, and certainoff-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitativejudgments by the regulators about components, risk weightings, and otherfactors.

         Quantitative measuresestablished by regulation to ensure capital adequacy require the Bank tomaintain minimum amounts and ratios (set forth in the table below) of total andTier I capital to risk-weighted assets, and of Tier I capital to averageassets.  Management believes, as of December 31, 2003, that the Bankmeets all capital adequacy requirements to which it is subject.

**         **As of December 31, 2003, the most recentnotification from the Office of the Comptroller of the Currency categorized theBank as well capitalized under the regulatory framework for prompt correctiveaction.  There are no conditions or events since that notification thatmanagement believes have changed the Bank's category.  The Bank's actualcapital amounts and ratios and minimum regulatory amounts and ratios arepresented as follows (dollar amounts in thousands):

**         **

**                   Actual                     **

**   For capital                adequacy purposes                Minimum            **

**To be well  capitalized      under prompt corrective         action  provisions                    Minimum              **

**   As of December 31, 2003**    Total Capital (to risk      weighted assets)    Tier I Capital (to risk      weighted assets)    Tier I Capital (to average assets)      **As of December 31, 2002**    Total Capital (to risk      weighted assets)    Tier I Capital (to risk      weighted assets)    Tier I Capital (to average assets)

**  Amount  **        $   62,255          57,731       57,731              $   57,264          53,109       53,109

**  Ratio  ****    **16.49%     15.29    9.76**          **16.28%     15.10       9.73   

**    Amount  ****    **$   30,197          15,098       23,662              $   28,140          14,070       21,823

**  Ratio  **** **      8.00 %      4.00   4.00               8.00 %      4.00      4.00   

  **  Amount      **   $   37,746          22,647       29,578              $  35,175         21,105      27,279   

**    Ratio**             10.00%       6.00    5.00              10.00%     6.00  5.00 

******55

***NOTE 16 - ESTIMATED FAIR VALUE OFFINANCIAL INSTRUMENTS***

         Theestimated fair values of the Company's financial instruments were as follows atDecember 31 (amounts in thousands):

** **

**                 2003 **    **           ****Carrying          **   **Fair     **

**                2002                   ****   Carrying          **  **Fair     **

**   FINANCIAL ASSETS**    Cash  and due from banks      Federal funds sold      Investment securities available for sale      Investment securities held to maturity      Other investments      Loans   **FINANCIAL LIABILITIES**    Deposits      Securities sold under repurchase agreements      U.S. Treasury demand notes

**  Amount   **     $25,021  1,000  182,210  8,081  1,284  362,034        503,113  24,760  970

**   Value    $25,021  1,000  182,210  8,516  1,284  362,791        503,549  24,760  970
**  Amount   **     $   25,217   22,000   165,914   13,105   1,394   325,622         468,309   26,219   6,509 

**   Value    $   25,217   22,000   165,914   13,702   1,394   327,131         468,857   26,219   6,509  
***    Notional  Amount***

***   Fair  Value***

***   Notional  Amount***

***   Fair  Value***

***OFF  BALANCE SHEET INSTRUMENTS***Commitments to  extend credit******Standby letters of credit  Commitment to purchase securities

   $39,308  828  -

 $       -  -  -

   $37,518  1,052  7,000

 $       -  -  -
*NOTE 17 - PARENT COMPANY INFORMATION*
      Following is condensed financialinformation of CNB Corporation (parent company only) (amounts in thousands):

***CONDENSED BALANCE SHEETS***

** **

**         December  31,       **

**   ASSETS     **Cash     Investment in subsidiary     Land     Other assets         **LIABILITIES AND STOCKHOLDERS' EQUITY**   Dividends payable     Stockholders' equity (net of $104 and $102 of treasury stock)

**    2003    $     5,282  60,362  1,812          37 **$ 67,493  **$   2,870   64,623**   $ 67,493**
**    2002    $     5,71957,053  1,006           37 **$  63,815**** **     $    2,690    61,125 **$  63,815**
56

***NOTE 17- PARENT COMPANY INFORMATION, Continued***

***CONDENSED STATEMENTS OF INCOME***

 

**  For  the years ended December 31,  **

**   INCOME**   Dividend  from bank subsidiary   **EXPENSES**   Sundry        Income before equity in undistributed           net income of bank  subsidiary   **EQUITY IN UNDISTRIBUTED NET INCOME OF      SUBSIDIARY   **      Net income

**    2003     $    3,097                  54 3,043           4,622 **$   7,665**
**    2002     $     2,903               53     2,850            4,332   **$    7,182**
**    2001     **$     2,903               54     2,849            3,586   **$    6,435**

