## 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     June 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 jurisdiction of                (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 check mark whether the registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes  X .  No    .**

**     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: 717,363 shares of common stock, par value $10per share, July 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 4.     Item 6.** | **FINANCIAL  INFORMATION     Financial Statements:     Consolidated Balance Sheets as of June 30, 2004,  December 31, 2003 and June 30, 2003      Consolidated Statement of Income for the Three Months  and Six Months Ended June 30, 2004 and 2003     Consolidated Statement of Comprehensive Income  for the Three Months and Six Months EndedJune 30, 2004 and 2003   Consolidated Statement of Changes in  Stockholders'  Equity for the Six Months Ended June 30, 2004 and 2003   Consolidated Statement of Cash Flows for the Six MonthsEnded June 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                 Submission of Matters to a Vote of Security Holders     Exhibits and Reports on Form 8-K** | **            2        3        4           5        6        7-14     14-24        24     24     25           26     26** |
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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-looking statements" for purposes of the safe harbor provided bySection 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives,goals, strategies, future events or performance and underlying assumptions andother statements which are other than statements of historical facts.  Suchforward-looking statements may be identified, without limitation, by the use ofthe words "anticipates," "believes," "estimates," "expects," "intends,""plans," "predicts," "projects," and similar expressions. The Company'sexpectations, beliefs, estimates and projections are expressed in good faithand are believed by the Company to have a reasonable basis, including withoutlimitation, management's examination of historical operating trends, datacontained in the Company's records and other data available from third parties,but there can be no assurance that management's expectations, beliefs, estimatesor projections will result or be achieved or accomplished.**

**     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 the forward-lookingstatements, due to several important factors herein identified, among others,and other risks and factors identified from time to time in the Company'sreports 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      Interest bearing deposits with banks      Investment Securities        (Fair values of $5,685 at         June 30, 2004, $8,516 at          December 31, 2003, and $9,904         at June 30, 2003)      Securities Available for Sale        (Amortized cost of $189,356 at         June 30, 2004, $177,825 at         December 31, 2003, and $156,562         at June 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         2003 and 2002; issued 718,246 in         2003 and 2002         Surplus         Undivided Profits         Net Unrealized Holding         Gains (Losses) on          Available-For-Sale Securities           Less:  Treasury stock              Total  stockholders' equity             Total  liabilities               and  stockholders' equity** | **June 30,   2004     (Unaudited)  $ 24,100   0   5,440               189,133                     31,000      390,303      (4,861)385,442   17,894     11,162   $664,171      $ 123,449  441,027    564,476       29,087   1,652    3,038    598,253             7,182   34,815   24,154   (133)          (100)    65,918    $664,171 ** | **December 31,  2003       $ 25,021   0   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 ** | **June 30,   2003     (Unaudited)  $ 27,630   0   9,243               164,049                     37,000      350,691      (4,564)346,127   14,376      9,317   $607,742      $110,336  393,590    503,926       28,699   4,924    4,648    542,197             7,182   34,792   19,224   4,492           (145)    65,545    $607,742 ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**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   June 30,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Six Months Ended   June 30,**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2004          $  5,927     1,618  240           58     7,843 1,583      65       2      1,650     6,193     210       5,983 901     0     725     1,626     2,682       603   1,151     4,436     3,173   1,140     2,033     $   2.83   $      0    $  91.87      717,492    717,540**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | **2003          $  5,782     1,575  255           62     7,674 1,781        85       2      1,868     5,806     220       5,586 879     0     615     1,494     2,604       511   1,053     4,168     2,912     914     1,998     $   2.78   $      0    $  91.41     718,002    717,073** | **   2004          $ 11,656     3,234  485          104    15,479 3,133      132       4      3,269    12,210     445      11,765 1,759     0   1,221     2,980     5,363     1,208   2,060     8,631     6,114   2,072     4,042     $   5.63   $      0    $  91.87     717,492    717,540** | **2003          $  11,348     3,275  526        111    15,260 3,654  176             7      3,837    11,423     500      10,923 1,716     154   1,093     2,963     5,206     1,053   1,953     8,212     5,674   1,768     3,906     $   5.44   $      0    $  91.41     718,002    717,073** |
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**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          June 30,      ** | **Six Months       Ended         June 30,     ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| **2004   **                                                                                                                                                                                                                                               | **2003   **                                                                                                                          | **2004  **                                                                                                                  | **2003  ** |
| **      $2,033 **                                                                                                                                                                                                                                         | **      $1,998 **                                                                                                                    | **      $4,042 **                                                                                                      | **      $3,906 ** |
| **Other  comprehensive income, net of tax         Unrealized gains/(losses)        on securities:      Unrealized holding gains/(losses)        during period** | **            (3,219)   **                                                                                                 | **            378    **                                                                                 | **            (2,764)   ** | **            548    ** |
| **   Net Comprehensive Income/(Loss)**                                                                                                                                                                                                                              | **          $(1,186)**                                                                                      | **         $2,376 **                                                                          | **         $1,278 ** | **         $4,454 ** |
|                                                                                                                                                                                                                                                                          |                                                                                                                                                     |                                                                                                                                       |  |  |  |

