## FORM 10-QSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549

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

**For the quarterly period ended     September 30, 2004                            **

**OR**

**[ ] TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    EXCHANGE ACT  OF 1934**

**For the transition period from                        to                    ___________________Commission file number:  2-96350        **

**                                 CNBCorporation                                          (Exactname of registrant as specified in its charter)  SouthCarolina                                 57-0792402                  (State or other jurisdictionof                (I.R.S.Employer  incorporation ororganization)                 IdentificationNo.)P.O. Box 320, Conway, South  Carolina             29528                     (Address of principal executiveoffices)        (Zip Code)(Registrant's telephone number, including area code):  (803)248-5721**

**     Indicate by checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes  X .  No    .**

**     Indicate by check mark whether the registrant isan accelerated filer (as defined in Rule 12 b-2 of the Exchange Act).  Yes____.No   X  .**

**State the number of shares outstanding of the issuers shares of common equityas of the latest practical date: 788,454 shares of common stock, par value $10per share, October 31, 2004.**

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**CNB Corporation**
| **      Forward-Looking Statements**                                                                                                                                                                                                                                                | **       **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **Page     1   **                                                                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PART I.     Item 1.                                                           Item 2.        Item 3.     Item 4.     SIGNATURE     PART II.     Item 6.** | **FINANCIAL  INFORMATION     Financial Statements:     Consolidated Balance Sheets as of September 30, 2004,  December 31, 2003 and September 30, 2003      Consolidated Statement of Income for the Three Months  and Nine Months Ended September 30, 2004 and 2003     Consolidated Statement of Comprehensive Income  for the Three Months and Nine Months Ended  September 30, 2004 and 2003   Consolidated Statement of Changes in  Stockholders'  Equity for the Nine Months Ended September 30, 2004 and 2003   Consolidated Statement of Cash Flows for the Nine MonthsEnded September 30, 2004 and 2003     Notes to Consolidated Financial Statements     Management's Discussion and Analysis of Financial  Condition and Results of Operations     Qualitative and Quantitative Disclosures About Market Risk     Controls and Procedures                 Exhibits and Reports on Form 8-K** | **            2        3        4           5        6        7-14     14-24        24     24     25           26** |
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****** **

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**Forward-Looking Statements**

**     Statements included in this report which are nothistorical in nature are intended to be, and are hereby identified as "forward-lookingstatements" for purposes of the safe harbor provided by Section 21E of theSecurities Exchange Act of 1934, as amended.  Forward-looking statementsinclude statements concerning plans, objectives, goals, strategies, futureevents or performance and underlying assumptions and other statements which areother than statements of historical facts.  Such forward-looking statements maybe identified, without limitation, by the use of the words "anticipates,""believes," "estimates," "expects," "intends,""plans," "predicts," "projects," and similarexpressions. The Company's expectations, beliefs, estimates and projections areexpressed in good faith and are believed by the Company to have a reasonablebasis, including without limitation, management's examination of historicaloperating trends, data contained in the Company's records and other dataavailable from third parties, but there can be no assurance that management'sexpectations, beliefs, estimates or projections will result or be achieved oraccomplished.**

**     The Company cautions readers that forward-lookingstatements, including without limitation, those relating to the Company'srecent and continuing expansion, its future business prospects, revenues,working capital, liquidity, capital needs, interest costs, income, and adequacyof the allowance for loan losses, are subject to risks and uncertainties thatcould cause actual results to differ materially from those indicated in theforward-looking statements, due to several important factors herein identified,among others, and other risks and factors identified from time to time in theCompany's reports filed with the Securities and Exchange Commission.**

**     The Company undertakes no obligation to publiclyupdate or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise.**

**-1-**

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**PartI.**

**Item 1.  Financial Statements**

**CNB Corporation and SubsidiaryConsolidated Balance Sheets(All Dollar Amounts, Except Per Share Data, in Thousands)**
| **ASSETS:            Cash and due from banks      Investment Securities        (Fair values of $5,435 at         September 30, 2004, $8,516 at          December 31, 2003, and $9,448         at September 30, 2003)      Securities Available for Sale        (Amortized cost of $195,965 at         September 30, 2004, $177,825 at         December 31, 2003, and $183,174         at September 30, 2003)      Federal Funds sold and securities         purchased under agreement         to resell      Loans:         Total loans         Less allowance for possible            loan losses           Net loans      Bank premises and equipment      Other assets  Total assets     LIABILITIES AND STOCKHOLDERS' EQUITY:      Deposits:         Non-interest bearing         Interest-bearing            Total deposits      Federal funds purchased and         securities sold under agreement         to repurchase      Other short-term borrowings      Other liabilities   Total liabilities     Stockholders' equity:         Common stock, par value $10 per         share:  Authorized 1,500,000 in         2004 and 2003; issued 789,774 in         2004 and 718,246 in 2003         Surplus         Undivided Profits         Net Unrealized Holding         Gains (Losses) on          Available-For-Sale Securities           Less:  Treasury stock              Total  stockholders' equity             Total  liabilities               and  stockholders' equity** | **Sept. 30,    2004     (Unaudited)  $ 30,805   5,150               198,486                     28,000      395,006      (4,888)390,118   17,629     10,205   $680,393      $ 127,465  445,509  572,974       32,700   1,541    3,233    610,448             7,898   43,541   17,137   1,513           (144)    69,945    $680,393 ** | **December 31,   2003       $ 25,021   8,081               182,210                     1,000      362,034      (4,524)357,510   17,068      9,088   $599,978      $ 101,684  401,429  503,113       24,760   970    6,512    535,355             7,182   34,801   20,113   2,631           (104)    64,623    $599,978 ** | **Sept. 30,    2003     (Unaudited)  $ 21,621   8,962               188,292                     35,000      343,210      (4,498)338,712   15,020      9,209   $616,816      $107,888  405,842  513,730       32,060   1,107    3,691    550,588             7,182   34,792   21,343   3,071           (160)    66,228    $616,816 ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**2**