***CONDENSED STATEMENTS OF CASH FLOWS* **

** **

** For the  years ended December 31, **

**   OPERATING ACTIVITIES**   Net  income     Adjustments to reconcile net income to net cash provided        by operating activities        Equity in undistributed net income of  bank subsidiary              Net cash provided by  operating activities   **INVESTING ACTIVITIES**   Purchase of land   **FINANCING ACTIVITIES     **Dividends paid     Treasury stock transactions, net              Net cash used for  financing activities              Net increase (decrease)  in cash**CASH, BEGINNING OF THE YEAR  CASH, END OF THE YEAR**

**   2003   ****    **$   7,665           (4,622)        3,043              (806)        (2,690)          16       (2,674)     (437)    5,719 **$  5,282 **

**   2002    ****  **  $   7,182           (4,332)        2,850                    -         (2,507)        128        (2,379)     471      5,248 **$   5,719 **

**     2001    **  $   6,435           (3,586)        2,849                    -         (2,502)        125        (2,377)     472      4,776 **$   5,248 **

57

***NOTE 18 - QUARTERLYFINANCIAL DATA (UNAUDITED)***

      Unaudited condensed financial data byquarter for 2003 and 2002 is as follows (amounts, except per share data, inthousands):

** **

**Quarter ended**

** **

**  March  31 **

**  June  30  **

**September 30**

**December 31**

**   2003 **Interest income  Interest expense        Net interest income  Provision for loan losses     Net interest income after        provision for loan losses  Noninterest income  Noninterest expenses        Income before income taxes  Income taxes        Net income     Net income per share     Weighted average shares outstanding

**    **$     7,593       1,969 5,624          280 5,344  1,462       4,044 2,762          854 **$     1,908   $       2.66      718,024**
**    **$     7,681       1,868 5,813          220 5,593  1,487       4,168 2,912          914 **$     1,998   $       2.78      718,002**
      $     7,567       1,750 5,817          250 5,567  1,654       4,102 3,119       1,002 **$     2,117   $       2.95      717,698   **
      $     7,625       1,637 5,988          210 5,778  1,514       4,923 2,369          727 **$     1,642   $       2.29      716,420**
** **

**Quarter ended**

 
** **

** March  31 **

**  June  30  **

**September 30**

**December 31**

 
**   2002 **Interest income  Interest expense        Net interest income  Provision for loan losses     Net interest income after        provision for loan losses  Noninterest income  Noninterest expenses        Income before income taxes  Income taxes        Net income     Net income per share     Weighted average shares outstanding

**    **$    7,648      2,346 5,302         275 5,027  1,352      3,685 2,694         838 **$    1,856   $      2.59     716,680**
**    **$    7,872      2,315 5,557         215 5,342  1,300      3,752 2,890         889 **$    2,001   $      2.79     716,720**
**    **$    8,036      2,303 5,733         270 5,463  1,456      3,914 3,005         976 **$    2,029   $      2.83     716,746**
**    **$    7,788      2,104 5,684         225 5,459  1,355      4,808 2,006         710 **$    1,296   $      1.81     717,318**
58

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

None.

ITEM 9A.  CONTROLS AND PROCEDURES

**CONTROLS AND PROCEDURES**

(a) Based on their evaluation of the Company's disclosure controls andprocedures as of December 31, 2003, the Company's chief executive officer andchief financial officer concluded that the effectiveness of such controls andprocedures was adequate.

(b) There were no significant changes in the Company's internal controls or inother factors that could significantly affect these controls subsequent to thedate of their evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

PART IIIITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTMANAGEMENT OF THE COMPANY

Directors

     The Directors and Nominees for election to theBoard of Directors of the Company are as follows:

    Name (Age)

DirectorSince

Proposed  TermExpires

Present  Principal  Occupation

    Company    Stock Owned  Number      % 

    Willis J. Duncan        (77)            *W. Jennings Duncan        (48)               *James W. Barnette, Jr.        (59)                        Harold G. Cushman, Jr.        (74)               

     1958              1984                 1984                          1963                  

     2006              2007                 2007                          2005                  

     Chairman of the Board.  The President of the   Bank from November  1985 to February 1988.     President.  Executive  Vice President of the  Bank from November  1985 to February 1988.        President of Surfside  Rent Mart, Inc., a  general rental company  located in Surfside    Beach, S.C.,  since  1992.           Retired in 1995 as  President of Dargan  Construction Company,  Inc.         