**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  Balance at end of period**                                                                                            | **Six Months Ended  June 30,   **                                                                                                                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2004 **                                                                                                                                                                                                                                             | **2003 **                                                                                                                                                                 |
| **       7,182    None     7,182 **                                                                                                                                                                 | **       7,182    None     7,182 **                                                                                     |
| **   Surplus:  Balance, January 1  Issuance of Common Stock  Gain on sale of Treasury stock  Balance at end of period**                                                                                                                               | **      34,801   None        14    34,815 **                                                                       | **      34,783   None       8    34,792 ** |
| **   Undivided profits:  Balance, January 1  Net Income  Cash dividends declared  Balance at end of period**                                                                                                                                          | **      20,113   4,042    None    24,154 **                                                                                  | **      15,318   3,906    None    19,224 ** |
| **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  (2,764)     (133)**                                                                                                  | **         3,944     548     4,492 ** |
| **   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  (706 shares in 2004; 1,173 shares in 2003)     Total stockholders' equity** | **         (104)  (142)    146       (100)             65,918 ** | **         (102)  (194)    151       (145)             65,545 ** |

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

** **

**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 six-month period ended            June 30,                   2004               2003  ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **   $  4,042         422   445   (1,986)     0      (68)  (745)   1,873 **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | **   $  3,906         344   500   110      (154)     (2)  23     (590)**                                                                                                                                                                                      |
| **        Net  cash provided by operating            activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **   3,983 **                                                                                                                                                                                                                                                                                                             | **   4,137 ** |
| **   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 held to     maturity    Purchase of investment securities     available for sale    (Increase) decrease in federal funds sold    (Increase) decrease in loans    Premises and equipment expenditures**                        | **         0      2,641      46,148      0      (57,678)  (30,000)  (28,269)  (1,248)**                                                                                                                                                                                      | **         6,529      3,862      34,486      0      (38,083)  (15,000)  (25,069)  (2,271)** |
| **        Net  cash provided by (used for)            investing  activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **    (68,406)**                                                                                                                                                                                                                                                                                                                    | **    (35,546)** |
| **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)  61,363      4,327           682 **                                                                                                                                                                                                                                       | **   (2,690)  35,617      2,480        (1,585)** |
| **           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, June 30, 2004 AND 2003     CASH PAID (RECEIVED) FOR:    Interest    Income taxes**                                                                                                                                           | **      63,502       (921)       25,021    $ 24,100     $  3,308   $  2,072 **                                                                                                                                                  | **      33,822       2,413        25,217    $ 27,630     $  3,993   $  1,779 ** |

**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, 717,492 for the six-month period ended June 30, 2004and 718,002 for the six-month period ended June 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 six-month period ended June 30, 2004 and for the year endedDecember 31, 2003 were approximately $13,496 and $10,346, respectively.**

