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

(Mark One)X       Annual Report Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934
                 For the fiscal year ended December 31, 2001.
                                       or       Transition Report Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 [No Fee Required]
                 For the Transition Period From  to .
                      Commission file number 2-96350
                              CNB CORPORATION
           (Exact name of registrant as specified in its charter)
 South Carolina                      57-0792402
(State of incorporation)            (I.R.S. Employer Identification No.)
1400 Third Avenue, P.O. Box 320, Conway, South Carolina         29528
       (Address of Principal executive offices)               (Zip Code)
     Registrant's telephone number, including area code: (843) 248-5721
        Securities registered pursuant to section 12(b) of the Act:
                                  None
        Securities registered pursuant to Section 12(g) of the Act:
                                                   Name of each exchangeTitle of each class                                of which registeredCommon Stock, par value $10.00 per share           None
     Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YesX No     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III  of this  Form 10-K or any amendment to this Form 10-K. [  ]
     As of February 28, 2002, 716,912 shares of Common Stock of CNB Corporation were outstanding and the aggregate market value of such Common Stock held by nonaffiliates (based upon the price at which stock was sold during the 60 days prior to the date of filing) was approximately $76,709,584.
No Documents have been incorporated by reference.

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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 8
ITEM 9 | 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
Financial Statements
Disagreements on Accounting and Financial Disclosure | 25
26
27-34
35-59
59
|---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------

PART III

|ITEM 10
ITEM 11
ITEM 12
ITEM 13 | Directors and Executive Officers of the Registrant
Executive Compensation
Security Ownership of Certain Beneficial Owners
and Management
Certain Relationships and Related Transactions | 60-64
65-68
69
69
|------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------

PART IV

|ITEM 14 | Exhibits, Financial Statement Schedules, Notes to Financial Statements, and Reports on Form 8-K | 70
|------- | ----------------------------------------------------------------------------------------------- | --



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

CNB Corporation (the "Company") is a South Carolina business corporation organized for the purpose of becoming a bank holding company for The Conway National Bank (the "Bank") under the Bank Holding Company Act.  The Company was organized with $500 of capital on March 8, 1985; received approval from the Board of Governors of the Federal Reserve System 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 the common stock of the Bank.  The activities of the Company are subject to the supervision of the Federal Reserve, and the Company may engage directly or through subsidiary corporations in those activities closely related to banking which are specifically permitted under the Bank Holding Company Act and Gramm-Leach-Bliley Act of 1999.  See "Supervision and  Regulation."  Although the Company, after obtaining the requisite approval of the Federal Reserve and any other appropriate regulatory agency, may seek to enter businesses closely related to banking or to acquire existing businesses already engaged in such activities, the Company has not conducted, and has no present intent to conduct, negotiations for the acquisition or formation of any entities to engage in other permissible activities other than the acquisition of the Bank.  There can be no assurance that the Company will form or acquire any other entity.
The Company and the Bank compete with those banks and other financial institutions that compete with the Bank.  See "Competition."  In addition, if the Company attempts to form or acquire other entities and engage in activities closely related to banking, the Company will be competing with other bank holding companies, financial holding companies, and companies currently engaged in lines of business or permissible activities in which the Company might engage, many of which have far greater assets and financial resources than the Company and a greater capacity to raise additional debt and equity capital than the Company.

DESCRIPTION OF THE SUBSIDIARY

The Bank is an independent community bank engaged in the general commercial banking business in Horry and Georgetown Counties, South Carolina. The Bank was organized on June 5, 1903 as the Bank of Horry located on Main Street in Conway, South Carolina. The Bank became a national bank operating as The Conway National Bank in 1914.   On June 10, 1985, the Bank was reorganized into a bank holding company structure when substantially all of the common stock of the Bank was acquired by CNB Corporation in exchange for its own shares of common stock.  In 1960, the Bank opened its first additional office at 1400 Third Avenue in Conway.  Since that time,  the following offices have been opened: Coastal Centre in Conway, Horry County, (1969); Surfside in Surfside Beach, Horry County, (1971);  Northside, north of Myrtle Beach, Horry County, (1977); Red Hill in Conway, Horry County, (1981); Socastee, in the southern portion of Myrtle Beach, Horry County, (1986); Aynor in the Town of Aynor, Horry County, (1991), Myrtle Beach in the City of Myrtle Beach, Horry County, (1995), West Conway, in Conway, Horry County, (1998) and Murrells Inlet in Murrells Inlet, Georgetown County, (2000).  The Surfside office was enlarged in 1977 and 1984, and the Coastal Centre office was expanded in 1980.  The Third Avenue office, which houses the Bank's administrative offices and data processing facilities was expanded in 1982 from 11,150 square feet to 33,616 square feet. The Bank employs approximately 209 full-time-equivalent employees at its principal office and ten branch offices.

1

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The Bank performs the full range of normal commercial banking functions. Some of the major services provided include checking accounts, NOW accounts, money market deposit accounts, IRA accounts, savings and time deposits of various types and loans to individuals for personal use, home mortgages, home improvement, automobiles, real estate, agricultural purposes and business needs.   Commercial lending operations include various types of credit for business, industry, and agriculture.   In addition, the Bank offers safe deposit boxes, wire transfer services, bank money orders, 24-hour teller machines on the STAR Network, internet banking,  direct deposits and a MasterCard/Visa program. Through a correspondent relationship the Bank offers discount brokerage services.  The Bank does not provide trust services; does not sell annuities; and does not sell mutual funds.
The majority of the Bank's customers are individuals and small to medium-sized businesses headquartered within the Bank's service area.  The Bank has no material concentration of deposits from any single customer or group of customers.  No significant portion of the Bank's loans is concentrated within a single industry or group of related industries.  There are no material seasonal factors that would have any adverse effect on the Bank nor does the Bank rely on foreign sources of funds or income.

COMPETITION

The Bank actively competes with other institutions in Horry County in providing customers with deposit, credit and other financial services.  The principal competitors of the Bank include local offices of six regional banks, two state-wide banks, five locally owned banks in Horry County and various other financial and thrift institutions. The regional banks with offices in Horry County are Bank of America, Centura Bank, First Union National Bank, First Citizens Bank and Trust Company, Branch Bank and Trust and Wachovia, N.A.. The statewide banks with offices in Horry County are National Bank of South Carolina and Carolina First Savings Bank.  The locally owned banks having offices in Horry County are Anderson Brothers Bank, Coastal Federal Savings Bank, Horry County State Bank, Sandhills Bank, and Beach First National Bank. In addition, two thrift institutions have offices in Horry County.  The Bank also competes with credit unions, money market funds, brokerage houses, insurance companies, mortgage companies, leasing companies, consumer finance companies and other financial institutions. Significant competitive factors include interest rates on loans and deposits, prices and fees for services, office location, customer service, community reputation, and continuity of personnel.

SUPERVISION AND REGULATION

General
The Company and the Bank are subject to an extensive collection of state and federal banking laws and regulations which impose specific requirements and restrictions on, and provide for general regulatory oversight with respect to, virtually all aspects of the Company's and the Bank's operations.  The Company and the Bank are also affected by government monetary policy and by regulatory measures affecting the banking industry in general.  The actions of the Federal Reserve System affect the money supply and, in general, the Bank's lending abilities in increasing or decreasing the cost and availability of funds to the Bank.  Additionally, the Federal Reserve System regulates the availability of bank credit in order to combat recession and curb inflationary pressures in the economy by open market operations in United States government securities, changes in the discount rate on member bank borrowings, and changes in the reserve requirements against bank deposits.

2



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During 1989 and 1991, the United States Congress enacted two major pieces of banking legislation:  The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA").  The FIRREA and FDICIA have significantly changed the commercial banking industry through, among other things, revising and limiting the types and amounts of investment authority, significantly increasing minimum regulatory capital requirements, and broadening the scope and power of federal bank and thrift regulators over financial institutions and affiliated persons in order to protect the deposit insurance funds and depositors.  These laws, and the resulting implementing regulations, 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 and compensation expenses in complying with a substantially increased number of new regulations and policies.  The regulatory structure created by these laws gives the regulatory authorities extensive authority in connection with their supervisory and enforcement activities and examination policies.
The Omnibus Consolidated Appropriations Act was enacted on September 30, 1996.  Among the law's many provisions is a resolution of the BIF-SAIF deposit insurance premium disparity, many regulatory burden relief provisions and other bank-related legislation.  The BIF-SAIF provisions are contained in the Deposit Insurance Funds Act of 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 holding companies.  Financial holding companies may engage in a broad range of securities, insurance, and other financial activities.
The following is a brief summary of certain statutes, rules and regulations affecting the Company and the Bank.  This summary is qualified in its entirety by reference to the particular statutory and regulatory provisions referred to below and is not intended to be an exhaustive description of the statutes or regulations applicable to the business of the Company and the Bank.   Any change in applicable laws or regulations may have a material adverse effect on the business and prospects of the Company and the Bank.
The Company
The Company is a bank holding company within the meaning of the Federal Bank Holding Company Act of 1956, as amended (the "BHCA") and is registered as such with the Federal Reserve.  The Company is required to file annual reports and other information regarding its business operations and those of its subsidiaries.  It is also subject to supervision and regular examinations.
The BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve Board before (i) it or any of its subsidiaries (other than a bank) acquires substantially all of the assets of any bank, (ii) it acquires ownership or control of any voting shares of any bank if after such acquisition it would own or control, directly  or indirectly, more than 5% of the voting shares of such bank, or (iii) it merges or consolidates with any other bank holding company.

3

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The BHCA and the Federal Change in Bank Control Act, together with regulations promulgated by the Federal Reserve Board, require that, depending on the particular circumstances, either the Federal Reserve Board's approval must be obtained or notice must be furnished to the Federal Reserve Board and not disapproved prior to any person or company acquiring control of a bank holding company, such as the Company, subject to certain exemptions for certain transactions.
Under the BHCA, a bank holding company is generally prohibited from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in, nonbanking activities, unless the Federal Reserve Board, by order or regulation, has found those activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.  Some of the activities that the Federal Reserve Board has  determined by regulation to be proper incidents to the business of a bank holding company include making or servicing loans and certain types of leases, engaging in certain insurance and discount brokerage activities, performing certain data processing services, acting in certain circumstances as a fiduciary or investment or financial adviser, owning savings associations and making investments in certain corporations or projects designed primarily to promote community welfare.  The Company is also restricted in its activities by the provisions of the Glass-Stegall Act of 1933, which prohibits the Company from owning subsidiaries that are engaged principally in the issue, flotation, underwriting, public sale or distribution of securities.  The regulatory requirements to which the Company is subject also set forth various conditions regarding the eligibility and qualifications of its directors and officers.
Under the Gramm-Leach-Bliley Act, the Company may elect to be treated as a financial holding company which would allow the Company to engage in a broad range of securities, insurance, and other financial activities.
The Bank
The Bank is subject to regulation and supervision, of which regular bank examinations are a part, by the Comptroller of the Currency.  The Bank is a member of the Federal Deposit Insurance Corporation (the "FDIC") which currently insures the deposits of each member bank to a maximum of $100,000 per depositor.   For this protection, each bank pays a statutory assessment and is subject to the rules and regulations of the FDIC.  The Company is an "affiliate" of the Bank within the meaning of the Federal Reserve Act and the Federal Deposit Insurance Act, which imposes restrictions on loans by any subsidiary bank to the Company, on investments by any subsidiary bank in the stock or securities of the Company and on the use of such stock or securities as collateral security for loans by any subsidiary bank to any borrower.  The Company will also be subject to certain restrictions with respect to engaging in the business of issuing, underwriting and distributing securities.

4

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DESCRIPTION OF BANK STOCK

The Bank is authorized to issue 199,536 shares and has outstanding 193,536 shares of Bank Stock.  The holders of Bank Stock are entitled to one vote per share.  Holders of shares of Bank Stock have preemptive rights to purchase additional shares of Bank Stock and have cumulative rights in the elections of directors of the Bank.  The National Bank Act generally provides for a majority vote of the Bank Stock to approve an action by the Bank but a two-thirds vote of the outstanding shares of Bank Stock is required to approve certain fundamental changes.
The National Bank Act, 12 U.S.C. Section 55, provides for the pro rata assessment of holders of common stock of a national bank in the event that its capital becomes impaired, such assessment to be enforced by sale to the extent necessary of the stock of the stockholder failing to pay his assessment.  However, the Company has been advised that the Comptroller of the Currency has not used this provision in recent years.  Accordingly, the shares of Bank Stock are subject to such assessment.  However, the Bank's management does not anticipate the Bank Stock being assessed in this manner in the foreseeable future.
The holders of Bank Stock are entitled to receive such dividends as may be declared by the Board of Directors of the Bank out of funds legally available
therefor.  National banking laws and regulations impose restrictions on the payment of dividends and other distributions to stockholders.  The National Bank Act provides that a national bank cannot pay dividends or other distributions to stockholders out of any portion of its capital and surplus, and that no dividend shall be paid by a bank in an amount greater than its "net profits then on hand" (as defined in the National Bank Act), after deduction of statutory "bad debts."  In addition, 12 U.S.C. Section 60 provides that the approval of the Comptroller of the Currency is required for the payment of dividends by a national bank if the total of all dividends declared by the bank in any calendar year shall exceed the total of its "net profits" of that year combined with its "retained net profits" of the preceding two years.  The same section further provides that, until the surplus fund of a national bank shall equal its common capital, no dividends shall be declared unless there has been carried to the surplus fund not less than one-tenth part of the bank's net profits of the preceding half year in the case of quarterly or semiannual dividends, or not less than one-tenth part of its net dividends.  Also, under 12 U.S.C. Section 1818, the Comptroller of the Currency can restrict a national bank's dividend payments if they are deemed an unsafe or unsound banking practice.
In the event of the liquidation, dissolution or winding-up of the affairs of the Bank, the holders of outstanding shares of Bank Stock will be entitled to share pro rata according to their respective interests in the Bank's assets and funds remaining after payment or provision for payment of all debts and other liabilities of the Bank.