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**CNB Corporation and SubsidiaryConsolidated Statement of Income(All Dollar Amounts, Except Per Share Data, in Thousands)(Unaudited)**
| **            Interest Income:    Interest and fees on loans    Interest on investment securities:      Taxable investment securities      Tax-exempt investment securities    Interest on federal funds sold and securities      purchased under agreement to resell        Total interest income  Interest Expense:    Interest on deposits    Interest on federal funds purchased and securities      sold under agreement to repurchase    Interest on other short-term borrowings           Total interest expense    Net interest income    Provision for possible loan losses       Net interest income after provision for possible      loan losses    Other income:      Service charges on deposit accounts      Gains/(Losses) on available-for-sale securities      Other operating income          Total other income       Other expenses:      Salaries and employee benefits      Occupancy expense      Other operating expenses          Total operating expenses    Income before income taxes      Income tax provision    Net income       *Per share data:      Net income per weighted average shares       outstanding         Cash dividend paid per share         Book value per actual number of shares       outstanding         Weighted average number of shares outstanding         Actual number of shares outstanding** | **Three Months Ended   Sept 30,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Nine Months Ended   Sept. 30,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2004    $  6,177     1,659  249          106     8,191 1,674     97       3      1,774     6,417     315       6,102 875  0     931     1,806     2,692       614   1,200     4,506     3,402     935     2,467     $   3.13   $      0    $  88.69    789,124    788,664**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **2003        $  5,608     1,610  256           86     7,560 1,669     77       4      1,750     5,810     250       5,560 846  0     816     1,662     2,512       541   1,049     4,102     3,120   1,002     2,118     $   2.68   $      0    $  83.97    789,468    788,653** | **   2004        $ 17,833     4,893  734          210    23,670 4,807     229       7      5,043    18,627     760      17,867 2,634  0   2,152     4,786     8,055     1,822   3,260    13,137     9,516   3,007     6,509     $   8.25   $      0    $  88.69    789,124    788,664** | **2003        $ 16,956     4,885  782        197    22,820 5,323  253         11      5,587    17,233     750      16,483 2,562  154   1,909     4,625     7,718     1,594   3,002    12,314     8,794   2,770     6,024     $   7.63   $      0    $  83.97    789,468    788,653** |
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***Adjustedfor the effect of a 10% stock dividend issued during 2004.**

**3**

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**CNB Corporation and SubsidiaryConsolidated Statement of Comprehensive Income(All Dollar Amounts, Except Per Share Data,in Thousands)(Unaudited)**
| **                  Net Income**                                                                                                                                                                                                           | **Three Months       Ended          Sept. 30,      ** | **Nine Months       Ended         Sept. 30,     ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|
| **2004   **                                                                                                                                                                                                                                               | **2003   **                                                                                                                           | **2004  **                                                                                                                    | **2003  ** |
| **      $2,467 **                                                                                                                                                                                                                                         | **      $2,118 **                                                                                                                     | **      $6,509 **                                                                                                        | **      $6,024 ** |
| **Other  comprehensive income, net of tax         Unrealized gains/(losses)        on securities:      Unrealized holding gains/(losses)        during period** | **            1,646    **                                                                                              | **            (1,421)   **                                                                                     | **            (1,118)   ** | **            (873)    ** |
| **   Net Comprehensive Income/(Loss)**                                                                                                                                                                                                                              | **         $4,113 **                                                                                         | **         $  697 **                                                                  | **         $5,391 ** | **         $5,151 ** |
|                                                                                                                                                                                                                                                                          |                                                                                                                                                      |                                                                                                                                         |  |  |  |

**4**

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**CNB Corporation and SubsidiaryConsolidated Statement of Changes in Stockholders' Equity(All Dollar Amounts in Thousands)(Unaudited)**
| **         Common Stock:  ($10 par value; 1,500,000 shares authorized)  Balance, January 1  Issuance of Common Stock  Stock Dividend  Balance at end of period**                                                                              | **Nine Months Ended  September 30,   **                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2004 **                                                                                                                                                                                                                                               | **2003 **                                                                                                                                                                 |
| **       7,182      None       716     7,898 **                                                                                                                              | **       7,182      None      None     7,182 **                                                     |
| **   Surplus:  Balance, January 1  Issuance of Common Stock  Stock Dividend  Gain on sale of Treasury stock  Balance at end of period**                                                                                                                 | **      34,801   None   8,726        14    43,541 **                                                          | **      34,783   None   None       9    34,792 ** |
| **   Undivided profits:  Balance, January 1  Net Income  Stock Dividend  Cash dividends declared  Balance at end of period**                                                                                                                            | **      20,113   6,509   (9,485)   None    17,137 **                                                                         | **      15,318   6,024   None    None    21,343 ** |
| **Net unrealized holding gains/(losses) on  Available-for-sale securities:  Balance, January 1  Change in net unrealized gains/(losses)  Balance at end of period**                                                                                          | **         2,631  (1,118)    1,513 **                                                                                                  | **         3,944    (873)    3,071 ** |
| **   Treasury stock:  Balance, January 1  (837 shares in 2004; 951 shares in 2003)  Purchase of treasury stock  Reissue of treasury stock  Balance at end of period  (1,110 shares in 2004; 1,173 shares in 2003)     Total stockholders' equity** | **         (104)  (186)    146       (144)             69,945 ** | **         (102)  (232)    174       (160)             66,228 ** |

**Note:  Columns may not add due to rounding.**

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**5**

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**CNB CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENT OF CASH FLOWS(Unaudited)**
| **         OPERATING ACTIVITIES    Net Income    Adjustments to reconcile net income to      net cash provided by operating activities      Depreciation      Provision for loan losses      Provision for deferred income taxes      Loss (gain) on sale of investment       securities      (Increase) decrease in accrued interest       receivable      (Increase) decrease in other assets      (Decrease) increase in other liabilities** | **For the nine-month period ended            September 30,                2004               2003  ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **   $  6,509         630   760   (1,154)     0      129   (817)     596 **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | **   $  6,024         517   750   (837)     (154)     498   (369)      17 **                                                                                                                                                            |
| **        Net  cash provided by operating            activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **   6,653 **                                                                                                                                                                                                                                                                                                 | **   6,446 ** |
| **   INVESTING ACTIVITIES    Proceeds from sale of investment securities     available for sale    Proceeds from maturities/calls of investment     securities held to maturity    Proceeds from maturities/calls of investment     securities available for sale    Purchase of investment securities     available for sale    (Increase) decrease in federal funds sold    (Increase) decrease in loans    Premises and equipment expenditures**                                                                                                           | **         0      2,931      54,519   (72,658)  (27,000)  (32,972)  (1,191)**                                                                                                                                                                                                   | **         6,529      4,143      54,008      (84,216)  (13,000)  (17,588)  (3,088)** |
| **        Net  cash provided by (used for)            investing  activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **    (76,371)**                                                                                                                                                                                                                                                                                                        | **    (53,212)** |
| **FINANCING  ACTIVITIES    Dividends paid    Increase (decrease) in deposits    (Decrease) increase in securities sold      under repurchase agreement    (Decrease) increase in other      short-term borrowings**                                                                                                                                                                                                                                                                                                                                                                                                  | **   (2,870)  69,861      7,940           571 **                                                                                                                                                                                                                           | **   (2,690)  45,421      5,841        (5,402)** |
| **           Net cash provided by (used  for)            financing  activities             Net increase (decrease) in  cash            and due from  banks     CASH AND DUE FROM BANKS, BEGINNING OF YEAR     CASH AND DUE FROM BANKS, SEPT. 30, 2004 AND 2003     CASH PAID (RECEIVED) FOR:    Interest    Income taxes**                                                                                                                                          | **      75,502       5,784        25,021    $ 30,805     $  5,077   $  2,941 **                                                                                                                                | **      43,170       (3,596)       25,217    $ 21,621     $  5,911   $  2,759 ** |