**7**

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**NOTE 3 - INVESTMENTSECURITIES**

**Investment securities with a par value ofapproximately $94,595 at June 30, 2004 and $85,195 at December 31, 2003 werepledged to secure public deposits and for other purposes required by law.**

**The following summaries reflect the book value, unrealized gains and losses,approximate market value, and tax-equivalent yields of investment securities atJune 30, 2004 and at December 31, 2003.**
| **            AVAILABLE FOR SALE    United States Treasury**                                                                                                                                                                                              | **            June  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**                                                                                   | **      11,825 158,665   170,490                1,041**                                                                                                                                                                                                                                                                 | **      218 1,438   1,656                -** | **      - 2,480   2,480               37** | **      12,043 157,623   169,666                1,004** | **      5.30%3.72   3.83           3.60%** |
| **  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  10,530   6,502    17,513        312  $189,356**                                                                                                                                                                                                                                                                           | **      7  351   298     656        -  $2,312** | **      -  -    18      18        -  $2,535** | **      488  10,881   6,782    18,151        312  $189,133** | **      5.29%  5.77 6.78   6.14       -   4.04%** |
| **    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**                                                                 | **      1,140    3,399       901     5,440  $  5,440**                                                                                                                                                                                                                                                                            | **      15  172    58     245  $  245** | **      -  -     -       -  $    -** | **      1,155  3,571     959     5,685  $  5,685** | **      7.01%  7.27 7.28   7.22   7.22%** |

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

**As of the quarter endedJune 30, 2004, the Bank did not hold any securities of an issuer that exceeded10% of stockholders' equity. The net unrealized holding gains/(losses) onavailable-for-sale securities component of capital is $(133) as of June 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 June 30, 2004 and December 31, 2003 by majorclassification:**
| **         Real estate loans - mortage                    - 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** | **June 30,   December 31,   2004         2003    **                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **   $242,791   44,096   64,992      34,242   2,485    1,697    390,303     (4,861)  $385,442 **                                                                                                                                                                                                                                                                                                                                                                                       | **   $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 six-month periodended June 30, 2004 and 2003 and the year ended December 31, 2003 aresummarized 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    Six  Months Ended   December     June 30,           June  30,         31,         2004     2003      2004     2003      2003     **

**   $ 4,706  63     0     41  $   104  $    17     0     32  $    49  $    55  $   210  $ 4,861**

**   $ 4,377        19     39     72  $   130 $    25     5     67  $    97  $    33  $   220  $ 4,564**

**   $ 4,524      72          17    132  $   221      $    30     1     82  $   113  $   108  $   445  $ 4,861**

**   $ 4,155      49          44    163  $   256      $    58     8     99  $   165  $    91  $   500  $ 4,564**

**   $ 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**

**                .02%**

**                .01%**

**                  .03%**

**                .03%**

**                .17%**

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

**AtJune 30, 2004 and December 31, 2003 loans on which no interest was beingaccrued totalled approximately $235 and $351, respectively and foreclosed realestate totalled $80 and $0, respectively; and loans 90 days past due and stillaccruing totalled $5 and $130, respectively.**

**11**

**NOTE 5 - PREMISES ANDEQUIPMENT**

**     Propertyat June 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**

**June 30     2004       $ 15,866    7,090     5,452  $ 28,408       10,514    $ 17,894  **

**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 $209 and $422 for the quarter ended and the six-month period ended June 30,2004, respectively and $739 for the year ended December 31, 2003.**
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
**     AtJune 30, 2004 and December 31, 2003, certificates of deposit of $100,000 ormore included in time deposits totaled approximately $107,804 and $86,975respectively.  Interest expense on these deposits was approximately $482 and$938 for the quarter ended and the six-month period ended June 30, 2004,respectively, and $1,929 for the year ended December 31, 2003.**