5

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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 December 31, 2001, has 718,246 shares issued and 716,112 shares outstanding. The holders of Company Stock are entitled to one vote per share.  Holders of shares of Company  Stock do not have pre-emptive rights to purchase any additional shares of Company Stock and do not have cumulative voting rights in the election of directors.  Without pre-emptive rights, stockholders could experience dilution of their voting power and of their equity interest in the Company.
The ability of the Company to pay dividends to the holders of the Company Stock depends upon the amount of dividends paid by the Bank to the Company. The holders of shares of Company Stock will be entitled to receive such dividends as may be declared by the Board of Directors of the Company out of the funds legally available
therefor. The payment of dividends by the company are subject to the restrictions of South Carolina laws applicable to the declaration of dividends by a business corporation. Under such provisions, dividends may be paid in cash or in property of the Company, including the shares of other corporations, except when the Company is insolvent or would thereby be made insolvent or when the declaration of payment thereof would be contrary to any restrictions in the Company Articles.  Dividends may be declared and paid only out of the unreserved and unrestricted earned surplus of the Company.
In the event of the liquidation, dissolution or winding-up of the affairs of the Company, the holders of outstanding shares of Company Stock will be entitled to share pro rata according to their respective interests in the Company's assets and funds remaining after payment or provision for payment of all debts and other liabilities of the 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, may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, timing of certain business initiatives of the Company, the Company's interest rate risk condition, and future regulatory actions of the Comptroller of the Currency and Federal Reserve System.  It is important to note that the Company's actual results may differ materially and adversely from those discussed in forward-looking statements.

6

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SUPPLEMENTARY DATA

QUARTERLY SHAREHOLDER INFORMATION

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

Summary of 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 | 2001 
$8,9074,404
 4,503190
1,1333,465
 1,981615$1,366$ 1.91 | 2000 
$8,3013,420
 4,881240
1,0273,332
 2,336771$1,565$ 2.19 | 2001 
$8,6474,080
 4,567130
1,4303,544
 2,323
   714
$1,609
      
$ 2.25 | 2000 
$8,4913,501
 4,990240
1,1443,379
 2,515
   814
$1,701
      
$ 2.38

SUPPLEMENTARY INFLATION ADJUSTED FINANCIAL DATA
Inflation-adjusted accounting has not been applied to the Company's financial information as management does not believe this type of analysis provides useful information within the financial services industry.  The Company currently does not meet the asset size criteria which would make detailed disclosure of inflation adjusted data mandatory.

GUIDE 3.   STATISTICAL DISCLOSURE BY BANK
HOLDING COMPANIES

The following tables present additional statistical information about CNB Corporation and its operation and financial condition and should be read in conjunction with the consolidated financial statements and related notes thereto contained elsewhere in this report.

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

The tables on the following 5 pages present selected financial data and an analysis of net interest income.

7

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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
|$294,837
122,060
20,744
32,984$470,625
  33,771
$504,396
$332,870
30,882
3,409$367,16180,218
4,47452,543
$504,396
$470,625                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|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                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(2) The Company 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.

8

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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
|$284,431
118,983
16,344
11,022$430,780
  31,580
$462,360
$299,460
30,953
4,206$334,61977,180
3,53647,025
$462,360
$430,780                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|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                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(2) The Company had no out-of-period adjustments or foreign activities.
    Loan fees of $237 are included in the above interest income.  Loans on a
    non-accrual basis for the recognition of interest income totalling $305
    as of December 31, 2000 are included in loans, net of unearned income,
    for purpose of this analysis.

9

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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
|$248,616
132,136
14,980
27,883$423,615
  29,956
$453,571
$298,789
32,555
1,644$332,98874,385
3,05243,146
$453,571
$423,615                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|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                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(2) The  Company had no out-of-period adjustments or foreign activities.
    Loan fees of $228 are included in the above interest income.  Loans on a
    non-accrual basis for the recognition of interest income totalling $527
    as of December 31, 1999 are included in loans, net of unearned income,
    for purpose of this analysis.

10

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CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For 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
20,74432,984470,625332,870
30,8823,409
367,161
103,464470,625 | Average
Volume2000 
284,431
118,983
16,34411,022430,780299,460
30,9534,206
334,619
 96,161430,780 | 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 1,3732,812
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-equivalent adjustment based on a 34% tax rate.
(2)  Includes non-accruing loans which does not have a material effect on the
     Net Yield on Earning Assets.

11

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CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Twelve Months Ended December 31, 2000 and 1999
(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
Volume2000 
284,431
118,983
16,34411,022430,780299,460
30,9534,206
334,619
 96,161430,780 | Average
Volume1999 
248,616
132,136
14,98027,883423,615298,789
32,5551,644
332,988
 90,627423,615 | 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% | Yield/Rate1999 (1) 
8.80%  
5.87%  
7.27%  5.02%  7.58%  3.89%  
4.15%  4.68%  3.92%    3.08%  3.66%  .84%  4.50% | 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 | Interest  
Earned/Paid 1999 (1)  
21,869   
7,754   
1,089   1,401   32,113   
11,616   
1,351   77   13,044      13,044      19,069 | Variance
3,902 
(709)
78 (712)2,559
1,466 
119 196 
1,781 
      
1,781 | Change
Due toRate 
646 
66 
(19)3431,036
1,434 
195 30 
1,659 
      
1,659 | Change
Due toVolume
3,152 
(772)
99 (846)1,633
26 
(66)120 
   80 
      
   80 | Change
Due to
Rate XVolume
104 
(3)
(2)(209)(110)
6 
(10)46 
   42 
      
   42
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------------------------------------------------------

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

12

---

CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Twelve Months Ended December 31, 1999 and 1998
(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
Volume1999 
248,616
132,136
14,98027,883423,615298,789
32,5551,644
332,988
 90,627423,615 | Average
Volume1998 
228,057
118,941
13,77126,890387,659273,469
34,2741,514
309,257
 78,402387,659 | Yield/Rate1999 (1) 
8.80%  
5.87%  
7.27%  5.02%  7.58%  3.89%  
4.15%  4.68%  3.92%    3.08%  3.66%  .84%  4.50% | Yield/Rate1998 (1) 
9.10%  
6.04%  
7.65%  5.23%  7.84%  4.18%  
4.42%  5.55%  4.21%    3.36%  3.63%  .85%  4.48% | Interest  
Earned/Paid 1999 (1)  
21,869   
7,754   
1,089   1,401   32,113   
11,616   
1,351   77   13,044      13,044      19,069 | Interest  
Earned/Paid 1998 (1)  
20,755   
7,187   
1,053   1,406   30,401   
11,432   
1,514   84   13,030      13,030      17,371 | Variance
1,114 
(567)
36 (5)1,712
184 
(163)(7)
   14 
      
   14 | Change
Due toRate 
(684)
(202)
(52)(56)(994)
(793)
(93)(13)
 (899)
      
 (899) | Change
Due toVolume
1,871 
797 
92 522,812
1058 
(76)7 
  989 
      
  989 | Change
Due to
Rate XVolume
(73)
(28)
(4)(1)(106)
(81)
6 (1)
  (76)
      
  (76)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- | -------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------------------------

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

13

---

INVESTMENT SECURITIES

The purpose of the investment policy of the Bank
is to ensure that the investment securities portfolio shall be managed to
maximize portfolio yield over the long term in a manner that is consistent with
liquidity needs, pledging requirements, asset/liability strategies, and
safety/soundness concerns.  Specific investment objectives include the
desire to:  ensure adequate liquidity for loan demand, deposit
fluctuations, and other changes in balance sheet mix; manage interest rate risk;
maximize the institution's overall return; ensure collateral is available for
pledging; and manage asset-quality diversification of the bank's assets. 
Currently, investment securities comprise a higher percentage of total assets
due to weakened loan demand within our market.  At December 31, 2001, the
Loans/Total Assets ratio had dropped to 58.6% as compared to 62.8% at December
31, 2000, and investment securities correspondingly rose as a percentage of
total assets from 27.8% to 32.0%, respectively.
Investment securities with a par value of $76,640, $90,870, and $82,325 at December 31, 2001, 2000, and 1999, respectively, were pledged to secure public deposits and for other purposes required by law.
The following summaries reflect the book value, unrealized gains and losses, approximate market value, and tax-equivalent yields on investment securities at December 31, 2001, 2000, and 1999.

|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
 96,65214,612
 121,191                                                                    
|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
11,640854
  16,146
        
     278
$137,615                                               
|HELD TO MATURITY
  Federal agencies
   Within one year
   One to five years                                                                                                                             | 3,0137,011
  10,024                                                                               
|State, county and
  municipal
   Within one year
   One to five years
   Six to ten years
   
   Total held to maturityOTHER INVESTMENTS, AT COST  Federal Reserve &
   Federal Home Loan
   Bank Stock | 1,570
5,9313,180
  10,681
$ 20,705
        
$  1,394                                              

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

14

---

INVESTMENT SECURITIES, continued

|AVAILABLE FOR SALE
  United States Treasury
   Within one year                                                                                                                                          | December 31, 2000 Book      Unrealized     Fair          
 Value   Gains   Losses   Value Yield(1)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------
|$14,066                                                                                                                                                                                                 | $   65                                                                                            
|Federal agencies
   Within one year
   One to five years                                                                                                                                                | 25,05941,517
 66,576                                                                              
|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                         | 453
4,7111,357
  6,521
       

    254
$87,417                                                   
|HELD TO MATURITY
  United States Treasury
   Within one year                                                                                                                                            | $ 1,006                                                                                           
|Federal agencies
   Within one year
   One to five years                                                                                                                                                | 13,02615,082
 28,108                                                                              
|State, county and
  municipal
   Within one year
   One to five years
   Six to ten years
   
   Total held to maturityOTHER INVESTMENTS, AT COST  Federal Reserve &
   Federal Home Loan
   Bank Stock | 2,415
6,3224,364
 13,101
$42,215
       
$ 1,394                                                  



15

---

INVESTMENT SECURITIES, continued

|AVAILABLE FOR SALE
  United States Treasury
   Within one year
   One to five years                                                                                                                                   | December 31, 1999 Book      Unrealized     Fair          
 Value   Gains   Losses   Value Yield(1)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------
|$ 4,98410,117
 15,101                                                                                                                                                                                                 | $   110
    11                                                                                    
|Federal agencies
   Within one year
   One to five years                                                                                                                                                              | 11,46161,746
 73,207                                                                              
|State, county and 
  municipal
   Six to ten years
  Total available for sale                                                                                                                                         | 1,132
$89,440                                                                                     
|HELD TO MATURITY
  United States Treasury
   Within one year
   One to five years                                                                                                                                     | $ 3,0001,012
  4,012                                                                              
|Federal agencies
   Within one year
   One to five years                                                                                                                                                              | 7,61328,188
 35,801                                                                               
|State, county and
  municipal
   Within one year
   One to five years
   Six to ten years
   After ten years
  Total held to maturityOTHER INVESTMENTS, AT COST  Federal Reserve &
   Federal Home Loan
   Bank Stock | 1,759
8,342
4,315639
 15,055
$54,868
       
$ 1,394                                              



(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended December 31, 1999, the Bank did not hold any securities of an issuer that exceeded 10% of stockholders' equity.