    29,325(1)               26,930(2)                   5,829(3)                           25,382(4)                  

     4.09              3.75                  .81                          3.54                  

59

ITEM 10.   DIRECTORS AND EXECUTIVEOFFICERS OF THE REGISTRANTMANAGEMENT OF THE COMPANY (continued)

Name (Age)

DirectorSince

Proposed  TermExpires

Present  PrincipalOccupation

    Company    Stock Owned  Number      % 

    H. Buck Cutts        (62)               Paul R. Dusenbury        (45)               Robert P. Hucks        (58)                     Richard M. Lovelace, Jr.        (57)            *John K. Massey        (89)            Howard B. Smith, III        (55)

   2002                 1997                 1993                       1984              1959              1993

   2005                 2006                 2005                       2006              2007              2005

   Retired.  Previously,   Mr. Cutts was an  attorney in private  practice in Surfside  Beach, South Carolina.     Treasurer.  Vice  President and Cashier  of the Bank since 1988.           Executive Vice  President.  Served as  Vice President and  Cashier of the Bank  from 1985 to 1988.           Attorney in private  practice in Conway,   South Carolina.        Retired.              Executive in Residence  for the Wall College of  Business, Coastal   Carolina University.  Previously, Mr. Smith   was a Practicing   Certified Public  Accountant with Smith,  Sapp,Bookhout,Crumpler,  & Callihan, P.A. In   Myrtle Beach,South   Carolina.

    17,979(5)                   1,102(6)                   2,578(7)                         2,465(8)                5,666(9)                3,632 

   2.51                  .15                  .36                        .34               .79               .51

* Nominee for election to the Board of Directors.

60

       Exceptas indicated below, each director or director nominee of the company has solevoting and investment power with respect to all shares of Company stock ownedby such director or director nominee.  Each director or director nomineeresides in Conway, South Carolina with the exceptions of Harold G. Cushman andPaul R. Dusenbury who reside in Myrtle Beach and Aynor, respectively, which arewithin Horry County, South Carolina.  The address of each director or directornominee is c/o The Conway National Bank, Post Office Drawer 320, 1400 ThirdAvenue, Conway, South Carolina 29528.  All shareholder communication to anindividual Director or to the full Board of Directors sent to the above addresswill be forwarded to the individual Director or full Board of Directors as indicated. All Directors and officers of the Company and its subsidiary, The ConwayNational Bank, as a group (43 persons), own 161,038 (22.5%) shares of Companystock.

       (1) Includes 12,399 shares held byHarriette B. Duncan (wife).

       (2) Includes 1,665 shares held byRobin F. Duncan (wife); 3,632 shares held by Ann Louise Duncan (daughter);3,632 shares held by Mary Kathryn Duncan (daughter); 3,632 shares by WillisJennings Duncan, V (son); and 3,632 shares by Margaret Brunson Duncan(daughter).

       (3) Includes 4,826 shares held byJanet J. Barnette (wife).

       (4) Includes 21,000 shares held bythe Cushman Family Limited partnership; 588 shares held by Dianne C. Cushman(wife); 757 shares held by Frances Faison Cushman (daughter); 757 shares heldby Harold G. Cushman, III (son); 639 shares held by Harold G. Cushman, IV (grandson); and 638 shares held by Kara Dawn Cushman (granddaughter).

       (5) Includes 1,293 shares held byBrenda M. Cutts (wife); 1,172 shares held by Claire Cutts Abbott (daughter);and 1,172 shares held by Emeline E. Cutts (daughter).

       (6) Includes 208 shares held byJennifer S. Dusenbury (wife); 65 shares held by Elena Cox Dusenbury (daughter);and 65 shares held by Sarah Cherry Dusenbury (daughter). 

       (7) Includes 400 shares held byWillie Ann Hucks (wife); 30 shares held by Mariah J. Hucks (daughter); 74shares held by Norah Leigh Hucks (daughter); and 224 shares held by Robert P.Hucks, II (son).

       (8) Includes 1,404 shares held byRebecca S. Lovelace (wife); 518 shares held by Richard Blake Lovelace (son);and 423 shares held by Macon B. Lovelace (son).

       (9) Includes 1,586 shares held byBertha T. Massey (wife). 

       Each director or director nominee ofthe Company has been engaged in his principal occupation of employment asspecified above for five (5) years or more unless otherwise indicated.

       W. Jennings Duncanis Willis J. Duncan's son.  No other family relationships exist among the abovenamed directors or officers of the Company.  No director owns 25% or more of apublicly traded company.  None of the directors of the Company holds adirectorship in any company with a class of securities registered under Section12 of the Securities Exchange Act of 1934, as amended, or subject to therequirements of Section 15(d) of that act or in any company registered as an investmentcompany under the Investment Company Act of 1940, as amended.