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

**     AtJune 30, 2004 and December 31, 2003, securities sold under repurchaseagreements totaled $29,087 and $24,760. Securities with a book value of $34,770($35,386 market value) and $34,100 ($35,341 market value), respectively, areused as collateral for the agreements.  The weighted-average interest rate ofthese agreements was 1.15 percent and .96 percent at June 30, 2004 and December31, 2003.**

**NOTE 8 - LINES OF CREDIT**

**     AtJune 30, 2004, the Bank had unused short-term lines of credit to purchaseFederal Funds from unrelated banks totaling $27,000.  These lines of credit areavailable on a one to seven day basis for general corporate purposes of theBank.  All of the lenders have reserved the right to withdraw these lines attheir 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 U.S. Treasury and Agency Notes with a marketvalue of $5,942 at June 30, 2004.  The amount outstanding under the notetotaled $1,652 and $970 at June 30, 2004 and December 31, 2003, respectively.**

**     The Bank also has a line of credit from theFederal Home Loan Bank of Atlanta for $99,874 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 June 30, 2004 and December 31, 2003,respectively.**

**NOTE 9 - INCOME TAXES**

**     Incometax expense for the quarter ended June 30, 2004 and June 30, 2003 on pretaxincome of $3,173 and $2,912 totalled $1,140 and $914 respectively.  Income taxexpense for the six-month period ended June 30, 2004 and June 30, 2003 onpretax income of $6,114 and $5,674 totalled $2,072 and $1,768 respectively. The provision for federal income taxes is calculated by applying the 34%statutory federal income tax rate and increasing or reducing this amount due toany tax-exempt interest, state bank tax (net of federal benefit), businesscredits, surtax exemption, tax preferences, alternative minimum taxcalculations, or other factor.  A summary of income tax components and areconciliation of income taxes to the federal statutory rate are included in fiscalyear-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 June 30,2004.**

**     In the normal course of business, the banksubsidiary is party to financial instruments with off-balance-sheet riskincluding commitments to extend credit and standby letters of credit.  Suchinstruments have elements of credit risk in excess of the amount recognized inthe balance sheet.  The exposure to credit loss in the event of nonperformanceby the other parties to the financial instruments for commitments to extendcredit and standby letters of credit is represented by the contractual notionalamount of those 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**

**June 30, 2004  $ 40,173   3,180   **

**                     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 six-monthperiods ended June 30, 2004 and year ended December 31, 2003, $145, $292, 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 June 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**

**$66,687     61,826     61,826**

**16.13%     14.96      9.71 **

**$33,074     16,537     25,468**

**8.0%     4.0      4.0 **

**$41,343     24,806     31,834**

**10.0%     6.0      5.0 **

 

**NOTE 13 - CONDENSED FINANCIAL INFORMATION**

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

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

**ASSETS     Cash     Investment in subsidiary     Fixed assets     Other assets**

**   $  2,377   61,693   1,811       37   $ 65,918 **

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

**      $      0   65,918   $ 65,918 **

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

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

**   $  4,095   0      (53)  $  4,042 **

 

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS**

**(All dollar amounts in thousands, 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 June 30, 2004 and for the three-month and six-monthperiods ending June 30, 2004 and 2003 have been prepared in accordance withgenerally 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 recurringadjustments) 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 11.3% from $350,691 at June 30,2003 to $390,303 at June 30, 2004 and have increased as a percentage of totalassets from 57.7% to 58.8% over the same period as loan demand has strengthenedin our market. Securities and federal funds sold have decreased as a percentageof total assets from 34.6% at June 30, 2003 to 33.9% at June 30, 2004 aslending has improved.  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 18.2% at June 30, 2003 to 18.6% at June 30, 2004.  As more customers, bothbusiness and personal, are attracted to interest-bearing deposit accounts, weexpect the percentage of demand deposits to decline over the long-term.Interest-bearing deposits have increased slightly from 64.8% of total assets atJune 30, 2003 to 66.4% at June 30, 2004 while securities sold under agreementto repurchase have decreased from 4.7% to 4.4% 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 June 30, 2004and 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**