16

---

LOAN PORTFOLIO
LENDING ACTIVITIES

The Company engages, through the Bank, in a full
compliment of lending activities, including commercial, consumer, installment
and real estate loans.
Real Estate Loans
One of the primary components of the Bank's loan portfolio are loans secured by
first or second mortgages on residential and commercial real estate.  These
loans will generally consist of commercial real estate loans, construction and
development loans and residential real estate loans (including home equity and
second mortgage loans).  Interest rates may be fixed or adjustable. 
The bank seeks to manage credit risk in the commercial real estate portfolio by
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, generally does not
exceed 80%.  In addition, the Bank typically requires personal guarantees
of the principal owners of the property.  The Bank may also facilitate
mortgage loans for sale into the secondary market, earning a fee, but avoiding
the interest rate risk of holding long-term, fixed-rate loans.  The
principal economic risk associated with all loans, including real estate loans,
is the creditworthiness of the Bank's borrowers.  The ability of a borrower
to repay a real estate loan will depend upon a number of economic factors,
including employment levels and fluctuations in the value of real estate. 
In the case of a real estate construction loan, there is generally no income
from the underlying property during the construction period, and the developer's
personal obligations under the loan may be limited.  Each of these factors
increases the risk of nonpayment by the borrower.  In the case of a real
estate purchase loan, the borrower may be unable to repay the loan at the end of
the loan term and may thus be forced to refinance the loan at a higher interest
rate, or, in certain cases, the borrower may default as a result of its
inability to refinance the loan.  In either case, the risk of nonpayment by
the borrower is increased.  The Bank will also face additional credit risks
to the extent that it engages in making adjustable rate mortgage loans ("ARMs"). 
In the case of an ARM, as interest rates increase, the borrower's required
payments increase periodically, thus increasing the potential for default. 
The marketability of all real estate loans, including ARMs, is also generally
affected by the prevailing level of interest rates.
Commercial Loans
The Bank makes loans for commercial purposes in various lines of business. 
The commercial loans will include both secured an unsecured 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 and machinery.  Equipment loans will typically be made for a
term of five years of less at either fixed or variable rates, with the loan
fully amortized over the term and secured by the financed equipment. 
Working capital loans will typically have terms not exceeding one year and will
usually be secured by accounts receivable, inventory or personal guarantees of
the principals of the business.  Commercial loans will vary greatly
depending upon the circumstances and loan terms will be structured on a
case-by-case basis to better serve customer needs.  The risks associated
with commercial loans vary with many economic factors, including the economy in
the Bank's market area.  Many of the Bank's commercial loans are made to
small- to medium - sized businesses, which are typically smaller, have shorter
operating histories, and less sophisticated record keeping systems than larger
entities.  As a result, these smaller entities may be less able to
withstand adverse competitive, economic and financial conditions than larger
borrowers.  In addition, because payments on loans secured by commercial
property generally depend to a large degree on the results of operations and
management of the properties, repayment of such loans may be subject, to a
greater extent than other loans, to adverse conditions in the real estate market
or the economy.  The Bank seeks to spread commercial loans throughout a
variety of industries and monitors loan diversification to avoid a significant
concentration within the loan portfolio.

17

---

CLASSIFICATION OF LOANS

Consumer Loans
The Bank makes a variety of loans to individuals for personal and household
purposes, including secured and unsecured installment and term loans, home
equity loans and lines of credit and unsecured revolving lines of credit such as
credit cards.  The secured installment and term loans to consumers will
generally consist of loans to purchase automobiles, boats, recreational
vehicles, mobile  homes and household furnishings, with the collateral for
each loan being the purchased property.  The underwriting criteria for home
equity loans will generally be the same as applied by the Bank when making a
first mortgage loan, as described above, but more restrictive for home equity
lines of credit.  Consumer loans generally involve more credit risks than
other loans because of the type and nature of the underlying collateral or
because of the absence of any collateral.  Consumer loan repayments are
dependent on the borrower's continuing financial stability and are likely to be
adversely affected by job loss, divorce and illness.  Furthermore, the
application of various federal and state laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans in the case of default.  In most cases, any repossessed
collateral will not provide an adequate source of repayment of the outstanding
loan balance.  Although the underwriting process for 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 the borrower's ability to
pay, and the value of the security, will be affected by prevailing economic and
other conditions.
Loan Approval and Review
The Bank's loan approval policies provide for various levels of officer lending
authority.  When the amount of aggregate loans to a single borrower exceeds
an individual officer's lending authority, the loan request will be considered
and approved by an officer with a higher lending limit or by the Credit
Committee as established by the Board of Directors.  The Loan Committee of
the Board of Directors determines the lending limits for the Bank's loan
officers.  The Bank has an in-house lending limit to a single borrower of
10% of capital.  An unsecured limit (aggregate) for the Bank is set at 100%
of total capital.

CLASSIFICATION OF LOANS

The following is a summary of loans, in thousands of dollars, at December 31, 2001, 2000, 1999, 1998, and 1997 by major classification:

|                                                                                                                                                                                                                                                                                                                         | 2001                                                                                | 2000                                                                                | 1999                                                                                | 1998                                                                                | 1997                                                                             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------
|Real Estate Loans - mortgage
                  - construction
Loans to farmers
Commercial and industrial loans
Loans to individuals for household
  family and other consumer
  expenditure
All other loans, including
  Overdrafts
  Gross Loans
    Less unearned income
   Less reserve for loan losses
    Net loans | $187,808
  28,324
   1,316
  44,351
  32,0152,800
 296,614
      (7)(3,763)$292,844 | $191,329
  20,590
   1,376
  45,929
  34,7751,698
 295,697
     (49)(3,782)$291,866 | $163,614
  21,013
   1,447
  45,742
  33,8641,736
 267,416
    (275)(3,451)$263,690 | $142,039
  15,560
   1,487
  36,393
  32,6691,951
 230,099
    (970)(3,132)$225,997 | $136,441
  19,653
   1,214
  34,606
  30,772140
 222,826
  (1,105)(2,879)$218,842



The Company's loan portfolio consisted of approximately $220,786 and $232,944 in fixed rate loans as of December 31, 2001 and 2000, respectively. At December 31, 2001, and 2000, fixed rate loans with maturities in excess of one year amounted to approximately $169,151 and $175,866, respectively. Variable rate loans are those on which the interest rate can be adjusted to changes in the Bank's prime rate.  Fixed rate loans are those on which the interest rate generally cannot be changed for the term of the loan.

18

---

RISK ELEMENTS

The following information relates to certain assets which are defined as risk elements by the Securities and Exchange Commission.  All loans which meet the criteria set forth by the Securities and Exchange Commission are detailed below, regardless  of the likelihood of collection in full or in part. All loans classified for regulatory purposes as loss, doubtful, substandard, or especially mentioned that have not been disclosed do not represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources or represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of such borrower to comply with the loan repayment terms.  As a matter of practice, loans which management has serious concerns about the borrower being able to pay are put into a non-accrual status and disclosed under Risk Elements. Management reviews these loans periodically and feels that the current reserve for possible loan losses adequately provides coverage for actual loss potential.  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, and restructured loans, in thousands of dollars, for the periods ended December 2001, 2000, 1999, 1998, 1997:



|                                                                                                                                                                  | 2001                | 2000               | 1999               | 1998               | 1997              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ------------------ | ------------------ | ------------------ | ------------------
|Nonaccrual loans
   Accruing loans which are
   contractually past due
   90 days or more as to
   principal or interest
   payments
   Restructured trouble debt | $  633
$   138
None | $  305
$  189
None | $  527
$  142
None | $  422
$  100
None | $   24
$  135
None

Information relating to interest income on nonaccrual and renegotiated loans outstanding for the year ended December 31, 2001, 2000, and 1999 is as follows:

|                                                                                                                            | 2001      | 2000      | 1999     
|--------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | ---------
|Interest included in income during the    year
   Interest which would have been included    at the original contract rates | $ 12
$ 66 | $ 10
$ 38 | $ 26
$ 46

Loans are placed in a non-accrual status when, in the opinion of management, the collection of additional interest is questionable. Thereafter no interest is taken into income unless received in cash or  until  such time as the borrower demonstrates the ability to pay principal and interest.

19

---

POTENTIAL PROBLEM LOANS

In addition to those loans disclosed under "Risk Elements", there are certain loans in the portfolio which are presently current but about which management has concerns regarding the ability of the borrower to comply with present loan repayment terms.  Management maintains a loan review of the total loan portfolio to identify loans where there is concern that the borrower will not be able to continue to satisfy present loan repayment terms.  Such problem loan identification includes the review of individual loans, loss experience, and economic conditions.  Problem loans include both current and past due loans.
As of December 31, 2001, loans which management had serious concerns about the borrower being able to repay were put into a non-accrual status which are disclosed under "Risk Elements".

FOREIGN OUTSTANDINGS

As of the year ended December 31, 2001, the Company had no foreign loans outstanding.

LOAN CONCENTRATIONS

As of the year ended December 31, 2001, the Company did not have any concentration of loans exceeding 10% of total loans which are not otherwise disclosed as a category of loans pursuant to Item III. A. of Guide 3.

OTHER INTEREST-BEARING ASSETS

As of December 31, 2001, the Company does not have any interest-bearing assets that would be required to be disclosed under Item III. C. 1. or 2. if such assets were loans.

20

---

SUMMARY OF LOAN LOSS EXPERIENCE

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

|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 | Year Ended December 31,2001  2000   1999  1998   1997                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------
|$294,837
$  3,782383
96470
     94910631168
$    305
$    644
$    625
$  3,763                                                                                                                                                                                                                                                                                                                                                                                                                                            | $284,431$  3,451186
134426
     7469219146
$    257
$    489
$    820
$  3,782
|Ratio of net charge-offs during the period
 to average loans outstanding during the
 period                                                                                                                                                                                                                                                                                                                                                                                                                                | .22%                                                                          

The reserve for loan losses is maintained at the greater of 1.20% of net loans or an amount that bears the same ratio to eligible loans as net charge-offs to average eligible loans over the past six years.  In addition, the Asset/ Liability Management Committee and the Loan Committee review the adequacy of the reserve quarterly and make recommendations as to the desired amount of the reserve.  Determination of the adequacy of the reserve is based on the above ratios and, but not limited to, considerations of classified and internally-identified problem loans, the current trend in delinquencies, the volume of past-due loans, and current or expected economic
conditions.

The Board of Directors maintains an independent Loan Review
function which has established controls and procedures to monitor loan portfolio
risk on an on-going basis.  Credit reviews on all major relationships are
conducted on a continuous basis as is the monitoring of past-due trends and
classified assets.  The function utilizes various methodologies in its
assessment of the adequacy of the Reserve for Loan Losses.  Three primary
measurements are reported to the Board of Directors on a quarterly basis, the
Graded Loan Method based on a bank-wide risk grading model, the Migration
Analysis Method which tracks risk patterns on charged-off loans for the previous
10 years, and the Historical Experience Method based on net charge-offs. 
Additionally, the function annually conducts an independent economic
assessment, addresses portfolio risk by industry concentration, reviews loan
policy changes and marketing strategies for any effect on portfolio risk, and
conducts tests addressing portfolio performance by type of portfolio, collateral
type, and loan officer performance.

Based upon all relevant factors, Management anticipates net
charge-offs to be approximately $750 during 2002.

21

---

DEPOSITS

AVERAGE DEPOSITS BY CLASSIFICATION

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

|                                                                                                                     | Years Ended December 31,                
|-------------------------------------------------------------------------------------------------------------------- | ----------------------------------------
|Noninterest bearing demand deposits
Interest bearing demand deposits
Savings deposits
Time deposits
  Total deposits | 2001
80,218
53,225
26,931252,714
413,088

AVERAGE RATES PAID ON DEPOSITS

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

|                                                                | Years Ended December 31,
|--------------------------------------------------------------- | ------------------------
|Interest bearing demand deposits
Savings Deposits
Time deposits | 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 or more, in thousands of dollars, at December 31, 2001:

|Maturity within 3 months or less
          Over 3 through 6 months
          Over 6 through 12 months
          Over 12 months
              Total | $28,479
 24,768
 11,9893,372$68,608
|-------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------

22

---

RETURN ON EQUITY AND ASSETS

The following table presents certain ratios relating to the Company's equity and 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 | 20011.28%
12.25%
38.96%
10.42%

SHORT-TERM BORROWINGS

Federal funds purchased and securities sold under repurchase agreements are short-term borrowings which generally mature within 90 days from the dates of issuance.  No other category of short-term borrowings had an average balance outstanding during the reported period which represented 30 percent or more of stockholders' equity at the end of the period.
The following is a summary of short-term borrowings at December 31 of each reported period, in thousands of dollars:

|                                                                              | December 31,
|----------------------------------------------------------------------------- | ------------
|Federal funds purchased
  and securities sold under agreement to   repurchase | 2001$32,821 

The following information relates to short-term borrowings outstanding during 2001, 2000, and 1999:
                         Maximum Amount        Weighted Average
                       Outstanding in Any        Interest Rate
                     Month  End  at December 31,                     2001 2000 1999  2001  2000  1999  Federal funds 
   purchased and
   securities sold
   under agreement
   to repurchase     $36,702 $34,263 $36,183   1.91% 5.00%  4.34%
                                       Year ended December 31,                                       2001   2000  1999  Federal funds purchased and
   securities sold under
   agreement to repurchase-
   average daily amount outstanding     $30,882   $30,851   $32,555
   Weighted average interest rate paid     3.46%     4.76%     4.15%

23

---

ITEM 2.   PROPERTIES

The Company's subsidiary, The Conway National Bank, has ten permanent offices in Horry County and one permanent office in Georgetown County, for a total of eleven offices.  The principal office, located at 1400 Third Avenue in Conway, houses the Bank's administrative offices and data processing facilities.  This three-story structure, which was significantly expanded in 1982, contains approximately 33,616 square feet.  In addition, the Bank has a 632 square foot building for express banking services adjacent to the principal office.  The Bank has a two-story office on Main Street in Conway containing 8,424 square feet. Bank offices are housed in one-story facilities at the Coastal Centre in Conway (3,500 square feet with an adjacent 675 square foot building for express banking services), Red Hill in Conway (3,760 square feet) West Conway in Conway (3,286 square feet) Surfside in Surfside Beach (6,339 square feet), Northside, north of Myrtle Beach (2,432 square feet), Socastee in the southern portion of Myrtle Beach (3,498 square feet), Aynor in The Town of Aynor (2,809 square feet), Myrtle Beach in the City of Myrtle Beach (12,000 square feet), and Murrells Inlet in Murrells Inlet, Georgetown County (3,600 square feet). Of the eleven offices, the bank owns the principal office, the office at Red Hill, West Conway, Surfside Beach, Northside, Main Street, Socastee, Aynor, Myrtle Beach, and Murrells Inlet.  One facility, Coastal Centre in Conway, is leased by the Bank under a long-term lease with renewal options. In addition to the existing facilities, the Company has purchased three future office sites.  The sites consist of 1.1 acres on Highway 701 north of Conway, 1.0 acres on Highway 17 in North Myrtle Beach, and 3.24 acres on Highway 9 west of North Myrtle Beach. Plans are being made to build an approximate 3,600 square foot office on the North Myrtle Beach site with a tentative opening date in October, 2002. The company anticipates building offices on the other sites within the next three to five years, depending on market conditions. Additionally, preliminary work is being done to build a new approximate 24,000 square foot retail office at the principal site and converting the existing 33,616 square foot building into an operations center.  Anticipated completion of this project is in the latter half of 2003.