**6**

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**CNB CORPORATION ANDSUBSIDIARY (The "Corporation")CNB CORPORATION (The "Parent")THE CONWAY NATIONAL BANK (The "Bank")NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(All Dollar Amounts in Thousands)NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Net income per share - Netincome per share is computed on the basis of the weighted average number ofcommon shares outstanding, adjusted for a 10% stock dividend declared inSeptember, 2004, resulting in 789,124 for the nine-month period ended September30, 2004 and 789,468 for the nine-month period ended September 30, 2003.**

**NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS**

**TheBank is required to maintain average reserve balances either at the Bank or ondeposit with the Federal Reserve Bank.  The average amount of these reservebalances for the nine-month period ended September 30, 2004 and for the year ended December 31, 2003 were approximately $14,127and $10,346, respectively.**

**7**

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**NOTE 3 - INVESTMENTSECURITIES**

**Investment securities with a par value ofapproximately $107,080 at September 30, 2004 and $85,195 at December 31, 2003 were pledged to secure public deposits and for other purposes requiredby law.**

**The following summaries reflect the book value, unrealized gains and losses,approximate market value, and tax-equivalent yields of investment securities atSeptember 30, 2004 and at December 31, 2003.**
| **            AVAILABLE FOR SALE    United States Treasury**                                                                                                                                                                                              | **          September 30, 2004            Book  Unrealized  Holding Fair             Value   Gains   Losses   Value Yield(1)** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **           $      0**                                                                                                                                                                                      | **         $    -**                                                                                                                                                                                                                                                                                                     | **         $    -** | **           $      0** | **           -%** |
| **     Federal agencies     Within one year     One to five years          Mortgage Backed Securities   Over ten years **                                                                     | **      16,571 160,542   177,113                1,027**                                                                                                                                                                                                                                        | **      353 1,647   2,000                -** | **      -   355     355               38** | **      16,924 161,834   178,758                  989** | **      5.30%3.65   3.80           3.62%** |
| **  State,  county and    municipal     Within one year     One to five years     Six to ten years       Other-CRA Qualified     Investment Fund    Total available for sale** | **      481  11,785   5,237    17,503        322  $195,965**                                                                                                                                                                                                                                                  | **      4  530   380     914        -  $2,914** | **      -  -     -       -        -  $  393** | **      485  12,315   5,617    18,417        322  $198,486** | **      5.33%  5.85 6.91   6.15       -   4.01%** |
| **    HELD TO MATURITY    United States Treasury**                                                                                                                                                                                                                  | **             $      0**                                                                                                                                                                                                                                                                           | **                -** | **                -** | **                    0** | **             -%** |
| **  Federal agencies**                                                                                                                                                                                                                                                        | **                 0**                                                                                                                                                                                                                                                                              | **             -** | **              -** | **                  0** | **           -%** |
| **  State,  county and    municipal     Within one year     One to five years     Six to ten years        Total held to maturity**                                                                 | **      1,031    3,218       901     5,150  $  5,150**                                                                                                                                                                                                                                                   | **      11  192    82     285  $  285** | **      -  -     -       -  $    -** | **      1,042  3,410     983     5,435  $  5,435** | **      6.97%  7.24 7.27   7.19   7.19%** |

**(1) Tax equivalent adjustment based on a 34% tax rate.**

**As of the quarter ended September 30, 2004, the Bank did not hold any securities of an issuer thatexceeded 10% of stockholders' equity. The net unrealized holding gains/(losses)on available-for-sale securities component of capital is $1,513 as of September 30, 2004.**

**8**

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**NOTE 3 - INVESTMENTSECURITIES (Continued)**
| **          December  31, 2003                  Book   Unrealized  Holding  Fair          Value    Gains   Losses   Value  Yield(1)** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **   AVAILABLE FOR SALE    United States Treasury**                                                                                                                                                                                                                                                                                                                                                  | **          $      0** | **         $    -** | **         $    -** | **           $      0** | **           -%** |
| **   Federal agencies     Within one year     One to five years**                                                                                                                                                                                                                                                                                                                | **      8,809 149,917   158,726** | **      174 3,484   3,658** | **      -   273     273** | **      8,983 153,128   162,111** | **      4.36 4.00   4.02 ** |
| **   Mortgage Backed Securities      Over ten years       State, county and     municipal     Within one year     One to five years     Six to ten years     Over ten years       Other - CRA Qualified     Investment Fund  Total available for sale**       | **              1,071           185  10,283  6,961     288    17,717        311  $177,825** | **            -           1  522  492     4   1,019      -  $4,677** | **             19           -  -  -     -       -        -  $  292** | **            1,052           186  10,805  7,453     292    18,736        311  $182,210** | **       3.59           7.03   5.68   6.81 5.92   6.14       -   4.23%** |
| **   HELD TO MATURITY    United States Treasury**                                                                                                                                                                                                                                                                                                                                                    | **             $      0** | **                -** | **                -** | **                    0** | **             -%** |
| **   Federal agencies     Within one year **                                                                                                                                                                                                                                                                                                                                               | **              2,000** | **             55** | **              -** | **              2,055** | **        6.44 ** |
| **  State,  county and    municipal     Within one year     One to five years     Six to ten years             Total held to maturity**                                                                                                                                                               | **      1,562  3,086   1,433     6,081  $  8,081** | **      30  227   123     380  $  435** | **      -  -     -       -  $    -** | **      1,592  3,313   1,556     6,461  $  8,516** | **      6.98%  7.40 6.97   7.19   7.01%** |

**(1) Tax equivalent adjustment based on a 34% tax rate**

**As of the quarterended  December 31, 2003, the Bank  did not hold any securities of an issuerthat exceeded 10% of stockholders' equity. The net unrealized holdinggains/(losses) on available-for-sale securities component of capital is $2,631as of December 31, 2003.**

**9**

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**NOTE 4 - LOANS ANDALLOWANCE FOR LOAN LOSSES**

**     Thefollowing is a summary of loans at September 30, 2004 and December 31, 2003 by major classification:**
| **         Real estate loans - mortgage                    - construction  Commercial and industrial loans  Loans to individuals for household,    family and other consumer expenditures  Agriculture  All other loans, including overdrafts       Gross loans         Less allowance for loan losses           Net loans** | **Sept. 30,   December 31,   2004         2003    **                              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **   $249,099   43,981   63,511      34,818   2,049    1,548    395,006     (4,888)  $390,118 **                                                                                                                                                                                                                                                                                                                                                                                        | **   $228,556   44,099   53,559      32,884   1,537    1,399    362,034     (4,524)  $357,510 ** |  
**10**
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued
**     Changesin the allowance for loan losses for the quarter ended and nine-month periodended September 30, 2004 and 2003 and the year ended December 31, 2003 are summarized as follows:**