**June 30,    2004    2003 **

**      58.8%  .8   28.5      4.6    92.7     7.3   100.0%**

**      57.7%  1.5   27.0      6.1    92.3     7.7   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**

**            66.4%     4.4    .2    71.0  18.6   .5   9.9   100.0%**

**            64.8%     4.7    .8    70.3  18.2   .7  10.8   100.0%**

 

**15**

**RESULTS OF OPERATION**

**CNBCorporation experienced earnings for the three-month period ended June 30, 2004and 2003 of $2,033 and $1,998, respectively, resulting in a return on averageassets of 1.25% and 1.38% and a return on average stockholders' equity of12.18% and 12.46%.**

**CNB Corporation experienced earnings for the six-month period ended June 30,2004 and  2003 of $4,042 and $3,906, respectively, resulting in a return onaverage assets of 1.27% and 1.37% and a return on average stockholders' equityof 12.17% and 12.35%.**

**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. Totalassets have increased  $56,429 or 9.3% from $607,742 at June 30, 2003 to $664,171 at June 30, 2004. The following table sets forth the financial highlightsfor the three-month and six-month periods ending June 30, 2004 and June 30,2003:**

 

**CNB Corporation  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  Cash dividends declared     Per Share  Total assets  Total deposits  Loans  Investment securities and    securities available    for sale  Stockholders' equity  Book value per share  Ratios (1):  Annualized return on   average total assets  Annualized return on    average stockholders'    equity**

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

**Six-Month  Period       Ended June 30,        Percent    Increase   2004     2003   (Decrease)**

**   5,983   3,173   2,033   2.83   0   0   664,171   564,476   390,303         194,573   65,918   91.87          1.25%     12.18%**

**   5,586   2,912   1,998   2.78   0   0   607,742   503,926   350,691         173,292   65,545   91.41          1.38%     12.46%**

**   7.1%   9.0    1.8    1.8    -    -    9.3%   12.0    11.3          12.3    .6    .5           (9.4)%     (2.2)%**

**   11,765   6,114   4,042   5.63   0   0   664,171   564,476   390,303         194,573   65,918   91.87          1.27%     12.17%**

**   10,923   5,674   3,906   5.44   0   0   607,742   503,926   350,691         173,292   65,545   91.41          1.37%     12.35%**

**   7.7%   7.8    3.5    3.5    -    -    9.3%   12.0    11.3          12.3    .6    .5           (7.3)%     (1.5)%**

**(1) For the three-month period ended June 30, 2004 and June 30, 2003, averagetotal assets amounted to $652,757 and $579,362 with average stockholders'equity totaling $66,779 and $64,137, respectively. For the six-month periodended June 30, 2004 and June 30, 2003, average total assets amounted to$638,536 and $572,202 with average stockholders' equity totaling $66,420 and$63,249 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 maintained net interest margins for the three-month and six-monthperiods ended June 30, 2004, of 4.18% and 4.21%, respectively, and 4.40% and4.38%, respectively, for the same periods in 2003 as compared to management'slong-term target of 4.50%.  Net interest margins have been compressed at thebank and industry-wide, as we are experiencing almost fifty year lows in marketinterest rates.  We anticipate interest rates to increase in 2004 and during2005 which should enhance our earnings potential through a wider net interestmargin.**

**Fully-tax-equivalent net interest income showed a 6.4% increase from $5,937 forthe three-month period ended June 30, 2003 to $6,317 for the three-month periodended June 30, 2004. During the same period, total fully-tax-equivalentinterest income increased by 2.1% from $7,805 to $7,967 and total interestexpense decreased by 11.7% from $1,868 to $1,650. Fully-tax-equivalent netinterest income as a percentage of total earning assets has shown a decrease of..22% from 4.40% for the three-month period ended June 30, 2003 to 4.18% for thethree-month period ended June 30, 2004.**