61

       TheBoard of Directors of the Company, as originally constituted, was classifiedinto three (3) classes with each class consisting of five (5) directors. Three(3) directors in Class I will be elected at the 2004 Annual Meeting to servefor a three (3) year term. Directors in Class II will be elected at the 2005Annual Meeting to serve for a three (3) year term and Directors in Class IIIwill be elected at the 2006 Annual Meeting to serve for a three (3) year term.Currently, there are ten (10) Directors, with three (3) directors in Class I.The Board of Directors has passed a resolution fixing the total number ofDirectors at ten (10).

       The Board of Directors of the Companyserves as the Board of Directors of its subsidiary, The Conway National Bank. The Company's Board of Directors meets as is necessary and the Bank's Board ofDirectors meets on a monthly basis.

       The Board of Directors of the Bank hasan Executive Committee that meets when necessary between scheduled meetings ofthe Board of Directors and also functions as the compensation and nominatingcommittee.  The Executive Committee recommends to the Board of Directors theappointment of officers; determines officer compensation subject to Boardapproval; reviews employee salaries; considers any director nominee submittedby the shareholders; and addresses any other business as is necessary whichdoes not come under the authority of other committees on the Board ofDirectors. The Executive Committee will consider any nominee to the Board ofDirectors submitted by the shareholders, provided shareholders intending tonominate director candidates for election deliver written notice thereof to theSecretary of the Company not later than (i) with respect to at election to beheld at an Annual Meeting of shareholders, ninety (90) days prior to theanniversary date of the immediately preceding Annual Meeting of shareholders,and (ii) with respect to an election to be held at a special meeting ofshareholders, the close of business on the tenth (10th) day following the dateon which notice of such meeting is first given to shareholders. The Bylawsfurther provide that the notice shall set forth certain information concerningsuch shareholder and his nominee(s), including their names and addresses, arepresentation that the shareholder is entitled to vote at such meeting andintends to appear in person or by proxy at the meeting to nominate the personor persons specified in the notice, a description of all arrangements orunderstandings between the shareholder and each nominee, such other informationas would be required to be included in a proxy statement soliciting proxies forthe election of the nominees of such shareholder and the consent of eachnominee to serve as Director of the Company if so elected.  The Chairman of themeeting may refuse to acknowledge the nomination of any person not made incompliance with the foregoing procedures.  There is no policy or charter inplace for the nominating committee function.  No material changes have beenmade to the procedure by which shareholders may recommend candidates forconsideration by the Executive Committee which serves as the nominatingcommittee.  The members of the Executive Committee are Harold G. Cushman, Jr. ("independent"Director), Willis J. Duncan ("inside" Director), and W. JenningsDuncan ("inside" Director).

       In addition, the Board of Directorsof the Bank has Audit, Loan, Public Relations, and Building Committees.  Themembers of the Audit Committee are James W. Barnette, Jr. ("independent"Director), H. Buck Cutts ("independent" Director), John K. Massey ("independent"Director), and Howard B. Smith, III ("independent" Director and "auditcommittee financial expert").   The members of the Loan Committee areHarold G. Cushman, Jr. ("independent" Director), Willis J. Duncan ("inside"Director), W. Jennings Duncan ("inside" Director), Paul R. Dusenbury("inside" Director), Robert P. Hucks ("inside" Director),and Richard M. Lovelace, Jr. ("independent" Director).  The members of thePublic Relations Committee are James W. Barnette, Jr. ("independent"Director) and John K. Massey ("independent" Director).  The membersof the Building Committee are James W. Barnette, Jr. ("independent"Director), Harold G. Cushman, Jr. ("independent" Director), Willis J.Duncan ("inside" Director), W. Jennings Duncan ("inside"Director), and Robert P. Hucks ("inside" Director). Willis J. Duncan,Chairman of the Board, and W. Jennings Duncan, President, are ex officiomembers of each of these committees of the Board with the exception of theAudit Committee.

     The function of the Audit Committee is to ensurethat adequate procedures are in existence and functioning in a manner adequateto safeguard the assets of the Bank.  The Audit Committee also monitorsinternal and external audit activities.  The Audit Committee does not have anaudit charter.  Each member of the Audit Committee is independent as defined inthe National Association of Securities Dealers listing standards and Howard B.Smith, III qualifies as an "audit committee financial expert".

62

       Thefunction of the Loan Committee is to review and ratify new loans and monitorthe performance and quality of existing loans, as well as to ensure that soundpolicies and procedures exist in the Bank's lending operations.

       During 2003, the Company's Board ofDirectors met three (4) times; the Bank's Board of Directors met twelve (12)times; the Executive Committee met twelve (12) times; the Audit Committee met eleven(11) times; the Loan Committee met twelve (12) times; the Building Committeemet five (5) times; and the Public Relations Committee did not meet. EachDirector attended at least 75% of the aggregate of (a) the total number ofmeetings of the Board of Directors held during the period for which he servedas Director and (b) the total number of meetings held by all committees of theBoard of Directors of which he served.