ITEM 3.   LEGAL PROCEEDINGS

There were no material legal proceedings against the Company or its subsidiary, The Conway National Bank, as of December 31, 2001.
There were no administrative or judicial proceedings arising under Section 8 of the Federal Deposit Insurance Act.
There were no material proceedings to which any director, officer, or owner of record of more than 5% of the voting securities of the Company or any associate is a party adverse to the Company.
There are other legal proceedings pending against the Company or its subsidiary, The Conway National Bank, in the ordinary course of business. In the opinion of management, based upon the opinion of counsel, liabilities arising from these proceedings, if any, would not have a material adverse effect on the financial position of the Company.

24

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ITEM 4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

On May 8, 2001, at the Annual Meeting of CNB Corporation, the security holders:
1) Nominated and elected three directors to serve for a three-year
   term; and
2) Ratified  the  appointment of Elliott Davis, LLP as independent
   auditors for the  Company  and its subsidiary for the year ending December
   31, 2001.

PART II
ITEM 5.  MARKET PRICE OF REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS

As of December 31, 2001, there were approximately 723 holders of record of Company stock. There is no established market for shares of Company stock and only limited trading in such shares has occurred since the formation of the Company on June 10, 1985.  Most of the limited trading transactions have been effected through the efforts of officers of the Company in matching interested purchasers with shareholders who have expressed an interest in selling their shares of Company stock.  Some private trading of Company stock has occurred without any participation in the transaction by the officers of the Company other than to effect the transfer on the Company's shareholder records. Accordingly, management of the Company is not aware of the prices at which all shares of Company stock have traded. The following table sets forth the prices known to management of the Company at which shares of Company stock have traded in each quarter within the two most recent fiscal years adjusted for the effect of a 20% stock dividend paid during 2000.
                                          2001                2000
                                     High       Low       High      Low
                    First  Quarter  $100.00    $100.00   $ 91.25   $ 91.25
                    Second Quarter $104.00    $100.00   $ 95.00   $ 91.25
                    Third  Quarter  $104.00    $104.00   $ 95.00   $ 95.00
                    Fourth Quarter $107.00    $104.00   $100.00   $ 95.00
Holders of shares of Company stock are entitled to such dividends as may be declared from time to time by the Board of Directors of the Company. The Company paid an annual cash dividend of $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. The Company paid a 20% stock dividend in September 2000, a 25% stock dividend in September 1997, a 20% stock dividend in September 1994, a 50% stock dividend in July 1989, a 20% stock dividend in August 1987 and a 15% stock dividend in November 1985.  There can be no assurance, however, as to the payment of dividends by the Company in the future since payment will be dependent upon the earnings and financial condition of the Company and the Bank and other related factors.

25

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ITEM 6. SELECTED FINANCIAL DATA
CNB Corporation
FINANCIAL SUMMARY
(All Dollar Amounts, Except Per Share Data, in Thousands)

The following  table sets forth certain selected financial data relating to the Company and subsidiary and is qualified in its entirety by  reference to  the   more   detailed 
financial statements of the Company and subsidiary and notes thereto 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* | 2001

$ 33,96314,822
  19,141
     62518,516
   5,33714,606
   9,247
   2,812$  6,435$   9.00
$   3.50
 714,618

*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 | $505,725
 292,844
 162,106
   3,950
$ 88,995321,648
$410,643$ 53,996 | $471,076
 291,866
 131,190
   9,875
$ 76,342314,388
$390,730$ 48,606 | $455,702
 263,690
 144,019
  11,150
$ 72,728302,775
$375,503$ 43,712 | $426,359
 225,997
 141,203
  27,100
$ 66,303279,809
$346,112$ 41,201 | $381,144
 218,842
 123,423
  11,375
$ 55,422245,905
$301,327$ 37,717
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------------------------------------------------

26

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

"Management's Discussion and Analysis" is provided to afford a clearer understanding of the major elements of the Company's financial condition, results of operations, liquidity, and capital resources. The following discussion should be read in conjunction with the Company's financial statements and notes thereto and other detailed information appearing elsewhere in this report.Distribution of Assets and Liabilities
The Company maintains a conservative approach in determining the distribution of assets and liabilities.  Loans, net of unearned income, increased 10.7% from $267,141 at December 31, 1999 to $295,648 at December 31, 2000; and .3% from December 31, 2000 to $296,607 at December 31, 2001.  Loan growth is attributed to overall business development efforts to meet business and personal loan demand in our market area. Loan demand was strong in our market area in 2000 reflecting a strong local economy, but declined in 2001 due to recessionary pressures coupled with the effects of the September 11 terrorist attacks on consumer confidence.  Loans, net of unearned income, increased as a percentage of total assets from 58.6% at year-end 1999 to 62.8% at year-end 2000 and decreased to
58.6% at year-end 2001. Correspondingly, investment securities and federal funds sold decreased as a percentage of total assets from 34.1% at year-end 1999 to 29.9% at year-end 2000 and increased to 32.8% at year-end 2001 as investments have been utilized to balance the growth in loan outstandings.  Investments and federal funds sold provide for an adequate supply of secondary liquidity.  Year-end other assets as a percentage of total assets increased from 7.3% in 1999 and 2000 to
8.6% in 2001 due to the purchase of the existing Surfside Beach office site in early 2001. Management has sought to build the deposit base with stable, relatively non-interest-rate sensitive deposits by offering the small to medium account holders a wide array of deposit instruments at competitive rates. Non-interest-bearing demand deposits have grown from 16.0% at December 31, 1999 to 16.2% at December 31, 2000 and 17.6% at December 31, 2001.  Demand deposits are expected to decline over the long-term as more customers utilize interest-bearing deposit and repo accounts. Interest-bearing liabilities as a percentage of total assets have declined from 73.3% at December 31, 1999 to 72.3% at December 31, 2000 and 70.5% at December 31, 2001.
The following table sets forth the percentage relationship to total assets of significant components of the Company's balance sheet as of December 31, 2001, 2000 and 1999:

|Assets:
   Earning assets:
     Loans, net of unearned income
           Investment securities:
           Taxable
           Tax-exempt
     Federal funds sold and securities purchased
       under agreement to resell
     Other earning assets
        Total earning assets
     Other assets
        Total assets                                                                                         | December 31,2001     2000    1999           
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------
|58.6%
26.7 
5.3 
..8 - 
 91.4 
  8.6 
100.0%                                                                                                                                                                                                                                                                                                                                                                     | 62.8%
23.6 
4.2 
2.1 - 
 92.7 
  7.3 
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 | 63.6%
6.5 .4 
 70.5 17.6 
1.2 10.7 
100.0%  

27

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Results of Operation


CNB Corporation and subsidiary experienced earnings in 2001, 2000 and 1999 of $6,435, $6,311,and $6,105, respectively, resulting in a return of average assets of 1.28%, 1.36%, and 1.35% and a return on average stockholders' equity of 12.25%, 13.42% and 14.15%. The earnings were primarily attributable to favorable  net interest margins in each period (see Net Income-Net Interest Income). Other factors include management's ongoing 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, have supplied the necessary capital funds to support bank operations. Total assets were  $505,725 at December 31, 2001 as compared to $471,076 at December 31, 2000 and $455,702 at December 31, 1999. The following table sets forth the financial highlights for fiscal years 2001, 2000, and 1999.

28

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



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | December 31,
 2001                                                                                         | 2000
 to
 2001
Percent
Increase
(Decrease)                                            | December 31, 2000                                                                                          | 1999
 to
 2000
Percent
Increase
(Decrease)                                             | December 31,
1999                                                                                         
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------
|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, net of unearned income
Investment securities
Stockholders' equity
    Book value per share*
   (actual number of shares
    outstanding)
*Restated for stock dividend
Ratios (1):
Return on average total assets
Return on average stockholders'
  equity | $ 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% | (.6)%
..2  
2.0  
2.0  
..2  
-  
7.4% 
5.1  
..3  
23.6  
11.1  
10.9  
(5.9) 
(8.7) | $ 18,630
9,231
6,311
$   8.82
2,502
$   3.50
$471,076
390,730
295,648
131,190
48,606
$  67.98
1.36%
13.42% | 4.1% 
5.5  
3.4  
3.4  
19.9  
-  
3.4% 
4.1  
10.7  
(8.9) 
11.2  
11.2  
..7  
(5.2) | $ 17,904
9,181
6,105
$   8.53
2,086
$   3.50
$455,702
375,503
267,141
144,019
43,712
$  61.12
1.35%
14.15%

(1)  For the fiscal years ended December 31, 2001, 2000, and 1999, average total assets
amounted to $504,396, $462,360, and $453,571 with average stockholders' equity totaling $52,543, $47,025, and $43,146, respectively.

29

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NET INCOME


Net Interest Income - Earnings are dependent to a large degree on net interest income, defined as the difference between gross interest and fees earned on earning assets, primarily loans and investment securities, and interest paid on deposits and borrowed funds.  Net interest income is affected by the interest rates earned or paid and by volume changes in loans, investment securities, deposits, and borrowed funds.
The Bank maintained net interest margins in 2000 and 1999 of 4.6% and 4.5%,
respectively, which meet or exceed management's long-term target of 4.5%. However, the 2001 net interest margin fell
to 4.2% due to an unusually rapid decline in market interest rates lowering returns available on loans and investments while interest costs on liabilities did not decline as quickly due to strong competitive pressure.  We do expect a widening in the net interest margin in 2002.  Fully-tax-equivalent net interest income grew from $19,069 in 1999 to $19,847 in 2000 and shrank to 19,621 in 2001.  During the three-year period, total fully-tax-equivalent interest income increased by 8.0% from
$32,113 in 1999 to $34,672 in 2000 and decreased .7% in 2001 to $34,443.  Over the same period, total interest expense increased by 13.7% from $13,044 in 1999 to $14,825 in 2000 and showed little change to $14,822 in 2001. Fully-tax-equivalent net interest income as a percentage of average total earning assets was 4.5% in 1999, 4.6% in 2000 and decreased to 4.2% in 2001.
Interest rates paid on deposits and borrowed funds and earned on loans and investments have generally followed the fluctuations in market interest rates in 2001, 2000, and 1999. However, fluctuations in market interest rates do not necessarily have a significant impact on net interest income, depending on the Bank's rate sensitivity position.  A rate sensitive asset (RSA) is any loan or investment that can be repriced up or down in interest rate within a certain time interval.  A rate sensitive liability (RSL) is an interest paying deposit or other liability that can be repriced either up or down in interest rate within a certain time interval. When a proper balance between RSA and RSL exists, market interest rate fluctuations should not have a significant impact on earnings.  The larger the imbalance, the greater the interest rate risk assumed by the Bank and the greater the positive or negative impact of interest rate fluctuations on earnings. The Bank seeks to manage its assets and liabilities in a manner that will limit interest rate risk and thus stabilize long-run earning power. The following table sets forth the Bank's static gap rate sensitivity position at each of the time intervals indicated.  The table illustrates the Bank's rate sensitivity position on specific dates and may not be indicative of the position at other points in time. Management believes that a rise or fall in interest rates will not materially effect earnings.