**Fully-tax-equivalent net interest income showed a 6.6% increase from $11,694for the six-month period ended June 30, 2003 to $12,460 for the six-monthperiod ended June 30, 2004. During the same period, total fully-tax-equivalentinterest income increased by 1.3% from $15,531 to $15,729 and total interestexpense decreased by 14.8% from $3,837 to $3,269. Fully-tax-equivalent netinterest income as a percentage of total earning assets has shown a decrease of..17% from 4.38% for the six-month period ended June 30, 2003 to 4.21% for thesix-month period ended June 30, 2004.**

**The tables on the following four pages present average balance sheets, averageyield and interest earned on earning assets, and average rate and interestexpense on interest bearing liabilities for the three-month and six-monthperiods ended June 30, 2004 and 2003, and a summary of changes in net interest incomeresulting from changes in volume and changes in rate between the three-monthand six-month periods ended June 30, 2004 and 2003.**

**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 6/30/04  Three  Months Ended 6/30/03    Avg.    Interest Avg.  Ann.  Avg.    Interest  Avg.  Ann.   Balance Income/  Yield  or   Balance Income/    Yield  or   Expense    Rate             Expense(1)  Rate    **

**         $385,100     171,608  21,757        25,884   604,349    48,408  $652,757               $439,516           26,007      1,075   $465,598  117,505     1,875  66,779    $652,757    $604,349**

**         $  5,927     1,618  364            58     7,967                     1,583           65          2   $  1,650           $  6,317     $    124**

**         6.16%     3.77   6.69         .90   5.27                      1.44            1.00      .74      1.41                              4.18 **

**         $349,362     144,284  25,010        21,471   540,127    39,235  $579,362               $389,082           27,764      1,202   $418,048   92,387  4,790  64,137    $579,362    $540,127**

**         $  5,782     1,575  386            62     7,805                     1,781           85          2   $  1,868           $  5,937     $    131**

**         6.62%     4.37   6.17         1.16   5.78                        1.83            1.22      .67      1.79                              4.40 **

 
**   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**

**      1.25      12.18      0      10.23   11.99   17.34      92.58 **

**      1.38      12.46      0      11.07   13.32   18.36      93.23 **

 
**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**

**Six Months Ended  6/30/04   Six Months Ended 6/30/03      Avg.    Interest Avg.  Ann. Avg.     Interest  Avg. Ann.   Balance Income/  Yield  or  Balance  Income/   Yield  or    Expense    Rate             Expense(1)  Rate    **

**         $377,400     168,071  23,207           23,387   592,065    46,471  $638,536               $430,589           26,040      1,046   $457,675  111,078  3,363  66,420    $638,536    $592,065**

**         $ 11,656     3,234  735              104    15,729                     3,133           132          4   $  3,269           $ 12,460     $    250**

**         6.18%     3.85   6.33            .89   5.31                        1.46            1.01      .76      1.43                              4.21 **

**         $342,369     145,817  25,896           19,361   533,443    38,759  $572,202               $381,589           27,300      1,295   $410,184   93,823  4,946  63,249    $572,202    $533,443**

**         $ 11,348     3,275  797              111    15,531                     3,654           176          7   $  3,837           $ 11,694     $    271**

**         6.63%     4.49   6.16            1.15   5.82                        1.92            1.29      1.08      1.87                              4.38 **

 
**   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**

**      1.27      12.17      0      10.40   12.26   17.60      92.72 **

**      1.37    12.35      0      11.05   13.30   18.47      93.23 **

 
**19**

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

**                    Earning Assets:   Loans, Net of unearned    Income (2)   Investment securities:    Taxable    Tax-exempt   Federal funds sold and    Securities purchased under    agreement to resell       Total Earning Assets       Interest-bearing    Liabilities:       Interest-bearing deposits   Federal funds purchased and    securities sold under    agreement to repurchase   Other short-term borrowings       Total Interest-bearing    Liabilities   Interest-free Funds    Supporting Earning Assets       Total Funds Supporting   Earning Assets       Interest Rate Spread   Impact of Non-interest-    bearing Funds on Net Yield    on Earning Assets       Net Yield on Earning Assets**