**               Balance, 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/(recoveries)  Additions charge to operations  Balance, end of period**

**Quarter Ended    Nine  Months Ended   December     Sept. 30,           Sept.  30,         31,         2004     2003      2004     2003      2003     **

**   $ 4,861     106  0    208  $   314 $     9  0     17  $    26  $   288  $   315  $ 4,888**

**   $ 4,564     246  4    118  $   368 $    25  3     24  $    52  $   316  $   250  $ 4,498**

**   $ 4,524   178       17    340  $   535   $    39  1     99  $   139  $   396  $   760  $ 4,888**

**   $ 4,155   295       48    281  $   624   $    83  11    123  $   217  $   407  $   750  $ 4,498**

**   $ 4,155   431  59    392  $   882   $   115  26    150  $   291  $   591  $   960  $ 4,524**

 
**   Ratio of net charge-offs during the period   to average loans outstanding during the   period**

**                .07%**

**                .09%**

**                  .10%**

**                .12%**

**                .17%**

 
**The entire balance is available to absorb future loan losses.**

**AtSeptember 30, 2004 and December 31, 2003 loans on which no interest was beingaccrued totalled approximately $428 and $351, respectively and foreclosed realestate totalled $80 and $0, respectively; and loans 90 days past due and stillaccruing totalled $280 and $130, respectively.**

**OTHER INTEREST-BEARING ASSETS**

**Asof September 30, 2004, the Company does not have any interest-bearingassets that would be required to be disclosed under Item III.C.1. or 2. if suchassets were loans.**

**11**

**NOTE 5 - PREMISES ANDEQUIPMENT**

**     Propertyat September 30, 2004 and December 31, 2003 is summarized as follows:**

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

**Sept. 30    2004       $ 15,333    7,327     5,692  $ 28,352       10,723    $ 17,629  **

**December 31,  2003       $ 15,866    6,923     4,371  $ 27,160         10,092    $ 17,068  **

**     Depreciationand amortization of bank premises and equipment charged to operating expensewas $208 and $630 for the quarter ended and the nine-month period ended September 30, 2004, respectively and $739 for the year ended December 31, 2003.**
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
**     AtSeptember 30, 2004 and December 31, 2003, certificates of deposit of $100,000 or more included in time depositstotaled approximately $106,809 and $86,975 respectively.  Interest expense onthese deposits was approximately $536 and $1,474 for the quarter ended and the nine-monthperiod ended September 30, 2004, respectively, and $1,929 for the year ended December 31, 2003.**

**NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS**

**     AtSeptember 30, 2004 and December 31, 2003, securities sold under repurchase agreements totaled $32,700 and$24,760. Securities with a book value of $43,752 ($44,702 market value) and$34,100 ($35,341 market value), respectively, are used as collateral for theagreements.  The weighted-average interest rate of these agreements was 1.31percent and .96 percent at September 30, 2004 and December 31, 2003.**

**NOTE 8 - LINES OF CREDIT**

**     AtSeptember 30, 2004, the Bank had unused short-term lines of creditto purchase Federal Funds from unrelated banks totaling $27,000.  These linesof credit are available on a one to seven day basis for general corporatepurposes of the Bank.  All of the lenders have reserved the right to withdrawthese 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.  TheBank may borrow up to $7,000 under the arrangement at a variable interestrate.  The note is secured by bonds with a market value of $6,042 at September 30, 2004.  The amount outstanding under the note totalled $1,541 and $970 at September 30, 2004 and December 31, 2003, respectively.**

**     The Bank also has a line of credit from theFederal Home Loan Bank of Atlanta for $69,615 secured by a lien on the Bank's 1-4family mortgages.  Allowable terms range from overnight to twenty years atvarying rates set daily by the FHLB.  The amount outstanding under theagreement totalled $0 and $0 at September 30, 2004 and December 31, 2003, respectively.**

**NOTE 9 - INCOME TAXES**

**     Incometax expense for the quarter ended September 30, 2004 and September 30, 2003 on pretax income of $3,402 and $3,120 totalled $935and $1,002 respectively. Income tax expense for the nine-month period ended September 30, 2004 and September 30, 2003 on pretax income of $9,516 and $8,794 totalled $3,007and $2,770 respectively.  The provision for federal income taxes is calculatedby applying the 34% statutory federal income tax rate and increasing orreducing this amount due to any tax-exempt interest, state bank tax (net offederal benefit), business credits, surtax exemption, tax preferences,alternative minimum tax calculations, or other factors.  A summary of incometax components and a reconciliation of income taxes to the federal statutoryrate are included in fiscal year-end reports.**

**     The Company accounts for income taxes inaccordance with Statement of Financial Accounting Standards ("SFAS")No. 109, "Accounting for Income Taxes".**

**12**

**NOTE 10 - OFF-BALANCE SHEET ARRANGEMENTS AND CONTINGENT LIABILITIES**

**     Fromtime to time the bank subsidiary is a party to various litigation, both asplaintiff and as defendant, arising from its normal operations.  No materiallosses are anticipated in connection with any of these matters at September 30,2004.**

**     In the normal course of business, the bank subsidiaryis party to financial instruments with off-balance-sheet risk includingcommitments to extend credit and standby letters of credit.  Such instrumentshave elements of credit risk in excess of the amount recognized in the balancesheet.  The exposure to credit loss in the event of nonperformance by the otherparties to the financial instruments for commitments to extend credit andstandby letters of credit is represented by the contractual notional amount ofthose instruments.  Generally, the same credit policies used foron-balance-sheet instruments, such as loans, are used in extending loancommitments and standby letters of credit.**

**     Following are the off-balance-sheet financialinstruments whose contract amounts represent credit risk:**

**   Loan Commitments  Standby letters of credits**

**Sept. 30, 2004  $ 41,640   2,797   **

**                     Loancommitments involve agreements to lend to a customer as long as there is noviolation of any condition established in the contract.  Commitments generallyhave fixed expiration dates or other termination clauses and some involvepayment of a fee.  Many of the commitments are expected to expire without beingfully drawn.  Therefore, the total amount of loan commitments does notnecessarily represent future cash requirements.  Each customer'screditworthiness is evaluated on a case-by-case basis.  The amount ofcollateral obtained, if any, upon extension of credit is based on management'scredit evaluation of the borrower.  Collateral held varies but may includecommercial and residential real properties, accounts receivable, inventory andequipment.**

**     Standby letters of credit are conditionalcommitments to guarantee the performance of a customer to a third party.  Thecredit risk involved in issuing standby letters of credit is the same as thatinvolved in making loan commitments to customers.  Many letters of credit willexpire without being drawn upon and do not necessarily represent future cashrequirements.**