       All Directors are expected to attendthe Company's Annual Meeting with ten of eleven in attendance at the May 13, 2003Annual Meeting.

Executive Officers:

       The Executive Officers and otherofficers of the Company are as follows:

                                  Position(s)Currently         Name             Age       WithThe Company            Willis J.Duncan       77     Chairmanof the Board (1)    W. Jennings Duncan     48     Presidentand Director (1)    Robert P.Hucks        58     ExecutiveVice President and                                  Director(1)    Paul R. Dusenbury      45     Treasurerand Director (1)                                 (ChiefFinancial Officer and                                  ChiefAccounting Officer)    Virginia B. Hucks      54     Secretary

                     (1) Executive Officer

       Allexecutive officers and other officers serve at the pleasure of the Board ofDirectors of the Company.  All executive officers and other officers of the Companyhave acknowledged receipt of The Conway National Bank Code of Ethics Policy andagree to comply therewith.  Each executive officer and other officer of theCompany has been employed by the Company and/or the Bank for five (5) years.

63

ITEM 11.  COMPENSATION OF DIRECTORS ANDEXECUTIVE OFFICERS

       The Company pays no remuneration toits Directors and Executive Officers.  All remuneration for services renderedare paid by the Company's subsidiary, The Conway National Bank, Conway, South Carolina ("the Bank").

Compensation Committee Report

       The Executive Committee of the Bankrecommends to the Board of Directors the appointment of officers; determinesofficer compensation subject to Board approval; and reviews employee salaries. The compensation of the President (Chief Executive Officer) and the otherexecutive officers is not tied directly to corporate performance or any measurethereof.  However, it would be deemed unacceptable by the Executive Committee,Board, and management to establish compensation levels that are not consistentwith the performance of the Bank or return to shareholders. During thecompensation decision process, much emphasis is placed on the Job EvaluationSalary Administration Program (JESAP) Committee.  The "JESAP"Committee is charged with the responsibility of establishing job positiondescriptions; applying values to each job position in the form of a salaryrange; and obtaining salary surveys of a local, regional, and national level todetermine that salary ranges are consistent with the industry and peers.  The "JESAP"committee utilizes an independent management consulting firm to aid in thisprocess.  For each Bank employee, including the President (Chief ExecutiveOfficer) and all executive officers, a salary minimum, midpoint, and maximum isestablished. For fiscal 2003, all executive officer salary levels were belowthe midpoint as established by the JESAP process.

Summary Compensation Table

                         AnnualCompensation                      Long-TermCompensation                                                               Awards                Payouts

   Name andPrincipal Position

    Year

     ($)Salary

    ($)   Bonus

   Other     Annual(1)Compensation

Restricted    Stock($)    Awards

 Stock   Options   #/SARS

Long-Term  Incentive  Payout($)

All Other (2)  Compensation

   W. Jennings Duncan  President and   Director of the Bank      Robert P. Hucks  Executive Vice  President and  Director of the Bank      Paul R. Dusenbury  Vice President and  Cashier of Bank.

   2003  2002  2001     2003  2002  2001        2003  2002  2001

   176,304  167,112  158,004     155,844  147,720  139,680        144,504  136,968  129,504

   27,446  28,156  28,651     24,377  25,005  25,444        22,676  23,257  23,663

      4,779     5,217     5,380        6,000     6,000     6,000           6,000     6,000     6,000

        0       0       0          0       0       0             0       0       0

      0     0     0        0     0     0           0     0     0

       0      0      0         0      0      0            0      0      0

      14,104     13,369     11,060        12,468     11,818      9,778           11,560     10,957      9,065

 

(1)  Cashvalue of personal use of automobile furnished by the Bank or automobile travel      allowance.

(2)  Cash contributions made by the Bank to the Bank's contributoryprofit-sharing and      savings defined contribution plan.

64

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS(continued)

PENSION PLAN DISCLOSURE
        The Bank has a definedcontribution pension plan covering all employees who have attained agetwenty-one and have a minimum one year of service.  Upon ongoing approval ofthe Board of Directors, the Bank matches one hundred percent of employeecontributions up to three percent of employee contributions of salary deferredand fifty percent of employee contributions in excess of three percent and upto five percent of salary deferred.  The Board of Directors may also makediscretionary contributions to the Plan.  For the years ended December 31, 2003, 2002, and 2001, $558,000, $510,000, and $426,000, respectively, wascharged to operations under the plan.