**    Average   Volume2004                385,100       171,608   21,757         25,884    604,349    439,516           26,007  1,075     466,598    137,751              604,349**

**    Average   Volume2003                349,362       144,284   25,010         21,471    540,127    389,082           27,764  1,202     418,048    122,079              540,127**

**        Yield/Rate2004 (1)                6.16%       3.77%   6.69%         .90%    5.27%    1.44%           1.00% .74%     1.41%              1.09% 3.86%         .32%    4.18%**

**        Yield/Rate2003 (1)                6.62%       4.37%   6.17%        1.16%    5.78%    1.83%           1.22% .67%     1.79%              1.38% 3.99%         .41%    4.40%**

**    Interest     Earned/Paid 2004 (1)                 5,927       1,618   364           58    7,967                1,583           65    2     1,650              1,650                6,317**

**    Interest     Earned/Paid 2003 (1)                 5,782       1,575   386           62    7,805                1,781           85    2     1,868              1,868           5,937**

**      Variance            145        43    (22)            (4)       162                 (198)           (20)     0        (218)                  (218)**

**    Change   Due toRate                (402)       (216)   33            (14)      (599)                   (379)           (15)     0        (394)                  (394)**

**    Change   Due toVolume            591        299    (50)          13      853                 231            (5)   0       226                226 **

**Change   Due to   Rate XVolume            (44)       (40)   (5)          (3)     (92)                (50)           0    0       (50)               (50)**

**(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 Six Months Ended June 30, 2004 and 2003(Dollars in Thousands)**

**                    Earning Assets:   Loans, Net of unearned    Income (2)   Investment securities:    Taxable    Tax-exempt   Federal funds sold and    Securities purchased under    agreement to resell       Total Earning Assets       Interest-bearing    Liabilities:       Interest-bearing deposits   Federal funds purchased and    securities sold under    agreement to repurchase   Other short-term borrowings       Total Interest-bearing    Liabilities   Interest-free Funds    Supporting Earning Assets       Total Funds Supporting   Earning Assets       Interest Rate Spread   Impact of Non-interest-    bearing Funds on Net Yield    on Earning Assets       Net Yield on Earning Assets**

**    Average   Volume2004                377,400       168,071   23,207         23,387    592,065    430,589           26,040  1,046     457,675    134,390              592,065**

**    Average   Volume2003                342,369       145,817   25,896         19,361    533,443    381,589           27,300  1,295     410,184    123,259              533,443**

**        Yield/Rate2004 (1)                6.18%       3.85%   6.33%         .89%    5.31%    1.46%           1.01% .76%     1.43%              1.10% 3.88%         .33%    4.21%**

**        Yield/Rate2003 (1)                6.63%       4.49%   6.16%        1.15%    5.82%    1.92%           1.29%1.08%     1.87%              1.44% 3.95%         .43%    4.38%**

**    Interest     Earned/Paid 2004 (1)                 11,656       3,234   735           104    15,729                3,133           132     4      3,269                3,269                 12,460**

**    Interest     Earned/Paid 2003 (1)                 11,348       3,275   797           111    15,531                3,654           176     7      3,837                3,837                 11,694**

**      Variance            308        (41)   (62)            (7)       198                 (521)           (44)    (3)       (568)                  (568)**

**    Change   Due toRate                (770)       (467)   22            (25)    (1,240)                   (878)           (38)    (2)       (918)                  (918)**

**    Change   Due toVolume            1,161        500    (83)            23      1,601                 470            (8)    (1)        461                    461 **

**Change   Due to   Rate XVolume            (83)       (74)   (1)           (5)     (163)                (113)           2     0       (111)                (111)**

**(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 $210 for the three-month periodended June 30, 2004 and $220 for the three-month period ended June 30, 2003.Net loan charge-offs/(recoveries) totaled $55 for the three-month period ended June 30, 2004and $33 for the same period in 2003.**