**     Management believes that its various sources ofliquidity provide the resources necessary for the bank subsidiary to fund theloan commitments and to perform under standby letters of credit, if the needarises.  Neither the Company nor the Bank are involved in other off-balancesheet contractual relationships or transactions that could result in liquidityneeds or other commitments or significantly impact earnings.**

**NOTE 11 - EMPLOYEE BENEFIT PLAN**

**     TheBank has a defined contribution pension plan covering all employees who haveattained age twenty-one and have a minimum of one year of service. Upon ongoingapproval of the Board of Directors, the Bank matches one hundred percent ofemployee contributions up to three percent of employee salary deferred andfifty percent of employee contributions in excess of three percent and up tofive percent of salary deferred.  The Board of Directors may also makediscretionary contributions to the Plan.  For the three-month and nine-monthperiods ended September 30, 2004 and year ended December 31, 2003, $144,$436, and $558, respectively, was charged to operations under the plan.**

**NOTE 12 - REGULATORY MATTERS**

**     TheBank is subject to various regulatory capital requirements administered by thefederal banking agencies.  Failure to meet minimum capital requirements caninitiate certain mandatory and possibly additional discretionary - actions byregulators that, if undertaken, could have a direct material effect on thefinancial statements.  The regulations require the Bank to meet specificcapital adequacy guidelines that involve quantitative measures of assets,liabilities, and certain off-balance-sheet items as calculated under regulatoryaccounting practices.  The capital classification is also subject toqualitative judgments by the regulators about components, risk weightings, andother factors.**

**13**

**NOTE 12 - REGULATORY MATTERS (continued)**

**     Quantitative measures established by regulationto ensure capital adequacy require the maintenance of minimum amounts andratios (set forth in the table below) of Tier I capital to adjusted totalassets (Leverage Capital ratio) and minimum ratios of Tier I and total capitalto risk-weighted assets.  To be considered adequately capitalized under theregulatory framework for prompt corrective action, the Bank must maintainminimum Tier I leverage, Tier I risk-based and total risked-based ratios as setforth in the table.  The Bank's actual capital ratios are presented in thetable below as of September 30, 2004:**

**                     Total Capital (to   risk weighted assets)  Tier I Capital (to   risk weighted assets)  Tier I Capital (to   avg. assets**

**To be       well capitalized  For           under  prompt   Capital adequacy corrective action                     Purposes         provisions       Actual           Minimum           Minimum    Amount  Ratio     Amount   Ratio  Amount    Ratio**

**$69,182     64,294     64,294**

**16.52%     15.36      9.86 **

**$33,794     16,747     26,094**

**8.0%     4.0      4.0 **

**$41,868     25,121     32,617**

**10.0%     6.0      5.0 **

 

**NOTE 13 - CONDENSED FINANCIAL INFORMATION**

**     Followingis condensed financial information of CNB Corporation (parent company only):**

**CONDENSED BALANCED  SHEET   SEPTEMBER 30, 2004  (Unaudited)**

**ASSETS     Cash     Investment in subsidiary     Other assets**

**$  4,101   65,807       37   $ 69,945 **

**   LIABILITIES AND STOCKHOLDERS' EQUITY     Other liability     Stockholders' equity**

**   $      0   69,945   $ 69,945 **

**CONDENSED STATEMENT  OF INCOME  For the nine-month period ended September 30, 2004  (Unaudited)**

**   EQUITY IN NET INCOME OF SUBSIDIARY  OTHER INCOME  OTHER EXPENSES     Net Income**

**   $  6,563   0      (54)  $  6,509 **

 

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS(All dollar amounts inthousands, except per share data.)**

**Management'sDiscussion and Analysis is provided to afford a clearer understanding of themajor elements of the corporation's results of operations, financial condition,liquidity, and capital resources. The following discussion should be read inconjunction with the corporation's financial statements and notes thereto andother detailed information appearing elsewhere in this report.  In addition,the results of operations for the interim periods shown in this report are notnecessarily indicative of results to be expected for the fiscal year. Theaccompanying consolidated financial statements include all accounts of theCompany and the Bank. All significant intercompany accounts and transactionshave been eliminated in consolidation. The accompanying unaudited consolidatedfinancial statements at September 30, 2004 and for the three-month and nine-monthperiods ending September 30, 2004 and 2003 have been prepared in accordancewith generally accepted accounting principles ("GAAP") for interimfinancial information and with the instructions to Form 10-Q for the Securitiesand Exchange Commission. Accordingly, they do not include all information andfootnotes required by GAAP for complete financial statements. However, in theopinion of management, all adjustments (consisting of normal recurring adjustments)considered necessary for a fair presentation have been included.**

**14**

**DISTRIBUTION OF ASSETS AND LIABILITIES**

**TheCompany maintains a conservative approach in determining the distribution ofassets and liabilities.  Loans have increased 15.1% from $343,210 at September 30, 2003 to $395,006 at September 30, 2004 and have increased as apercentage of total assets from 55.6% to 58.0% over the same period as loandemand has strengthened in our market. Securities and federal funds sold havedecreased as a percentage of total assets from 37.7% at September 30, 2003 to 34.1%at September 30, 2004.  This level of investments and federal funds soldprovides for a more than adequate supply of secondary liquidity.  Managementhas sought to build the deposit base with stable, relativelynon-interest-sensitive deposits by offering the small to medium deposit accountholders a wide array of deposit instruments at competitive rates.Non-interest-bearing demand deposits increased as a percentage of total assetsfrom 17.5% at September 30, 2003 to 18.7% at September 30, 2004.  As more customers, both business and personal, are attracted tointerest-bearing deposit accounts, we expect the percentage of demand depositsto decline over the long-term. Interest-bearing deposits have decreasedslightly from 65.8% of total assets at September 30, 2003 to 65.5% at September 30, 2004 while securities sold underagreement to repurchase have declined from 5.2% to 4.8% over the same period.**

**The following table sets forth the percentage relationship to total assets ofsignificant components of the corporation's balance sheet as of September 30, 2004 and 2003:**

**      Assets:     Earning assets:     Loans     Investment securities     Securities Available for Sale     Federal funds sold and securities purchased       under agreement to resell        Total earning assets     Other assets        Total assets**

**Sept. 30,    2004    2003 **

**      58.0%  .8   29.2      4.1    92.1     7.9   100.0%**

**      55.6%  1.5   30.5      5.7    93.3     6.7   100.0%**

**      Liabilities and stockholders' 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**

**            65.5%     4.8    .2    70.5  18.7   .5  10.3   100.0%**

**            65.8%     5.2    .2    71.2  17.5   .6  10.7   100.0%**

**15**

**RESULTS OF OPERATION**

**CNBCorporation experienced earnings for the three-month period ended September 30,2004 and 2003 of $2,467 and $2,118, respectively, resulting in a return onaverage assets of 1.47% and 1.38% and a return on average stockholders' equityof 14.50% and 12.89%.**