Interest Rate Sensitivity Analysis

|                                                                                                                                                                                                                                                                                                                                                                                                            | 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 $633)
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
Federal Home Loan Bank Advances
Total RSL
RSA-RSL
Cumulative RSA-RSL
Cumulative RSA/RSL | 3,950
     075,82179,771     0
     0
32,289
     032,289
47,482
47,482
  2.47 | 0
  8,18420,81028,994 28,479
 43,365
    532
     8372,459(43,465)
  4,017
   1.04 | 0
  9,00012,61521,615 24,768
 24,068
      0
     8348,919(27,304)
(23,287)
    .85 | 0
 25,02917,58442,613 11,989
 41,406
      0
     8353,478(10,865)
(34,152)
    .84 | 0
105,622116,601222,223  3,372
 11,540
      0
    33015,242206,981
172,829
   1.78 | 0
 12,87752,55065,427      0
    388
      0
    9061,294 64,133
236,962
   2.06

30

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N

31

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LIQUIDITY
The bank's liquidity position is primarily dependent on short-term demands for funds caused by customer credit needs and deposit withdrawals and upon the liquidity of bank assets to meet these needs.  The bank's liquidity sources include cash and due from banks, federal funds sold and short-term investments.  In addition, the bank has established federal funds lines of credit from correspondent banks; has the ability, on a short-term basis, to borrow funds from the Federal Reserve System; and has a line of credit from the Federal Home Loan Bank of
Atlanta (see NOTE 8 - LINES OF CREDIT).  The Company has cash balances on hand of $5,248, $4,776, and $4,241 at December 31, 2001, 2000, and 1999 with liabilities, consisting of cash dividends payable, totalling $2,507, $2,502, and $2,086, respectively.  Management feels that liquidity sources are more than adequate to meet funding needs.OFF-BALANCE SHEET RISKThe Company, through the operations of the Bank, makes contractual
commitments to extend credit in the ordinary course of business.  These
commitments are legally binding agreements to lend money to customers of the
Bank at predetermined interest rates for a specified period of time.  In
addition to commitments to extend credit, the Bank also issues standby letters
of credit which are assurances to a third party that they will not suffer a loss
if the Bank's customer fails to meet its contractual obligation to a third
party.  At December 31, 2001, the Bank had issued commitments to extend
credit of $25.8 million and standby letters of credit of $3.5 million (see NOTE
10 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK).  The majority of
the commitments and standby letters of credit typically mature within one year
and past experience indicates that many of the commitments and standby letters
of credit will expire unused.  However, through its various sources of
liquidity, the Bank believes that it will have the necessary resources to meet
these obligations should the need arise.
Neither the Company nor the Bank is involved in other off-balance sheet
contractual relationships, unconsolidated related entities that have off-balance
sheet arrangements, or transactions that could result in liquidity needs or
other commitments or significantly impact earnings.Obligations under noncancelable operating lease agreements totaled $41
thousand at December 31, 2001.  These obligations are payable over several
years as shown in NOTE 11 - COMMITMENTS AND CONTINGENCIES.
CAPITAL RESOURCESTotal stockholders' equity was $53,996, $48,606, and $43,712 at December 31, 2001, 2000, and 1999, representing 10.68%, 10.32%, and 9.59% of total assets, respectively. At December 31, 2001, the Bank exceeds quantitative measures established by regulation to ensure capital adequacy (see NOTE 15 - REGULATORY MATTERS).  Capital is considered sufficient by management to meet current and prospective capital requirements and to support anticipated growth in bank operations.EFFECTS OF INFLATION
Inflation normally has the effect of accelerating the growth of both a bank's assets and liabilities.  One result of this inflationary effect is an increased need for equity capital.  Income is also affected by inflation.  While interest rates have traditionally moved with inflation, the effect on net income is diminished because both interest earned on assets and interest paid on liabilities vary directly with each other.  In some cases, however, rate increases are delayed on fixed-rate instruments.  Loan demand normally declines during periods of high inflation. Inflation has a direct impact on the Bank's non-interest expense. The Bank responds to inflation changes through readjusting non-interest income by repricing services.

32

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EFFECTS OF REGULATORY ACTIONThe Federal Deposit Insurance Corporation (FDIC) reduced FDIC insurance premium rates during  1995 which has had a positive effect on subsequent earnings and should favorably impact future year's income.  Effective March 11, 2000, the Gramm-Leach-Bliley Act of 1999 allows bank holding companies to elect to be treated as financial holding companies which may engage in a broad range of securities, insurance, and other financial activities.  At this time, neither the Company nor the Bank plan to enter these new lines of business.  The management of the Company and the Bank is not aware of any other current recommendations by the regulatory authorities which, if they were to be implemented, would have a material effect on liquidity, capital resources, or operations.ACCOUNTING ISSUES
Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a replacement of SFAS No. 125," was issued in September 2000.  It revised the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures but 3will carry over most of SFAs No. 125's provisions without reconsideration.  SFAS 140 is effective for transfers and servicing of financial assets and extinguishment of liabilities occurring after March 31, 2001.  This statement is effective for recognition and reclassification of collateral and for disclosures related to securitization transactions and collateral for fiscal years ending after December 15, 2000.   The adoption of the provisions of SFAS No. 140 in 2001 did not have a material effect on the Company.
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets."  SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001.  SFAS 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. SFAS No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142.  The Company was required to adopt the provisions of SFAS No. 141 immediately and must adopt SFAS No. 142 effective January 1, 2002.  The adoption of the provisions of SFAS No. 141 in 2001 did not have a material effect on the Company. The adoption of SFAS No. 142 is not expected to have a material effect on the Company.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."  This SFAS supercedes prior pronouncements associated with impairment or disposal of long-lived assets.  The SFAS establishes methodologies for assessing impairment of long-lived assets, including assets to be disposed of by sale or by other means.  This statement is effective for all fiscal years beginning after December 15, 2001.  This SFAS is not expected to have a material impact on the Company's financial position.
On July 2, 2001, The Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 102, "Selected Loan Loss Allowance Methodology and Documentation Issues". SAB 102 expresses the SEC's views on the development, documentation and application of a systematic methodology for determining the allowance for loan and lease losses in accordance with Generally Accepted Accounting Principles.  The Company believes that it is currently in compliance with the requirements of SAB 102.
Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

33

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RISKS AND UNCERTAINTIESIn the normal course of its business the Company encounters two significant types of risks: economic and regulatory.  There are three main components of economic risk: interest rate risk, credit risk and market risk.  The Company is subject to interest rate risk to the degree that its interest-bearing liabilities mature or reprice at different speeds, or on different basis, than its interest-earning assets.  Credit risk is the risk of default on the Company's loan portfolio that results from borrower's inability or unwillingness to make contractually required payments.  Market risk reflects changes in the value of collateral underlying loans receivable 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.  The Company also undergoes periodic examinations by the regulatory agencies, which may subject it to further changes with respect to asset valuations, amounts of required loss allowances and operating restrictions from the regulators' judgments based on information available to them at the time of their examination.QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKMarket risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises principally from interest rate risk inherent in its lending, deposit and borrowing activities.  Management actively monitors and manages its interest rate risk exposure.  In addition to other risks which the Company manages in the normal course of business, such as credit quality and liquidity risk, management considers interest rate risk to be a significant market risk that could potentially have a material effect on the Company's financial condition and results of operations (See Net Income - Net Interest Income).  Other types of market risks, such as foreign currency risk and commodity price risk, do not arise in the normal course of the Company's business activities.

34

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---

CNB CORPORATION AND SUBSIDIARY
CONWAY, SOUTH CAROLINA

|                                                                                                                                                                                                                                                                                                                    | PAGE                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------
|REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTSConsolidated balance sheets
   Consolidated statements of income
   Consolidated statements of stockholders' equity
   Consolidated statements of comprehensive income
   Consolidated statements of cash flowsNOTES TO FINANCIAL STATEMENTS | 36
37
38
39
40
41
42 - 58

-36-

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The Directors and StockholdersCNB CorporationConway, South Carolina
     We have audited the accompanying consolidated balance sheets of CNB Corporation and Subsidiary as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity, comprehensive income and cash flows for each of the years in the three year period ended December 31, 2001.  These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
     We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CNB Corporation and Subsidiary at December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.
Elliott Davis, LLP
January 18, 2002
Greenville, South Carolina

Internationally - Moore Stephens Elliott Davis, LLC
Members of the American Institute of Certified Public Accounts
870 S. PleasantburG Drive   Post Office Box 6286   Greenville, South Carolina 29606-6286
Telephone (864) 242-3370     Telefax (864) 232-7161
-37-

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CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED 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 $21,312 in 2001 and $42,506 in 2000)OTHER INVESTMENTS, AT COSTLOANSLess allowance for loan losses
      Net loansPREMISES AND EQUIPMENT
ACCRUED INTEREST RECEIVABLE
OTHER ASSETS
                                        LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIESDeposits
      Noninterest-bearing
      Interest-bearing
         Total deposits
   Federal Home Loan Bank advances
   Securities sold under repurchase agreements
   United States Treasury demand notes
   Other liabilities
         Total liabilitiesCOMMITMENTS AND CONTINGENT LIABILITIES -Notes 10 and 11STOCKHOLDERS' EQUITYCommon stock - $10 par value; authorized 1,500,000 shares;
      issued 718,246 shares in 2001 and 2000
   Capital in excess of par value of stock
   Retained earnings
   Accumulated other comprehensive income 
   Less 2,134 in 2001 and 3,256 in 2000 shares held in Treasury at cost
         Total stockholders' equity | 2001
$  27,895 
3,950 
140,007 
20,705 
1,394 
296,607 (3,763)
292,844 
11,285 
4,482 3,163 $ 505,725
$  88,995 321,648 
410,643 
1,485 
32,821 
653 6,127 451,729 
7,182 
34,774 
10,826 1,435 
54,217 (221)53,996 $505,725

The accompanying notes are an integral part of these consolidated financial statements.-38-

---

CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED 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 incomeINTEREST EXPENSEDeposits
   Securities sold under repurchase agreements
   Federal Home Loan Bank advances
   United States Treasury demand notes
         Total interest expense
         Net interest incomePROVISION FOR LOAN LOSSES         Net interest income after provision for loan lossesNONINTEREST INCOME   Service charges on deposit accounts
   Other service and exchange charges
   Gain on sale of investment securities available for sale
         Total noninterest incomeNONINTEREST EXPENSES   Salaries and wages
   Pensions and other employee benefits
   Occupancy
   Furniture and equipment
   Liability insurance
   Office supplies
   Credit card operations
   Other operating expenses
         Total noninterest expenses
         Income before provision for income taxesPROVISION FOR INCOME TAXES         Net incomeNET INCOME PER SHARE OF COMMON STOCK | 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 
74 
447 
863 2,064 14,606 
9,247 2,812 $  6,435 $    9.00

The accompanying notes are an integral part of these consolidated financial statements.
-39-

---

CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 2001, 2000, and 1999
(amounts, except share data, in thousands)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Common stockShares     Amount                                           | Capital in  
excess of  
par value  of stock                 | Retainedearnings                                                                   | Accumu-
lated
other
compre-
hensive
 income(loss)                                                                     | Treasurystock                                                                                                                        | Total 
stock-
holders'equity                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------
|BALANCE, DECEMBER 31, 1998   Net income
   Cash dividend, $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 $957BALANCE, DECEMBER 31, 1999   Net income
   Cash dividend, $3.50 per share
   Six-for-five stock split effected in
     the form of a stock dividend
   Cash in lieu of fractional shares on 
     stock split
   Treasury stock transactions, net
   Gain on sale of treasury stock
   Net change in unrealized holding 
     loss, net of income taxes of $739BALANCE, DECEMBER 31, 2000   Net income
   Cash dividend, $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 $891BALANCE, DECEMBER 31, 2001 | 598,681
-
-
-
--
598,681
-
-
119,565
-
-
--
 718,246
-
-
-
-
 - 718,246 | $5,987
-
-
-
--
5,987
-
-
1,195
-
-
--
7,182
-
-
-
--$ 7,182 | $ 24,538 
- 
- 
- 
8 - 
24,546 
-
-
10,163
-
-
23- 34,732 
- 
- 
- 
42 
 - $34,774 | $ 10,448 
6,105 
(2,086)
- 
- - 
14,467 
 
6,311 
(2,502)
(11,358)
(20)
- --   6,898 
6,435 
(2,507)
-  
-  - $10,826 | $   425   
-   
-   
-   
-   (1,436)  
(1,011)  
-   
-   
-   
-   
-   
-   1,109       98   
-   
-   
-   
-   1,337   
 $1,435 | $ (197)
- 
- 
(80)
- - 
(277)
- 
- 
- 
- 
(27)
- -  (304)
- 
- 
83 
- - $ (221)

The accompanying notes are an integral part of these consolidated financial statements.
-40-

---



|                                                                                                                                                                                                                          | For the years ended December 31,     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------
|NET INCOME
OTHER COMPREHENSIVE INCOME, NET OF TAXUnrealized holding (losses) gains on investment securities
      available for sale
   Reclassification adjustments for gains included in net incomeCOMPREHENSIVE INCOME | 2001$    6,435 
1,506 (169)$    7,772

The accompanying notes are an integral part of these consolidated financial statements.
-41-

---

CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | For the years ended December 31,                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|OPERATING ACTIVITIESNet 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
      (Gain) 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 activitiesINVESTING ACTIVITIESProceeds from sales of investment securities available for sale
   Proceeds from maturities and calls of investment securities held to maturity
   Proceeds from maturities of investment securities available for sale
   Purchases of investment securities available for sale
   Purchases of investment securities held to maturity
   Net decrease in federal funds sold
   Net increase in loans
   Premises and equipment expenditures
            Net cash used for investing activitiesFINANCING ACTIVITIES   Dividends paid
   Net increase in deposits
   Increase (decrease) in securities sold under repurchase agreements
   Proceeds from Federal Home Loan Bank advances
   Repayments of Federal Home Loan Bank advances
   Increase (decrease) in United States Treasury demand notes
   Treasury stock transactions, net
   Cash paid in lieu of fractional shares on stock split
            Net cash provided by financing activities
            Net increase (decrease) in cash and due from banksCASH AND DUE FROM BANKS, BEGINNING OF YEAR
CASH AND DUE FROM BANKS, END OF YEAR
CASH PAID FOR   Interest
   Income taxes | 2001$   6,435 
650 
625 
(267)
- 
(169)
617 
(265)(14)7,612 
11,382 
21,510 
44,192 
(105,602)
- 
5,925 
(1,667)(2,140)(26,400)
(2,502)
19,913 
10,254 
- 
(165)
(1,181)
125 - 26,444 
7,656 20,239 $  27,895$  15,216 $    2,815

The accompanying notes are an integral part of these consolidated financial statements.
-42-

---

CNB CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
           Principles of consolidation and nature of operations

The consolidated financial statements include the accounts ofCNB Corporation ("the Company") and its wholly-owned subsidiary, The Conway National Bank ("the Bank").  The Company operates as one business segment.  All significant intercompany balances and transactions have been eliminated.  The Bank operates under a national bank charter and provides full banking services to customers.  The Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.  The Company is subject to regulation by the Federal Reserve Board.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the consolidated balance sheets and the consolidated statements of income for the periods covered.  Actual results could differ from those estimates.