       The Board of Directors of the Bankprovides supplemental benefits to certain key officers, under The ConwayNational Bank Executive Supplemental Income (ESI) Plan and a Long-Term DeferredCompensation (LTDC) Plan.  A copy of said plans was filed as Exhibits 10(a) and10(b)with an amended Form 10-K Annual Report dated June 10, 2002.  Theseplans are not qualified under the Internal Revenue Code.  These plans areunfunded, however, certain benefits under the ESI Plan are informally andindirectly funded by insurance policies on the lives of the covered employees. Under the provisions of the ESI Plan, the Bank and the participating employeeswill execute agreements providing each employee (or his beneficiary, ifapplicable) with a pre-retirement death benefit and a post-retirement annuitybenefit.  The ESI Plan is designed to provide participating employees with apre-retirement benefit based on a percentage of the employee's current compensation. The ESI agreement's post-retirement benefit is designed to supplement aparticipating employee's retirement benefits from Social Security in order toprovide the employee with a certain percentage of his final average income atretirement age.  Upon normal retirement age, Willis J. Duncan, W. JenningsDuncan, Robert P. Hucks, and Paul R. Dusenbury are eligible to receive fifteenannual payments of $9,650, $37,178, $30,827, and $28,379, respectively. Whilethe employee is receiving benefits under the ESI Agreement, the agreement willprohibit the employee from competing with the Bank and will require theparticipating employee to be available for consulting work for the Bank.  TheESI Agreement may be amended or revoked at any time prior to the participatingemployee's death or retirement, but only with the mutual written consent of thecovered employee and the Bank.  The ESI Agreements require that theparticipating employee be employed at the Bank at the earlier of death orretirement to be eligible to receive, or have his beneficiary receive, benefitsunder the agreement.  Under the LTDC Plan, certain key employees and the Boardof Directors may defer a portion of their compensation for their retirement andpurchase units which are equivalent in value to one share of the Company'sstock at market value.  The number of units shall be equitably adjusted andrestated to reflect changes in the number of common shares outstandingresulting from stock splits, stock dividends, stock issuances, and stock redemptions. The number of units also shall be equitably adjusted and restated to reflectcash dividends paid to Company common shareholders.  The employee or Directorreceives appreciation, if any, in the market value of the unit as compared tothe initial value per unit.

65

**COMPENSATIONOF DIRECTORS AND EXECUTIVE OFFICERS (continued)**

PerformanceGraphs

**COMPARISON OFFIVE-YEAR CUMULATIVE TOTAL RETURNAMONG CNB CORPORATION, INDEPENDENT BANK INDEX, AND NASDAQ**

ASSUMES $100 INVESTED ONDECEMBER 31, 1998 IN EACH OF CNB CORPORATIONSTOCK,INDEPENDENT BANK INDEX, AND NASDAQ INDEX WITH REINVESTMENT OF DIVIDENDS
**COMPARISON OFRETURN ON AVERAGE ASSETS (ROA)AMONG THE BANK, ALL SOUTH CAROLINA BANKS, AND SOUTH CAROLINA S&L's** 
BASED ON DECEMBER 31 DATA WITHTHE EXCEPTION OF THE SEPTEMBER 30, 2003 DATADUE TO THE UNAVAILABILITY OF DECEMBER 31, 2003 DATA66

COMPENSATION OFDIRECTORS AND EXECUTIVE OFFICERS (continued)

Compensation Committee Interlocks and Insider Participation in CompensationDecisions

      No Compensation Committee interlocksexist.  The members of the Executive Committee of the Board, which serves asthe Compensation Committee, are Harold G. Cushman, Jr. ("independent"Director), Willis J. Duncan (Chairman of the Board and inside Director), and W.Jennings Duncan (President and inside Director).  Membership of the "JESAP"Committee consists of seven Bank officers.

Director Compensation

     Directors who are not Bank officers received $500for each monthly meeting of the Board of Directors and an additional $200 foreach committee meeting attended. Beginning in 2004, the Chairman of the AuditCommittee will receive an additional $75 per Audit Committee meeting attended

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Section 16(a) of the Securities Exchange Act of1934 requires the Company's directors and executive officers and persons whoown more than ten percent of a registered class of the Company's equitysecurities to file reports of ownership on Form 3 and changes in ownership onForm 4 or 5 with the Securities and Exchange Commission (the "SEC")and the National Association of Securities Dealers.  Such officers, directors,and 10 percent shareholders are also required by SEC rules to furnish theCompany with copies of all Section 16(a) forms that they file.

     Based solely on its review of copies of suchreports received or written representations from certain reporting persons, theCompany believes that during the fiscal year ended December 31, 2003, allSection 16(a) filing requirements applicable to its officers, directors, and 10percent shareholders were complied with.