**CNB Corporation experienced earnings for the nine-month period ended September30, 2004 and 2003 of $6,509 and $6,024, respectively, resulting in a return onaverage assets of 1.34% and 1.37% and a return on average stockholders' equityof 12.96% and 12.54%.**

**The earnings were primarily attributable to net interest margins in each period(see Net Income-Net Interest Income).  Other factors include management'songoing effort to maintain other income at adequate levels (see Net Income -Other Income) and to control other expenses (see Net Income - Other Expenses). This level of earnings, coupled with a conservative dividend policy, havesupplied the necessary capital funds to support the growth in total assets.Total assets have increased  $63,577 or 10.3% from $616,816 at September 30, 2003 to $680,393 at September 30, 2004. The following table sets forth thefinancial highlights for the three-month and nine-month periods ending September 30, 2004 and September 30, 2003:**

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

**               Net interest income after provision       for loan losses  Income before income taxes  Net Income  Per Share (1)  Cash dividends declared     Per Share (1)  Total assets  Total deposits  Loans  Investment securities and      securities available for sale  Stockholders' equity      Book value per share (1)  Ratios (2):  Annualized return on average total       assets  Annualized return on average       stockholders' equity**

**Three-Month  Period       Ended Sept. 30,         Percent    Increase   2004      2003   (Decrease)**

**Nine-Month  Period       Ended Sept. 30,        Percent    Increase   2004     2003   (Decrease)**

**   6,102   3,402   2,467   3.13   0   0   680,393   572,974   395,006      203,636   69,945   88.69         1.47%     14.50%**

**   5,560   3,120   2,118   2.68   0   0   616,816   513,730   343,210      197,254   66,228   83.97         1.38%     12.89%**

**   9.8%   9.0    16.5    16.8    -    -    10.3%   11.5    15.1       3.2    5.6    5.6          6.5%      12.5% **

**   17,867   9,516   6,509   8.25   0   0   680,393   572,974   395,006      203,636   69,945   88.69         1.34%     12.96%**

**   16,483   8,794   6,024   7.63   0   0   616,816   513,730   343,210      197,254   66,228   83.97         1.37%     12.54%**

**   8.4%   8.2    8.1    8.1    -    -    10.3%   11.5    15.1       3.2    5.6    5.6          (2.2)%     3.3 %**

**(1)Adjustedfor a 10% stock dividend issued during 2004.**

**(2) For the three-month period ended September 30, 2004 and September 30, 2003,average total assets amounted to $672,538 and $612,261 with averagestockholders' equity totaling $68,076 and $65,700, respectively. For the nine-monthperiod ended September 30, 2004 and September 30, 2003, average total assets amounted to $649,870 and $585,555 with averagestockholders' equity totaling $66,972 and $64,066 respectively.**

**16**

**NET INCOME**

**NetInterest Income - Earnings are dependent to a large degree on net interestincome, defined as the difference between gross interest and fees earned onearning assets, primarily loans and securities, and interest paid on depositsand borrowed funds.  Net interest income is effected by the interest ratesearned or paid and by volume changes in loans, securities, deposits, andborrowed funds.**

**Interest rates paid on deposits and borrowed funds and earned on loans andinvestments have generally followed the fluctuations in market interest ratesin 2004 and 2003.  However, fluctuations in market interest rates do notnecessarily have a significant impact on net interest income, depending on thebank's rate sensitivity position.  A rate sensitive asset (RSA) is any loan orinvestment that can be repriced either up or down in interest rate within acertain time interval.  A rate sensitive liability (RSL) is an interest payingdeposit or other liability that can be repriced either up or down in interestrate within a certain time interval.  When a proper balance between RSA and RSLexists, market interest rate fluctuations should not have a significant impacton earnings. The larger the imbalance, the greater the interest rate riskassumed by the bank and the greater the positive or negative impact of interestrate fluctuations on earnings.  The bank seeks to manage its assets andliabilities in a manner that will limit interest rate risk and thus stabilizelong-run earning power. Management believes that a rise or fall in interestrates will not materially effect earnings.**

**The Bank has maintained net interest margins for the three-month and nine-monthperiods ended September 30, 2004, of 4.20% and 4.21%, respectively, and 4.18%and 4.31%, respectively, for the same periods in 2003 as compared tomanagement's long-term target of 4.50%.  Net interest margins have beencompressed at the bank and industry-wide, as we are experiencing almost fifty-yearlows in market interest rates.  We anticipate interest rates to increase in thelatter part of 2004 and into 2005 which should enhance our earnings potentialthrough a wider net interest margin.**

**Fully-tax-equivalent net interest income showed a 10.0% increase from $5,966for the three-month period ended September 30, 2003 to $6,565 for thethree-month period ended September 30, 2004. During the same period,total fully-tax-equivalent interest income increased by 8.1% from $7,716 to $8,339and total interest expense increased by 1.4% from $1,750 to $1,774.Fully-tax-equivalent net interest income as a percentage of total earningassets has shown an increase of .02% from 4.18% for the three-month periodended September 30, 2003 to 4.20% for the three-month period ended September 30, 2004.**

**Fully-tax-equivalent net interest income showed a 7.7% increase from $17,660for the nine-month period ended September 30, 2003 to $19,025 for the nine-monthperiod ended September 30, 2004. During the same period, totalfully-tax-equivalent interest income increased by 3.5% from $23,247 to $24,068and total interest expense decreased by 9.7% from $5,587 to $5,043.Fully-tax-equivalent net interest income as a percentage of total earningassets has shown a decrease of .10% from 4.31% for the nine-month period ended September 30, 2003 to 4.21% for the nine-month period ended September 30, 2004.**

**The tables on the following four pages present selected financial data and ananalysis of net interest income.**

**17**

**CNB Corporation and Subsidiary  Average Balances, Yields, and Rates  (Dollars in Thousands) **

 
**            Assets:    Earning assets:     Loans, net of unearned      income         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**

**Three Months Ended 9/30/04  Three  Months Ended 9/30/03    Avg.    Interest Avg.  Ann.  Avg.    Interest  Avg. Ann.   Balance Income/  Yield  or   Balance Income/    Yield or   Expense(1)    Rate             Expense(1)  Rate    **

**         $393,807     176,309  22,757        32,165   625,038    47,500  $672,538               $440,555           30,114      1,160   $471,829  129,009     3,624  68,076    $672,538    $625,038**

**         $  6,197     1,659  377           106     8,339                     1,674           97          3   $  1,774           $  6,565     $    148**

**         6.29%     3.76   6.63         1.32   5.34                      1.52            1.29      1.03      1.50                              4.20 **