Concentrations of credit risk

The Company, through its subsidiary, makes commercial and personal loans to individuals and small businesses located primarily in the South Carolina coastal region.  The Company has a diversified loan portfolio and the borrowers' ability to repay their loans is not dependent upon any specific economic sector.

Cash and cash equivalents

For purposes of the statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "Cash and Due from Banks".  Cash and cash equivalents have an original maturity of three months or less.

Investment securities

The Company accounts for investment securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities."  This statement requires that the Company classify debt securities upon purchase as available for sale, held to maturity or trading.  Such assets classified as available for sale are carried at fair value.  Unrealized holding gains or losses are reported as a component of stockholders' equity (accumulated other comprehensive income (loss)) net of deferred income taxes.  Securities classified as held to maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts into interest income using a method which approximates a level yield.  To qualify as held to maturity the Company must have the intent and ability to hold the securities to maturity.  Trading securities are carried at market value.  The Company has no trading securities.  Gains or losses on disposition of securities are based on the difference between the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method.

(Continued)

-43-

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued

Loans and interest income

Interest on loans is accrued and recognized based upon the interest method.

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

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

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

Allowance for loan losses

The allowance for loan losses is based on management's ongoing evaluation of the loan portfolio and reflects an amount that, in management's opinion, is adequate to absorb losses in the existing portfolio.  In evaluating the portfolio, management takes into consideration numerous factors, including current economic conditions, prior loan loss experience, the composition of the loan portfolio, and management's estimate of anticipated credit losses.  Loans are charged against the allowance at such time as they are determined to be losses.  Subsequent recoveries are credited to the allowance.  Management considers the year-end allowance appropriate and adequate to cover possible losses in the loan portfolio; however, management's judgment is based upon a number of assumptions about future events, which are believed to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the allowance for loan losses will not be required.

Non-performing assets

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

Premises and equipment

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

(Continued)

-44-

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued

Advertising expense

Advertising, promotional and other business development costs are generally expensed as incurred.  External costs incurred in producing media advertising are expensed the first time the advertising takes place.  External costs relating to direct mailing costs are expensed in the period in which the direct mailings are sent. Advertising, promotional and other business development costs of $294,000, $357,000 and $285,000, were included in the Company's results of operations for 2001, 2000, and 1999, respectively.

Income taxes

Income taxes are accounted for in accordance with SFAS No. 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 financial statement expense, or income is reported for financial statement purposes prior to being reported for tax purposes).  In addition, deferred tax assets are recognized on all deductible temporary differences (reversing differences where financial statements expense initially exceeds tax deductions, or income is reported for tax purposes prior to being reported for financial statement purposes). Valuation allowances are established to reduce deferred tax assets if it is determined to be "more likely than not" that all or some portion of the potential deferred tax assets will not be realized.

Reclassifications

Certain amounts in the financial statements for the year ended December 31, 2000 and 2001 have been reclassified, with no effect on net income to be consistent with the classifications adopted for the year ended December 31, 2001.

Net income per share

The Company computes net income per share in accordance with SFAS No. 128, "Earnings Per Share."  Net income per share is computed on the basis of the weighted average number of common shares outstanding:  714,618 in 2001, 715,656 in 2000, and 716,209 in 1999.  The Company does not have any dilutive instruments and therefore only basic net income per share is presented.

Fair values of financial instruments

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

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

Cash and due from banks - The carrying amounts of cash and due from banks (cash on hand, due from banks and interest bearing deposits with other banks) approximate their fair value.

Federal funds sold - The carrying amounts of federal funds sold approximate their fair value.

Investment securities available for sale and held to maturity - Fair values for investment securities are based on quoted market prices.

Other investments - No ready market exists for Federal Reserve and Federal Home Loan Bank Stock and they have no quoted market value.  However, redemption of this stock has historically been at par value.

(Continued)

-45-

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued

Fair values of financial instruments, continued

Loans - For variable rate loans that reprice frequently and for loans that mature within one year, fair values are based on carrying values.  Fair values for all other loans are estimated using discounted cash flow analyses, with interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.  Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

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

Short-term borrowings - The carrying amounts of borrowings under repurchase agreements, federal funds purchased, short-term Federal Home Loan Bank advances and U. S. Treasury demand notes approximate their fair values.

Federal Home Loan Bank advances - Fair values of Federal Home Loan Bank advances are based on a discounted cash flow analysis comparing existing rates on the Company's advances to current rates offered on advances of similar maturities.

Off balance sheet instruments - Fair values of off balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.

Recently issued accounting standards

Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a replacement of SFAS No. 125, " was issued in September 2000. It revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures but will carry over most of SFAS No. 125's provisions without reconsideration. SFAS 140 is effective for transfers and servicing of financial assets and extinguishment of liabilities occurring after March 31, 2001. This statement is effective for recognition and reclassification of collateral and for disclosures related to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of the provisions of SFAS No. 140 in  2001 did not have a material effect on the Company.
In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. SFAS No. 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142.  The Company was required to adopt the provisions of SFAS No. 141 immediately and must adopt SFAS No. 142 effective January 1, 2002. The adoption of the provisions of SFAS No. 141 in  2001 did not have a material effect on the Company.  The adoption of SFAS No. 142 is not expected to have a material effect on the Company.

(Continued)

-46-

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued

Recently issued accounting standards, continued

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
 Assets."  This SFAS supercedes prior pronouncements associated with impairment or disposal of long-lived
 assets.
   The SFAS establishes methodologies for assessing impairment of long-lived assets, including assets to be
disposed of by sale or by other means.  This statement is effective for all fiscal years beginning
after December 15,  2001.  This SFAS is not expected to have a material impact on the Company's financial position.
On July 2, 2001, The Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin (SAB") No.
 102, "Selected Loan Loss Allowance Methodology and Documentation Issues".  SAB 102 expresses the SEC's views on the development, documentation and application of a systematic methodology for determining the
allowance for loan and lease losses in accordance with Generally Accepted Accounting Principles.  The
Company believes that it is currently in compliance with the requirements of SAB 102.
Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board
that
do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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

NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS

The Bank is required to maintain average reserve balances either at the Bank or on deposit with the Federal Reserve Bank.  The average amounts of these reserve balances for the years ended December 31, 2001 and 2000 were approximately $9,103,000 and $8,852,000, respectively.

-47-

---

NOTE 3 - INVESTMENT SECURITIES

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | December 31, 2001
  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
      After ten years
   Other 
      CRA Qualified Investment Fund
      Total available for saleHELD 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
$    9,927
96,65214,612121,191
3,652
11,64085416,146278$137,615$    3,0137,01110,024
1,570
5,9313,18010,681$   20,705

(Continued)

-48-

---

NOTE 3 - INVESTMENT SECURITIES, Continued

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | December 31, 2000
  Amortized          Unrealized Holding                Fair                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|AVAILABLE FOR SALE
   United States Treasury
      Within one year
   Federal Agencies
      Within one year
      One to five years
   State, county and municipal
      One to five years
      Six to ten years
      After ten years
   Other 
         CRA Qualified Investment Fund
      Total available for saleHELD TO MATURITY
   United States Treasury
      Within one year
   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$   14,066
25,05941,51766,576
453
4,7111,3576,521254$   87,417$     1,006
13,02615,082
     28,108
2,415
6,3224,364
     13,101$   42,215



-49-

---

NOTE 3 - INVESTMENT SECURITIES, Continued

OTHER INVESTMENTS, AT COST, Continued

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

December 31,Federal Reserve Bank
Federal Home Loan Bank of Atlanta
2001
$     1161,278$  1,394
2000
$     1161,278$  1,394




NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES

Following is a summary 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
2001
$  187,808
28,324
44,351
32,008
1,3162,800$296,607
2000
$  191,329
20,590
45,929
34,726
1,3761,698$ 295,648


The Bank's loan portfolio consisted of $220,786,000 and $232,944,000 in fixed rate loans as of December 31, 2001 and 2000, respectively.  Fixed rate loans with maturities in excess of one year amounted to $169,151,000 and $175,866,000 at December 31, 2001 and 2000, respectively.  The Bank has an available line of credit from the Federal Home Loan Bank of Atlanta.  Securing the line is a blanket lien on qualifying 1-4 family mortgages.

Changes in the allowance for loan losses are summarized as follows (tabular amounts in thousands):

For the years ended December 31,

2001
2000
1999Balance, 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
$   3,782 
305 
625 (949)$   3,763
$  3,451 
257 
820 (746)$  3,782
$  3,132 
340 
795 (816)$  3,451


At December 31, 2001 and 2000, non-accrual loans totaled $633,000 and $305,000, respectively.  The total amount of interest earned on non-accrual loans was $12,000 in 2001, $10,000 in 2000, and $26,000 in 1999.  The gross interest income which would have been recorded under the original terms of the non-accrual loans amounted to $66,000 in 2001, $38,000 in 2000, and $46,000 in 1999.  As of December 31, 2001 and 2000, the Company had no impaired loans.

-50-

---

NOTE 5 - PREMISES AND EQUIPMENT     Premises and equipment at December 31 is summarized as follows (tabular amounts in thousands):

2001
2000Land and buildings
Furniture, fixtures and equipment
Less accumulated depreciation and amortization
Construction in progress
$  14,0976,175
20,2728,992
11,2805$11,285
$  12,2675,82618,0938,3599,73461$   9,795


Depreciation and amortization of premises and equipment charged to operating expense totaled $650,000 in 2001, $586,000 in 2000, $576,000 in 1999.

NOTE 6 - DEPOSITS     A summary of deposits, by type, as of December 31 follows (tabular amounts in thousands):

2001
2000Transaction accounts
Savings deposits
Insured money market accounts
Time deposits over $100,000
Other  time deposits
       Total deposits
$ 139,395
29,237
52,636
68,608120,767$410,643
$ 126,536
25,182
39,122
85,981113,909$390,730


Interest paid on certificates of deposit of $100,000 or more totaled $4,627,000 in 2001, $3,915,000 in 2000, and $3,513,000 in 1999.

At December 31, 2001 the scheduled maturities of time deposits are as follows (dollar amounts in thousands):

2002
             2003
             2004
             2005
$  174,075
9,480
5,432388$189,375


NOTE 7 - FHLB ADVANCES AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

At and for the year endedDecember 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
2001$   32,821   30,882   36,702   
1.91%3.46%
2000
$   22,567   30,851   34,263   
5.00%
4.76%


(Continued)

-51-

---

NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS, Continued

The Bank enters into sales of securities under agreements to repurchase. These obligations to repurchase securities sold are reflected as liabilities in the consolidated balance sheets.  The dollar amount of securities underlying the agreements are book entry securities maintained at the Federal Reserve Bank of Richmond.  U. S. Government securities with a book value of $37,599,000 ($38,631,000 fair value) and $38,592,000 ($38,626,000 fair value) at December 31, 2001 and 2000, respectively, are used as collateral for the agreements.

The Bank has an outstanding advance with the FHLB totaling $1,485,000 and $1,650,000 at December 31, 2001 and 2000, respectively.  At December 31, 2001, the advance bears interest at  7.01 percent and matures on October 18, 2010.

NOTE 8 - LINES OF CREDIT

At December 31, 2001, the Bank had unused short-term lines of credit totaling $23,000,000 to purchase Federal Funds from unrelated banks.  These lines of credit are available on a one to seven day basis for general corporate purposes of the Bank.  All of the lenders have reserved the right to withdraw these lines at their option.
      The Bank has a demand note through the U.S. Treasury, Tax and Loan system with the Federal Reserve Bank of Richmond.  The Bank may borrow up to $7,000,000 under the arrangement at an interest rate of 1.40 percent. The note is secured by U.S. Treasury Notes with a market value of $6,295,000 at December 31, 2001.  The amount outstanding under the note totaled $653,000 and $1,834,000 at December 31, 2001 and 2000, respectively.