67

ITEM 12.  SECURITY OWNERSHIP OF MANAGEMENT

       The following table sets forth as of December 31, 2003, certain information regarding the ownership of Company Stock of allofficers and directors of the Company.  No shareholder is known to themanagement of the Company to be the beneficial owner of more than five (5%)percent of the Company Stock.  The Company Stock is the Company's only class ofvoting securities.

  Name andAddress           Amountand Natureof          Percentof Beneficial Owner         BeneficialOwnership(1)        of ClassAll Officers and Directors as a Group(43persons)  (2)                  161,038                   22.5%                  (1)     For a description of the amount and nature ofownership of the directors of the Company, see "Management of the Company-Directors".(2)     Includes 32 officers of the subsidiary, TheConway National Bank, who are not officers of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Directors, principal shareholders, andExecutive Officers of the Company and the Bank are customers of and hadtransactions with the Bank in the ordinary course of business.  Included insuch transactions are outstanding loans and commitments, all of which were madeon comparable terms, including interest rates and collateral as thoseprevailing at the time for other customers of the Bank, and did not involvemore than normal risk of collectibility or present other unfavorable features.

68

ITEM 14.  PRINCIPALACCOUNTING FEES AND SERVICES
        Elliott, Davis, LLC served asthe Company's auditor during the fiscal years ended December 31, 2003 and2002.  The Board of Directors has not yet selected auditors for the audit ofthe annual financial statements for the current fiscal year.  The followingtable shows the fees that the Company paid or accrued for the audit and otherservices provided by Elliott Davis, LLC for the fiscal years ended December 31, 2003 and 2002.

 

Year Ended  December 31, 2003

Year Ended  December 31, 2002

   Audit Fees  Audit-Related Fees  Tax Fees  All Other Fees    Total

   $43  6  5  8$62

   $39  5  5  8$57

Audit Fees.  This categoryincludes the aggregate fees billed for professional services rendered byElliott Davis, LLC for the audit of the Company's annual consolidated financialstatements for the years ended December 31, 2003 and 2002 and for reviews ofthe financial statements included in the Company's reports on Forms 10-Q and10-K.  These fees include amounts paid or expected to be paid for eachrespective year's audit.  Reimbursements for travel and other out-of-pocketexpenses are not included.

Audit Related Fees.  Thiscategory includes the aggregate fees billed for non-audit services, exclusiveof the fees disclosed relating to audit fees, rendered by Elliott Davis, LLCduring the fiscal years ended December 31, 2003 and 2002.  These servicesprincipally include the assistance and issuance of consents for various filingswith the SEC and for the examination of the Company's assertion, as presentedin the Management Report on the Effectiveness of Internal Control OverFinancial Reporting, that effective internal control over financial reportingexists in accordance with GAAP and the FFIEC instructions for ConsolidatedReports of Condition and Income, based upon criteria described in InternalControl - Integrated Framework, issued by COSO of the Treadway Commission.

Tax Fees.  This category includesthe aggregate fees billed for tax services rendered by Elliott Davis, LLCduring the fiscal years ended December 31, 2003 and 2002.  These serviceswere primarily for the preparation of state and federal tax returns for theCompany and its subsidiary.  Additionally, Elliott Davis, LLC assists theCompany with tax compliance and provides limited tax consultation services.

All Other Fees.  This categoryincludes the aggregate fees billed for all other services, exclusive of thefees disclosed above, rendered by Elliott Davis, LLC during the fiscal yearsended December 31, 2003 and December 31, 2002.  These other services consistedof audits of the 401(k) plan.

Oversight of Accountants; Approval of Accounting Fees.  The auditcommittee substantially pre-approves all audit and non-audit services and feesprovided by the independent auditors.  These services include audit services,audit-related services, tax services and other services.  The terms and relatedfees of the 401-(k) engagement are reported to the audit committee.

All of the principal accounting services and fees reflected in the table inthis Item 14, unless otherwise noted in this section, were reviewed andapproved by the audit committee.  Substantially all of the services wereperformed by individuals employed by the independent auditor.

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ITEM15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES ANDREPORTS ON FORM 8-K

(a)  The following exhibits, financial statements and financialstatement schedules are filed as part of this report:

FINANCIAL STATEMENTS

Report of Independent Public AccountantsConsolidated Statements of Condition - December 31, 2003 and 2002Consolidated Statements of Income - Years ended December 31, 2003,   2002, and 2001Consolidated Statements of Changes in Stockholders' Equity - Years   ended December 31, 2003, 2002, and 2001Consolidated Statements of Comprehensive Income - Years ended December 31,  2003, 2002, and 2001.Consolidated Statements of Cash Flows - Years Ended December 31,   2003, 2002, and 2001Notes to Consolidated Financial Statements

FINANCIAL STATEMENT SCHEDULES

All financial statement schedules have been omitted from this Annual Reportbecause the required information is presented in the financial statements or inthe notes thereto or the required subject matter is not applicable.