**         $347,292  160,733  24,828        38,132   570,985    41,276  $612,261               $399,589           31,197      1,553   $432,339   109,948  4,274  65,700    $612,261    $570,985**

**         $  5,632     1,610  388            86     7,716                     1,669           77          4   $  1,750           $  5,966     $    156**

**         6.49%     4.01   6.25         .90   5.41                        1.67            .99      1.03      1.62                              4.18 **

 
**   Ratios:  Annualized return on average total assets  Annualized return on average stockholders'  equity  Cash dividends declared as a percent of net  income  Average stockholders' equity as a percent of:    Average total assets    Average total deposits    Average loans  Average earning assets as a percent of  average total assets**

**      1.47      14.50      0      10.12   11.95   17.29      92.94 **

**      1.38      12.89      0      10.73   12.89   18.92      93.26 **

 
**18**

**CNB Corporation and Subsidiary  Average Balances, Yield and Rates  (Dollars in Thousands)**

**            Assets:    Earning assets:     Loans, net of unearned      income     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**

**Nine Months Ended 9/30/04   Nine  Months Ended 9/30/03      Avg.    Interest Avg.  Ann. Avg.     Interest  Avg.  Ann.   Balance Income/  Yield  or  Balance  Income/   Yield  or    Expense(1)    Rate             Expense(1)  Rate    **

**         $382,869     170,817  23,057           26,313   603,056    46,814  $649,870               $433,911           27,398      1,084   $462,393  117,055  3,450  66,972    $649,870    $603,056**

**         $ 17,853     4,893  1,112              210    24,068                     4,807           229          7   $  5,043           $ 19,025     $    398**

**         6.22%     3.82   6.43            1.06   5.32                        1.48            1.11      .86      1.45                              4.21 **

**         $344,010     150,789  25,540           25,618   545,957    39,598  $585,555               $387,589           28,599      1,381   $417,569   99,198  4,722  64,066    $585,555    $545,957**

**         $ 16,980     4,885  1,185              197    23,247                     5,323           253         11   $  5,587           $ 17,660     $    427**

**         6.58%     4.32   6.19            1.03   5.68                        1.83            1.18      1.06      1.78                              4.31 **

 
**   Ratios:  Annualized return on average total assets  Annualized return on average stockholders'  equity  Cash dividends declared as a percent of net  income  Average stockholders' equity as a percent of:    Average total assets    Average total deposits    Average loans  Average earning assets as a percent of  average total assets**

**      1.34      12.96      0      10.31   12.16   17.49      92.80 **

**      1.37    12.54      0      10.94   13.16   18.62      93.24 **

 
**19**

**CNB Corporation and SubsidiaryRate/Volume Variance AnalysisFor the Three Months Ended September 30, 2004 and 2003(Dollars in Thousands)**

**                    Earning Assets:   Total Loans (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    Volume     2004             393,807       176,309    22,757         32,165    625,038    440,555            30,114  1,160     471,829    153,209              625,038**

** Average   Volume2003             347,292       160,733   24,828         38,132    570,985    399,589           31,197  1,553     432,339    138,646              570,985**

**     Yield/Rate2004 (1)                6.29%       3.76%   6.63%        1.32%    5.34%    1.52%           1.29%1.03%     1.50%              1.14% 3.84%         .36%    4.20%**

**     Yield/Rate2003 (1)                6.49%       4.01%   6.25%         .90%    5.41%    1.67%           .99%1.03%     1.62%              1.23% 3.79%         .39%    4.18%**

** Interest     Earned/Paid 2004 (1)                 6,197       1,659   377          106    8,339                1,674           97    3     1,774              1,774                6,565**

** Interest     Earned/Paid 2003 (1)              5,632       1,610   388           86    7,716                1,669           77    4     1,750              1,750           5,966**

**   Variance            565        49    (11)            20        623                 5            20     (1)         24                     24 
** Change   Due toRate             (174)       (100)   24            40      (210)                   (150)           23      0        (127)                  (127)**

** Change   Due toVolume            755        156    (32)         (13)     866                 171            (3)  (1)      167                167 **

**Change   Due to   Rate XVolume            (16)       (7)   (3)          (7)     (33)                (16)           0    0       (16)               (16)**

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

**20**

**CNB Corporation and SubsidiaryRate/Volume Variance AnalysisFor the Nine Months Ended September 30, 2004 and 2003(Dollars in Thousands)**

**                     Earning   Assets:   Total Loans (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    Volume     2004             382,869       170,817    23,057         26,313    603,056    433,911            27,398  1,084     462,393    140,663              603,056**

** Average   Volume2003             344,010       150,789   25,540         25,618    545,957    387,589           28,599  1,381     417,569    128,388              545,957**

**     Yield/Rate2004 (1)             6.22%       3.82%   6.43%        1.06%    5.32%    1.48%           1.11% .86%     1.45%              1.11% 3.87%         .34%    4.21%**

**     Yield/Rate2003 (1)             6.58%       4.32%   6.19%        1.03%    5.68%    1.83%           1.18%1.06%     1.78%              1.37% 3.90%         .41%    4.31%**

** Interest     Earned/Paid 2004 (1)              17,853       4,893   1,112           210    24,068                4,807           229     7      5,043                5,043                 19,025**

** Interest     Earned/Paid 2003 (1)              16,980       4,885   1,185           197    23,247                5,323           253    11      5,587                5,587                 17,660**

**   Variance            873        8    (73)            13        821                 (516)           (24)    (4)       (544)                  (544)
** Change   Due toRate             (929)       (565)   46              6     (1,442)                   (1,017)           (15)    (2)     (1,034)                (1,034)**

** Change   Due toVolume            1,918        649    (115)             5      2,457                 636            (11)    (2)        623                    623 **

**Change   Due to   Rate XVolume            (116)       (76)   (4)            2      (194)                (135)           2     0       (133)                (133)**

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

**21**

**NET INCOME (continued)**

**Provisionfor Possible Loan Losses - It is the policy of the bank to maintain theallowance for possible loan losses at the greater of 1.20% of net loans or apercentage based on a level to cover potential losses identified in theportfolio.**

**The provision for possible loan losses was $315 for the three-month periodended September 30, 2004 and $250 for the three-month period ended September 30, 2003. Net loan charge-offs/(recoveries) totaled $288 for the three-monthperiod ended September 30, 2004 and $316 for the same period in 2004.**

**The provision for possible loan losses was $760 for the nine-month period endedSeptember 30, 2004 and $750 for the nine-month period ended September 30, 2003. Net loan charge-offs/(recoveries) totalled $396 for the nine-monthperiod ended September 30, 2004 and $407 for the same period in 2003.**

**The allowance for possible loan losses as a percentage of net loans was 1.25%at September 30, 2004 and 1.33% at September 30, 2003.  The increasedprovisions during the three-month and nine-month periods ended September 30, 2004 reflect the continued strong loan portfolio growth.**