For the years ended December 31,

2001
2000
1999Tax 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$ 3,144 
(352)
193 (173)$2,812
%34.0%
(3.8) 
 2.1  (1.9) 30.4%
Amount$ 3,138
(253)
188 (153)$ 2,920
% 34.0%
(2.7)  
2.0   (1.6)   31.7%
Amount$ 3,122 
(242)
183 13 $ 3,076
% 34.0%  
(2.6)    
2.0     0.1     33.5%




-52-

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NOTE 9 - INCOME TAXES, Continued

The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

|                                                                                                                                                                                                                                                                                                                                                                                                                                     | December 31,                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------
|Deferred tax assets:Allowance for loan losses deferred for tax purposes
   Other
      Gross deferred tax assets
      Less valuation allowance
      Net deferred tax assetsDeferred 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 asset (liability) | 2001
$ 1,443 255 
1,698 835 863 
(957)(351)(1,308)$  (445)



A portion of the change in net deferred taxes relates to the change in unrealized net gains and losses on securities available for sale.  The related 2001 deferred tax expense of $891,000 and the 2000 deferred tax expense of $739,000 have been recorded directly to stockholders' equity.  The balance of the change in net deferred taxes results from the current period deferred tax benefit.
      The following summary of the provision for income taxes includes tax deferrals which arise from temporary differences in the recognition of certain items of revenue and expense for tax and financial reporting purposes (amounts in thousands):

For the years ended December 31,

Income taxes currently payable
  Federal
  State
Deferred income taxes
    Provision for income taxes
2001
$   2,742 292 
3,034 (222)$   2,812
2000
$   2,933 285 3,218 (298)$   2,920
1999
$   2,910 278 3,188 (112)$   3,076


-53-

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NOTE 10 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK

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

The contract value of the Bank's off balance sheet financial instruments is as follows as of December 31, 2001 (amounts in thousands):

Commitments to extend credit
Standby letters of credit
Contractamount$25,819
$ 3,488


Commitments to extend credit are agreements to lend as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Bank evaluates each customer's creditworthiness on a case-by-case basis.  The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on management's credit evaluation.NOTE 11 - COMMITMENTS AND CONTINGENCIES
      At December 31, 2001, the Bank was obligated under a number of non-cancelable operating leases on land used for branch offices and a computer maintenance contract that had initial or remaining terms of more than one year. Future minimum payments under these agreements at December 31, 2001 were (tabular amounts in thousands):

Payable in year ending      2002
      2003
      2004
      2005
      2006 
      2007 and thereafter
         Total future minimum payments required
Amount
$    16
       5
       5
       4
       47$    41


Lease payments under all operating leases charged to expense totaled $25,000 in 2001, $60,000 in 2000 and $92,900 in 1999.  The leases provide that the lessee pay property taxes, insurance and maintenance cost.
      The Company is party to 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 financial position.

-54-

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NOTE 12 - RESTRICTION ON DIVIDENDS

The ability of the Company to pay cash dividends is dependent upon receiving cash in the form of dividends from the Bank.  Federal banking regulations restrict the amount of dividends that can be paid and such dividends are payable only from the retained earnings of the Bank.  At December 31, 2001 the Bank's retained earnings were $10,826,000.

NOTE 13 - TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND ASSOCIATES

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

Total loans to all executive officers and directors, including immediate family and business interests, at December 31, were as follows (tabular amounts in thousands):

|                                                                                  | December 31,             
|--------------------------------------------------------------------------------- | -------------------------
|Balance, beginning of year
   New loans
   Less loan paymentsBalance, end of year | 2001
$ 1,215237282$ 1,170

NOTE 14 - EMPLOYEE BENEFIT PLAN

The Bank has a defined contribution pension plan covering all employees who have attained age twenty-one and have a minimum of one year of service.  Upon ongoing approval of the Board of Directors, the Bank matches one-hundred percent of employee contributions up to three percent of employee salary deferred and fifty percent of employee contributions in excess of three percent and up to five percent of salary deferred.  The Board of Directors may also make discretionary contributions to the Plan.  For the years ended December 31, 2001, 2000, and 1999, $426,000, $404,000 and $423,000, respectively, were charged to operations under the plan.
         Supplemental benefits are provided to certain key officers under The Conway National Bank Executive Supplemental Income Plan (ESI) and the Long-Term Deferred Compensation Plan (LTDC).  These plans are not qualified under the Internal Revenue Code.  The plans are unfunded.  However, certain benefits under the ESI Plan are informally and indirectly funded by insurance policies on the lives of the covered employees.

-55-

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NOTE 15 - REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
         Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.  Management believes, as of December 31, 2001, that the Bank meets all capital adequacy requirements to which it is subject.As of December 31, 2001, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the Bank's category.  The Bank's actual capital amounts and ratios and minimum regulatory amounts and ratios are presented 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, 2001
  Total Capital (to risk
    weighted assets)
  Tier I Capital (to risk
    weighted assets)
  Tier I Capital (to average assets)As of December 31, 2000
  Total Capital (to risk
    weighted assets)
  Tier I Capital (to risk
    weighted assets)
  Tier I Capital (to average assets) | Amount$   52,540
     48,777
     48,777$   48,965
     45,191
     45,191 | Ratio16.62 %
15.43   
  9.69   16.22 %
14.97    
  9.79      | Amount$   25,286
     12,643
     20,134
$   24,151
     12,076
     18,457                     



---

NOTE 16 - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTSThe estimated fair values of the Company's financial instruments were as follows at December 31 (amounts in thousands):

|                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2001Carrying  Fair                                                                          | 2000   Carrying  Fair                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------
|FINANCIAL ASSETS    Cash and due from banks
    Federal funds sold
    Investment securities available for sale
    Investment securities held to maturity
    Other investments
    LoansFINANCIAL LIABILITIES    Deposits
    Federal Home Loan Bank advances
    Securities sold under repurchase agreements
    U.S. Treasury demand notesOFF BALANCE SHEET INSTRUMENTS    Commitments to extend credit
    Standby letters of credit | Amount
$    27,895
3,950
140,007
20,705
1,394
296,607
410,643
1,485
32,821
653
25,819
3,488 | Value$    27,895
3,950
140,007
21,312
1,394
294,012
411,150
1,615
32,821
653
25,819
3,488

NOTE 17 - PARENT COMPANY INFORMATION

Following is condensed financial information of CNB Corporation (parent company only) (amounts in thousands):

CONDENSED BALANCE SHEETS

|                                                                                                                                                                                        | December 31,                                                   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------
|ASSETSCash
   Investment in subsidiary
   Land
   Other assetsLIABILITIES AND STOCKHOLDERS' EQUITY   Dividends payable
   Stockholders' equity (net of $221 and $304 of treasury stock) | 2001$    5,24850,212
1,00637$  56,503
$    2,50753,996$  56,503

-57-

---

NOTE 17 - PARENT COMPANY INFORMATION, Continued

CONDENSED STATEMENTS OF INCOME

|                                                                                                                                                                                                               | For the years ended December 31,      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------
|INCOME   Dividend from bank subsidiaryEXPENSES   Sundry
      Income before equity in undistributed
         net income of bank subsidiaryEQUITY IN UNDISTRIBUTED NET INCOME OF 
   SUBSIDIARY      Net income | 2001$     2,90354
2,8493,586$    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 activitiesINVESTING ACTIVITIES   Purchase of land
   Proceeds from the sale of land
         Net cash used for investing activitiesFINANCING ACTIVITIESDividends paid
   Cash in lieu of fractional shares on stock split
   Treasury stock transactions, net
         Net cash used for financing activities
         Net increase (decrease) in cashCASH, BEGINNING OF THE YEAR
CASH, END OF THE YEAR | 2001$   6,435 (3,586)2,849 
- - - 
(2,502)
- 125 (2,377)
472 4,776 $   5,248

-58-

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NOTE 18 - QUARTERLY FINANCIAL DATA (UNAUDITED)      Unaudited condensed financial data by quarter for 2001 and 2000 is as follows (amounts, except per share data, in thousand):

|                                                                                                                                                                                                                                                                                                             | Quarter ended                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                             | March 31                                                                                         
|2001Interest 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 | $   8,907 4,404 
4,503 190 
4,313 
1,133 3,465 
1,981 615 $  1,366 $    1.91 
 714,790           
|                                                                                                                                                                                                                                                                                                             | Quarter ended                                                                                    
|                                                                                                                                                                                                                                                                                                             | March 31                                                                                         
|2000Interest 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 | $    8,301  3,420  4,881  240  4,641  
1,027  3,332  2,336  771  $    1,565  $      2.19  715,906

ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

---

PART III
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTMANAGEMENT OF THE COMPANY

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

|Name (Age) | DirectorSince | Proposed
TermExpires | Present
Principal
Occupation | Company
  Stock OwnedNumber      %
|---------- | ------------- | -------------------- | ---------------------------- | ----------------------------------

|Willis J. Duncan
     (74)
W. Jennings Duncan
     (46)
James W. Barnette, Jr.
     (56)
*Harold G. Cushman, Jr.
     (72)
*H. Buck Cutts
     (60)
Paul R. Dusenbury
(43)
*G. Heyward Goldfinch
     (83)
*Robert P. Hucks
     (56) | 1958
1984
1984
1963
Has not 
served on
the Board
of Directors.
1997
1976
1993 | 2003
2004
2004
2005
2005
2003
2005
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.
Attorney in private
practice in Surfside
Beach, South Carolina.
Treasurer.  Vice
President and Cashier
of the Bank since 1988.
Retired.  Director of
Goldfinch's, Inc.,
a funeral home, and of
Hillcrest Cemetery of
Conway, Incorporated.
Executive Vice
President.  Served as
Vice President and
Cashier of the Bank
from 1985 to 1988. | 31,187(1)
 26,930(2)
  5,829(3)
 24,982(4)
 16,446(5)
 
  1,102(6)
  3,912(7)
 2,228(8) | 4.36
3.76
 .82
3.49
2.30
 .15
 .55
 .31
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ---------------------------------------

60

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

|Name (Age)                                                                                  | DirectorSince  | Proposed
TermExpires | Present
Principal
Occupation                                                                                                                                                                                                                                                                                        | Company
  Stock OwnedNumber      %
|------------------------------------------------------------------------------------------- | -------------- | -------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------
|Richard M. Lovelace, Jr.
     (55)
John K. Massey
     (87)
*Howard B. Smith, III
     (53) | 1984
1959
1993 | 2003
2004
2005       | 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. | 1,495(9)
 5,666(10)
 3,632        

* Nominee for election to the Board of Directors.

61

---

Except as indicated below, each director or director nominee of the company has sole voting and investment power with respect to all shares of Company stock owned by such director or director nominee.  Each director or director nominee resides in Conway, South Carolina with the exceptions of Harold G. Cushman, H. Buck Cutts, and Paul R. Dusenbury who reside in Myrtle Beach, Surfside Beach, and Aynor, respectively, which are within Horry County, South Carolina.  The address of each director or director nominee is c/o The Conway National Bank, Post Office Drawer 320, 1400 Third Avenue, Conway, South Carolina 29528.  All Directors and officers of the Company and its subsidiary, The Conway National Bank, as a group (42 persons), own 147,813 (20.6%) shares of Company stock.
       (1) Includes 12,632 shares held by Harriette B. Duncan (wife).
       (2) Includes 1,665 shares held by Robin 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 Willis Jennings Duncan, V (son); and 3,632 shares by Margaret Brunson Duncan (daughter).
       (3) Includes 4,826 shares held by Janet J. Barnette (wife).
       (4) Includes 21,000 shares held by the Cushman Family Limited partnership; 488 shares held by Dianne C. Cushman (wife); 657 shares held by Frances Faison Cushman (daughter); 657 shares held by 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 by Brenda M. Cutts (wife); 1,172 shares held by Claire Cutts Abbot (daughter); and 1,172 shares held by Emeline E. Cutts (daughter).
       (6) Includes 208 shares held by Jennifer S. Dusenbury (wife); 65 shares held by Elena Cox Dusenbury (daughter); and 65 shares held by Sarah Cherry Dusenbury (daughter). 
       (7) Includes 988 shares held by George Heyward Goldfinch (son); 350 shares held by Merilyn Goldfinch Cain (daughter); and 250 shares held by Cynthia Goldfinch Turner (daughter).
       (8) Includes 400 shares held by Willie Ann Hucks (wife); 30 shares held by Mariah J. Hucks (daughter); 74 shares held by Norah Leigh Hucks (daughter); and 224 shares held by Robert P. Hucks, II (son).
       (9) Includes 434 shares held by Rebecca S. Lovelace (wife); 518 shares held by Richard Blake Lovelace (son); and 423 shares held by Macon B. Lovelace (son).
      (10) Includes 1,586 shares held by Bertha T. Massey (wife). 
       Each director or director nominee of the Company has been engaged in his principal occupation of employment as specified above for five (5) years or more unless otherwise indicated.
       W. Jennings Duncan is Willis J. Duncan's son.  No other family relationships exist among the above named directors or officers of the Company.  No director owns 25% or more of a publicly traded company.  None of the directors of the Company holds a directorship in any company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of that act or in any company registered as an investment company under the Investment Company Act of 1940, as amended.