EXHIBITS

See Exhibit Index appearing below.

     Reports on Form 8-K  -  Noreports  on  Form 8-K  were filed during the     last quarter of the period covered by this report.

EXHIBIT INDEX

ExhibitNumber  3   Articles of Incorporation - A copy of theArticles of Incorporation      of the Company is incorporatedherein by reference to Exhibit 3(a)       which was filed with a Form 8-A dated June24, 1998      By-laws of the Company - A copy of theBy-laws of the Company is       incorporated herein by reference to Exhibit3(b) which was filed       with a Form 10-Q Quarterly Reportdated June 30, 1997. 10   Executive Supplemental Income Plan - A copy of theExecutive      Supplemental Income Plan is incorporatedherein by reference      to Exhibit 10(a) which was filed with aForm 10-K/A Annual      Report dated June 10, 2002.      Long Term Deferred Compensation Plan entitled"Phantom Stock       Plan" - A copy of the Long TermDeferred Compensation Plan is       incorporated herein by reference to Exhibit10(b) which was       filed with a Form 10-K/A Report datedJune 10, 2002. 14.1 Code of Ethics Policy - The Conway National Bank Code of EthicsPolicy       (filed herewith). 22   Subsidiaries of the Registrant - A copy of thesubsidiaries       of the registrant is incorporated herein byreference to       Exhibit 22 which was filed with a Form 10-KAnnual Report       dated March 28, 1986. 31.1 Certification of Principal Executive Officer required by Rule13a-14(a)       or Rule 15d-14(a) of the SecuritiesExchange Act of 1934, as adopted       pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 (filed herewith). 31.2 Certification of Principal Financial Officer required by Rule13a-14(a) or       Rule 15d-14(a) of the Securities ExchangeAct of 1934, as adopted pursuant       to Section 302 of the Sarbanes-OxleyAct of 2002 (filed herewith). 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.Section 1350,       as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002       (furnished herewith).  32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.Section 1350,       as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002       (furnished herewith).All other exhibits, the filing of which are required with this Form, are notapplicable.

70

SIGNATURES

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

                                        CNBCorporation                                   W.Jennings Duncan, President

Pursuant to the requirements of the Securities Exchange Act of 1934, thisreport has been signed below by the following persons on behalf of theregistrant and in their capacities on March 9, 2004.

    Signature                                  Capacity/S/Willis J. Duncan                      Chairmanof the BoardWillis J. Duncan/S/W. Jennings Duncan                    Presidentand DirectorW. Jennings Duncan/S/Robert P. Hucks                       ExecutiveVice President andRobert P. Hucks                          Director/S/Paul R. Dusenbury                     Treasurerand DirectorPaul R. Dusenbury                       (ChiefFinancial Officer                                         andChief Accounting Officer)/S/Virginia B. Hucks                     SecretaryVirginia B. Hucks/S/James W. Barnette, Jr.                DirectorJames W. Barnette, Jr./S/Harold G. Cushman, Jr.                DirectorHarold G. Cushman, Jr./S/H. Buck Cutts                         DirectorH. Buck Cutts/S/Richard M. Lovelace, Jr.              DirectorRichard M. Lovelace, Jr./S/John K. Massey                        DirectorJohn K. Massey/S/Howard B. Smith, III                  DirectorHoward B. Smith, III

71

**CNB CORPORATION**

**AUDIT COMMITTEE REPORT**

     The Audit Committee of the Board of Directors hasreviewed and discussed with management the Company's audited financialstatements for the year ended December 31, 2003.  The Audit Committee hasdiscussed with the Company's independent auditors, Elliott Davis, LLC, thematters required to be discussed by Statement of Auditing Standards 61.  TheAudit Committee has also received the written disclosures and the letter fromElliott Davis, LLC required by Independence Standards Board Standard No. 1, andhas discussed with Elliott Davis, LLC their independence.  Based on the reviewand discussions referred to above, the Audit Committee recommended to the Boardof Directors that the audited financial statements be included in the Company'sAnnual Report on Form 10-K for the year ended December 31, 2003.
/S/James W. Barnette, Jr.                               /S/JohnK. MasseyJames W. Barnette,Jr.                                  JohnK. Massey/S/H. Buck Cutts                                        /S/HowardB. Smith, IIIH. BuckCutts                                           HowardB. Smith, IIIMarch 9, 2004

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