**Securities Transactions - At September 30, 2004, December 31, 2003, and September 30, 2003 market value appreciation in the investment portfolio totalled $2,806,$4,820, and $5,604, respectively.  As indicated, market values have decreaseddue to higher market interest rates in 2004.  Security gains of $154 were takenduring the first quarter of 2003 to supplement liquidity and to take advantageof a steeply-sloping yield curve.**

**Other Income - Other income, net of any gains/losses on security transactions,increased by 8.7% from $1,662 for the three-month period ended September 30, 2003 to $1,806 for the three-month period ended September 30, 2004.**

**Other income, net of any gains/losses on security transactions, increased by 7.0%from $4,471 for the nine-month period ended September 30, 2003 to $4,786 for the nine-month period ended September 30, 2004.**

**This increase in the three-month and nine-month period ended September 30, 2004other income was due to an increase in deposit account volumes and highermerchant discount income, offset somewhat by a decrease in refinancing volumein the mortgage loan department.**

**Other Expenses - Other expenses increased by 9.8% from $4,102 for thethree-month period ended September 30, 2003 to $4,506 for the three-monthperiod ended September 30, 2004. The major components of other expenses aresalaries and employee benefits which increased 7.2% from $2,512 to $2,692;occupancy expense which increased 13.5% from $541 to $614; and other operatingexpenses which increased by 14.4% from $1,049 to $1,200.**

**Other expenses increased by 6.7% from $12,314 for the nine-month period ended September 30, 2003 to $13,137 for the nine-month period ended September 30, 2004. Themajor components of other expenses are salaries and employee benefits whichincreased 4.4% from $7,718 to $8,055; occupancy expense which increased 14.3%from $1,594 to $1,822; and other operating expense which increased by 8.6% from$3,002 to $3,260.**

**22**

**NET INCOME (continued)**

**Theincrease in the three-month and nine-month period ended September 30, 2004 salaries and employee benefits was due to normal pay increases and theincreased costs of providing employee benefits, particularly health insurancecoverage. Occupancy expense has grown in 2004 due to the addition of a newbanking office in Conway.  Looking ahead, the construction, staffing, andequipping of a new branch office in Pawleys  Island, South Carolina, expected in 2005, will add to future occupancy expense.**

**Income Taxes - Provisions for income taxes decreased 6.7% from $1,002 for thethree-month period ended September 30, 2003 to $935 for the three-monthperiod ended September 30, 2004.  Income before income taxes less interest ontax-exempt investment securities increased by 10.1% from $2,864 for thethree-month period ended September 30, 2003 to $3,153 for the sameperiod in 2004.  State tax liability increased as income before income taxesincreased 9.0% from $3,120 to $3,402 during the same period.  Third Quarter2004 income taxes declined slightly due to the recognition of additionaldeferred tax assets.**

**Provisions for income taxes increased 8.6% from $2,770 for the nine-monthperiod ended September 30, 2003 to $3,007 for the nine-month period ended September 30, 2004. Income before income taxes less interest on tax-exempt investmentsecurities increased by 9.6% from $8,012 for the nine-month period ended September30, 2003 to $8,782 for the same period in 2004 and state tax liabilityincreased as income before income taxes increased 8.2% from $8,794 to $9,516during the same period.**

**LIQUIDITY**

**Thebank's liquidity position is primarily dependent on short-term demands forfunds caused by customer credit needs and deposit withdrawals and upon theliquidity of bank assets to meet these needs.  The bank's liquidity sourcesinclude cash and due from banks, federal funds sold and short-terminvestments.  In addition, the bank has established federal funds lines ofcredit from correspondent banks and has the ability to borrow funds from theFederal Reserve System and the Federal Home Loan Bank of Atlanta. Managementfeels that short-term and long-term liquidity sources are more than adequate tomeet funding needs, including the funding of off-balance sheet loan commitmentsand standby letters of credit, if the need arises.  Neither the Company nor theBank are involved in other off-balance sheet contractual relationships ortransactions that could result in liquidity needs or other commitments orsignificantly impact earnings.  The Bank has received regulatory approval to opena new banking office in Pawleys  Island, South Carolina.  Land, construction, and equipment costs are estimated at $1,750.**

**CAPITAL RESOURCES**

**Totalstockholders' equity was $69,945 and $64,623 at September 30, 2004 and December 31, 2003, representing 10.28% and 10.77% of total assets, respectively. At September 30, 2004, the Bank exceeds quantitative measures established by regulation toensure capital adequacy (see NOTE 12 to the consolidated unaudited financialstatements - REGULATORY MATTERS). Capital is considered sufficient bymanagement to meet current and prospective capital requirements and to supportanticipated growth in bank operations.**

**23**

**ACCOUNTING ISSUES**

**Accounting standards that have been issued or proposed by the FinancialAccounting Standards Board that do not require adoption until a future date arenot expected to have a material impact on the consolidated financial statementsupon adoption.**

**RISKS AND UNCERTAINTIES**

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

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

**Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK**

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

**Item 4. CONTROLS AND PROCEDURES**

**Based on the evaluation required by 17 C.F.R. Section 240.13a-15(b) or240.15d-15(b) of the Company's disclosure controls and procedures (as definedin 17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)), the Company's chiefexecutive officer and chief financial officer concluded that the effectivenessof such controls and procedures, as of the end of the period covered by thisquarterly report, was adequate.**

**No disclosure is required under 17 C.F.R. Section 229.308.**

**24**

**SIGNATUREPursuant to the requirements of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.**

**                                  CNBCorporation                                    (Registrant)                                  /s/PaulR.Dusenbury                                                    PaulR. Dusenbury                                  Treasurer                                 (ChiefFinancial and Accounting Officer)Date:  November 10, 2004**

**25**

**PART II.**

**Item 6.  EXHIBITS AND REPORTS ON FORM 8-K**

**See Exhibit Index.**

**(b)  Reports on Form 8-K**

**     OnAugust 13, 2004, the Company furnished a Form 8-K stating that on August 10,     2004, the Registrant's Board of Directors adopteda Code of Ethics for     Executive Officers that addresses specificallythe standards set forth in     regulation 5-K, Item 406(b).  A copy of the newCode of Ethics was set forth as     Exhibit 99.**

**26**

**EXHIBIT INDEX**

**Exhibit 31.1   Certification of Principal Executive Officerrequired by Rule 13a-               14(a)or Rule 15d-14(a) of the Securities Exchange Act of 1934, as               adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**

**Exhibit 31.2   Certification of Principal Financial Officerrequired by Rule 13a-               14(a)or Rule 15d-14(a) of the Securities Exchange Act of 1934, as               adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1   Certification of Chief Executive Officer and ChiefFinancial               Officerpursuant to 18 U.S.C. Section 1350, as adopted pursuant to               Section906 of the Sarbanes-Oxley Act of 2002.**

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