62

---

The Board of Directors of the Company, as originally constituted, was classified into three (3) classes with each class consisting of five (5) directors. Five (5) directors in Class II will be elected at the 2002 Annual Meeting to serve for a three (3) year term. Directors in Class III will be elected at the 2003 Annual Meeting to serve for a three (3) year term and Directors in Class I will be elected at the 2004 Annual Meeting to serve for a three (3) year term. Currently, there are ten (10) Directors, with four (4) directors in Class II. The Board of Directors has passed a resolution increasing the total number of Directors from ten (10) to eleven (11).
       The Board of Directors of the Company serves 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 of Directors meets on a monthly basis.
       The Board of Directors of the Bank has an Executive Committee that meets when necessary between scheduled meetings of the Board of Directors.  The Executive Committee recommends to the Board of Directors the appointment of officers; determines officer compensation subject to Board approval; reviews employee salaries; considers any director nominee submitted by the shareholders; and addresses any other business as is necessary which does not come under the authority of other committees on the Board of Directors. The Executive Committee will consider any nominee to the Board of Directors submitted by the shareholders, provided shareholders intending to nominate director candidates for election deliver written notice thereof to the Secretary of the Company not later than (i) with respect to at election to be held at an Annual Meeting of shareholders, ninety (90) days prior to the anniversary date of the immediately preceding Annual Meeting of shareholders, and (ii) with respect to an election to be held at a special meeting of shareholders, the close of business on the tenth (10th) day following the date on which notice of such meeting is first given to shareholders. The Bylaws further provide that the notice shall set forth certain information concerning such shareholder and his nominee(s), including their names and addresses, a representation that the shareholder is entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, a description of all arrangements or understandings between the shareholder and each nominee, such other information as would be required to be included in a proxy statement soliciting proxies for the election of the nominees of such shareholder and the consent of each nominee to serve as Director of the Company if so elected.  The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures.  The members of the Executive Committee are Harold G. Cushman, Jr., Willis J. Duncan, and W. Jennings Duncan.
       In addition, the Board of Directors of the Bank has Audit, Loan, Public Relations, and Building Committees.  The members of the Audit Committee are James W. Barnette, Jr., John K. Massey, and Howard B. Smith, III.   The members of the Loan Committee are Harold G. Cushman, Jr., Willis J. Duncan, W. Jennings Duncan, Paul R. Dusenbury, G. Heyward Goldfinch, Robert P. Hucks, and Richard M. Lovelace, Jr. The members of the Public Relations Committee are James W. Barnette, Jr., G. Heyward Goldfinch, and John K. Massey.  The members of the Building Committee are James W. Barnette, Jr., Harold G. Cushman, Jr., Willis J. Duncan, W. Jennings Duncan, and Robert P. Hucks. Willis J. Duncan, Chairman of the Board, and W. Jennings Duncan, President, are ex officio members of each of these committees of the Board with the exception of the Audit Committee.
       The Audit Committee acts pursuant to a written charter adopted by the Board of Directors.  A copy of the charter is attached to the May 8, 2001 Proxy Statement as Appendix A.  Each member of the Audit Committee is independent as defined in the National Association of Securities Dealers listing standards.

63

---

The function of the Loan Committee is to review and ratify new loans and monitor the performance and quality of existing loans, as well as to ensure that sound policies and procedures exist in the Bank's lending operations.
       During 2001, the Company's Board of Directors met three (3) times; the Bank's Board of Directors met twelve (12) times; the Executive Committee met nine (9) times; the Audit Committee met nine (9) times; the Loan Committee met twelve (12) times; the Building Committee met two (2) times; and the Public Relations Committee did not meet. Each Director attended at least 75% of the aggregate of (a) the total number of meetings of the Board of Directors held during the period for which he served as Director and (b) the total number of meetings held by all committees of the Board of Directors of which he served.
Executive Officers:
       The Executive Officers and other officers of the Company are as follows:
                                  Position(s) Currently
    Name       Age    With The Company
    Willis J. Duncan       74     Chairman of the Board (1)
    W. Jennings Duncan     46     President and Director (1)
    Robert P. Hucks        56     Executive Vice President and
                                  Director (1)
    Paul R. Dusenbury      43     Treasurer and Director (1)
                                 (Chief Financial Officer and
                                  Chief Accounting Officer)
    Virginia B. Hucks      52     Secretary
_________________
(1) Executive Officer
       All executive officers and other officers serve at the pleasure of the Board of Directors of the Company.  Each executive officer and other officer of the Company has been employed by the Company and/or the Bank for five (5) years.

64

---

ITEM 11.  COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company pays no remuneration to its Directors and Executive Officers.  All remuneration for services rendered are paid by the Company's subsidiary, The Conway National Bank, Conway, South Carolina ("the Bank").Compensation Committee Report
       The Executive Committee of the Bank recommends to the Board of Directors the appointment of officers; determines officer compensation subject to Board approval; and reviews employee salaries.  The compensation of the President (Chief Executive Officer) and the other executive officers is not tied directly to corporate performance or any measure thereof.  However, it would be deemed unacceptable by the Executive Committee, Board, and management to establish compensation levels that are not consistent with the performance of the Bank or return to shareholders. During the compensation decision process, much emphasis is placed on the Job Evaluation Salary Administration Program (JESAP) Committee.  The "JESAP" Committee is charged with the responsibility of establishing job position descriptions; applying values to each job position in the form of a salary range; and obtaining salary surveys of a local, regional, and national level to determine that salary ranges are consistent with the industry and peers.  The "JESAP" committee utilizes an independent management consulting firm to aid in this process.  For each Bank employee, including the President (Chief Executive Officer) and all executive officers, a salary minimum, midpoint, and maximum is established. For fiscal 2001, all executive officer salary levels were below the midpoint as established by the JESAP process.



Annual Compensation                   Long-Term Compensation                                                               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)
CompensationW. 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.
2001
2000
1999
2001
2000
1999
2001
2000
1999
158,004
150,480
142,632
139,680
133,032
126,096
129,504
123,336
116,904
28,651
31,096
31,309
25,444
27,606
27,795
23,663
25,667
25,842
5,380
   4,683
   3,543
   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
11,060
   10,534
   11,232
    9,778
    9,312
    9,930
    9,065
    8,634
    9,206


(1)  Cash value of personal use of automobile furnished by the Bank or automobile travel allowance.
(2)  Cash contributions made by the Bank to the Bank's contributory profit-sharing and savings defined
contribution plan.

65

---

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS (continued)

PENSION PLAN DISCLOSURE

The Bank has a defined contribution pension plan covering all employees who have attained age twenty-one and have a minimum one year of service.  Upon ongoing approval of the Board of Directors, the Bank matches one hundred percent of employee contributions up to three percent of employee contributions of salary deferred and fifty percent of employee contributions in excess of three percent and up to five percent of salary deferred.  For the years ended December 31, 2001, 2000, and 1999, $426,000, $404,000, and $423,000, respectively, was charged to operations under the plan.
       The Board of Directors of the Bank provides supplemental benefits to certain key officers,
under The Conway National Bank Executive Supplemental Income (ESI) Plan and a Long-Term Deferred Compensation (LTDC) Plan.
A copy of said plans was filed as Exhibit 10(a) and 10(b) with an amended Form 10-K Annual
Report dated June 10, 2002.These plans are not qualified under the Internal Revenue Code.  These plans are unfunded, however, certain benefits under the ESI Plan are informally and indirectly funded by insurance policies on the lives of the covered employees.  Under the provisions of the ESI Plan, the Bank and the participating employees will execute agreements providing each employee (or his beneficiary, if applicable) with a pre-retirement death benefit and a post-retirement annuity benefit.  The ESI Plan is designed to provide participating employees with a pre-retirement benefit based on a percentage of the employee's current compensation.  The ESI agreement's post-retirement benefit is designed to supplement a participating employee's retirement benefits from Social Security in order to provide the employee with a certain percentage of his final average income at retirement age.
Upon normal retirement age, Willis J. Duncan, W. Jennings Duncan, Robert P.
Hucks, and Paul R. Dusenbury are eligible to receive fifteen annual payments of
$9,650, $37,178, $30,827, and $28,379, respectively. While the employee is receiving benefits under the ESI Agreement, the agreement will prohibit the employee from competing with the Bank and will require the participating employee to be available for consulting work for the Bank.  The ESI Agreement may be amended or revoked at any time prior to the participating employee's death or retirement, but only with the mutual written consent of the covered employee and the Bank.  The ESI Agreements require that the participating employee be employed at the Bank at the earlier of death or retirement to be eligible to receive, or have his beneficiary receive, benefits under the agreement.  Under the LTDC Plan, certain key employees and the Board of Directors may defer a portion of their compensation for their retirement and purchase units which are equivalent in value to one share of the Company's stock at market value.
The number of units shall be equitably adjusted and restated to reflect changes
in the number of common shares outstanding resulting from stock splits, stock
dividends, stock issuances, and stock redemptions.  The number of units
also shall be equitably adjusted and restated to reflect cash dividends paid to
Company common shareholders.  The employee or Director receives appreciation, if any, in the market value of the unit as compared to the initial value per unit.

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
(continued)Performance Graphs



ASSUMES $100 INVESTED ON DECEMBER
31, 1996 IN EACH OF CNB CORPORATION STOCK,
INDEPENDENT BANK INDEX, AND NASDAQ INDEX WITH REINVESTMENT OF DIVIDENDSCOMPARISON OF RETURN ON AVERAGE ASSETS (ROA)
AMONG THE BANK, ALL SOUTH CAROLINA BANKS, AND SOUTH CAROLINA S&L's

BASED ON DECEMBER 31 DATA
WITH THE EXCEPTION OF THE SEPTEMBER 30,2001 DATA
DUE TO THE UNAVAILABILITY OF DECEMBER 31, 2001 DATA
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS (continued)Compensation Committee Interlocks and Insider Participation in Compensation Decisions
      No Compensation Committee interlocks exist.  The members of the Executive Committee of the Board, which serves as the Compensation Committee, are Harold G. Cushman, Jr. (outside 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 $500 for each monthly meeting of the Board of Directors and an additional $150 for each committee meeting attended in 2001. Committee meeting compensation has been increased to $200 in 2002.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file reports of ownership on Form 3 and changes in ownership on Form 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 the Company with copies of all Section 16(a) forms that they file.
     Based solely on its review of copies of such reports received or written representations from certain reporting persons, the Company believes that during the fiscal year ended December 31, 2001, all Section 16(a) filing requirements applicable to its officers, directors, and 10 percent shareholders were complied with.

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ITEM 12.  SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth as of December 31, 2001, certain information regarding the ownership of Company Stock of all officers and directors of the Company.  No shareholder is known to the management 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 of voting securities.

Name and Address           Amount and Nature of          Percentof Beneficial Owner         Beneficial Ownership(1)        of Class
All Officers and Directors as a Group
(42 persons)  (2)                  147,813                   20.6%
_________________
(1)     For a description of the amount and nature of ownership of the directors of the Company, see "Management of the Company -Directors".
(2)     Includes 31 officers of the subsidiary, The Conway National Bank, who are not officers of the Company.ITEM 13. CERTAIN TRANSACTIONS
      Directors, principal shareholders, and Executive Officers of the Company and the Bank are customers of and had transactions with the Bank in the ordinary course of business.  Included in such transactions are outstanding loans and commitments, all of which were made on comparable terms, including interest rates and collateral as those prevailing at the time for other customers of the Bank, and did not involve more than normal risk of collectibility or present other unfavorable features.

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PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K

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

FINANCIAL STATEMENTS

Report of Independent Public Accountants
Consolidated Statements of Condition - December 31, 2001 and 2000
Consolidated Statements of Income - Years ended December 31, 2001, 
  2000, and 1999
Consolidated Statements of Changes in Stockholders' Equity - Years 
  ended December 31, 2001, 2000, and 1999
Consolidated Statements of Comprehensive Income - Years ended December 31,
  2001, 2000, and 1999.
Consolidated Statements of Cash Flows - Years Ended December 31,
  2001, 2000, and 1999
Notes to Consolidated Financial Statements

FINANCIAL STATEMENT SCHEDULES

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

EXHIBITS

See Exhibit Index appearing below.
     Reports on Form 8-K  -  No reports  on  Form 8-K  were filed during the
last quarter of the period covered by this report.

EXHIBIT INDEX

Exhibit
Number
  3      Articles of Incorporation - A copy of the Articles of 
         Incorporation of the Company is incorporated herein
         by reference to Exhibit 3(a) which was filed with a 
         Form 8-A dated June 24, 1998
         By-laws of the Company - A copy of the By-laws of the
         Company is incorporated herein by reference to Exhibit
         3(b) which was filed with a Form 10-Q Quarterly
         Report dated June 30, 1997. 
10       Executive Supplemental
Income Plan - A copy of the Executive
         Supplemental Income Plan
is filed herewith as Exhibit 10(a).
         Long Term Deferred
Compensation Plan entitled "Phantom Stock Plan" - A
         copy of the Long Term
Deferred Compensation Plan is filed herewith as
         Exhibit 10(b).
22       Subsidiaries of the Registrant - A copy of the subsidiaries
         of the registrant is incorporated herein by reference to
Exhibit 22
         which was filed
with a Form 10-K Annual Report dated March 28, 1986.

All other exhibits, the filing of which are required with this Form,
are not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
                                        CNB Corporation
                                   W. Jennings Duncan, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in their capacities on March 13, 2002.
    Signature                               CapacityS/Willis J. Duncan
  Willis J. Duncan                    Chairman of the BoardS/W. Jennings Duncan
  W. Jennings Duncan                  President and DirectorS/Robert P. Hucks
  Robert P. Hucks                     Executive Vice President and
                                      DirectorS/Paul R. Dusenbury
  Paul R. Dusenbury                   Treasurer and Director
                                     (Chief Financial Officer
                                      and Chief Accounting Officer)S/Virginia B. Hucks
  Virginia B. Hucks                   SecretaryS/James W. Barnette, Jr.
  James W. Barnette, Jr.              DirectorS/Harold G. Cushman, Jr.
  Harold G. Cushman, Jr.              DirectorS/G. Heyward Goldfinch
  G. Heyward Goldfinch                DirectorS/Richard M. Lovelace, Jr.
  Richard M. Lovelace, Jr.            DirectorS/John K. Massey
  John K. Massey                      DirectorS/Howard B. Smith, III
  Howard B. Smith, III                Director

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