**The provision for possible loan losses was $445 for the six-month period endedJune 30, 2004 and $500 for the six-month period ended June 30, 2003. Net loancharge-offs/(recoveries) totalled $108 for the six-month period ended June 30, 2004and $91 for the same period in 2003.**

**The allowance for possible loan losses as a percentage of net loans was 1.26%at June 30, 2004 and 1.32% at June 30, 2003.  The decreased provisions duringthe three-month and six-month periods ended June 30, 2004 reflect the continuedlow net charge-offs in the loan portfolio.**

**Securities Transactions - At June 30, 2004, December 31, 2003, and June 30,2003 market value appreciation in the investment portfolio totalled $22,$4,820, and $8,148, 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 8.8% from $1,494 for the three-month period ended June 30, 2003 to$1,626 for the three-month period ended June 30, 2004.**

**Other income, net of any gains/losses on security transactions, increased by6.1% from $2,809 for the six-month period ended June 30, 2003 to $2,980 for thesix-month period ended June 30, 2004.**

**This increase in the three-month and six-month period ended June 30, 2004 otherincome was due to an increase in deposit account volumes and higher merchantdiscount income, offset somewhat by a decrease in refinancing volume in themortgage loan department.**

**Other Expenses - Other expenses increased by 6.4% from $4,168 for thethree-month period ended June 30, 2003 to $4,436 for the three-month periodended June 30, 2004. The major components of other expenses are salaries andemployee benefits which increased 3.0% from $2,604 to $2,682; occupancy expensewhich increased 18.0% from $511 to $603; and other operating expenses whichincreased by 9.3% from $1,053 to $1,151.**

**Other expenses increased by 5.1% from $8,212 for the six-month period endedJune 30, 2003 to $8,631 for the six-month period ended June 30, 2004.  Themajor components of other expenses are salaries and employee benefits whichincreased 3.0% from $5,206 to $5,363; occupancy expense which increased 14.7%from $1,053 to $1,208; and other operating expense which increased by 5.5% from$1,953 to $2,060.**

**22**

**NET INCOME (continued)**

**Theincrease in the three-month and six-month period ended June 30, 2004 salariesand employee benefits was due to normal pay increases and the increased costsof providing employee benefits, particularly health insurance coverage.Occupancy expense has grown in 2004 due to the addition of a new banking officein Conway.**

**Income Taxes - Provisions for income taxes increased 24.7% from $914 for thethree-month period ended June 30, 2003 to $1,140 for the three-month periodended June 30, 2004.  Income before income taxes less interest on tax-exemptinvestment securities increased by 10.4% from $2,657 for the three-month periodended June 30, 2003 to $2,933 for the same period in 2004.  State tax liabilityincreased as income before income taxes increased 9.0% from $2,912 to $3,173during the same period.**

**Provisions for income taxes increased 17.2% from $1,768 for the six-monthperiod ended June 30, 2003 to $2,072 for the six-month period ended June 30,2004. Income before income taxes less interest on tax-exempt investmentsecurities increased by 9.3% from $5,148 for the six-month period ended June30, 2003 to $5,629 for the same period in 2004 and state tax liabilityincreased as income before income taxes increased 7.8% from $5,674 to $6,114during 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.  It is anticipated that the Bank will makeapplication to construct, equip, and staff a new banking office in PawleysIsland, South Carolina in the latter part of 2004.  Land, construction, andequipment costs are estimated at $1,750.**

**CAPITAL RESOURCES**

**Totalstockholders' equity was $65,918 and $64,623 at June 30, 2004 and December 31,2003, representing 9.92% and 10.77% of total assets, respectively. At June 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. Theseregulations can and do change significantly from period to period.  The Companyalso undergoes periodic examinations by the regulatory agencies, which maysubject 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 other riskswhich the Company manages in the normal course of business, such as creditquality and liquidity risk, management considers interest rate risk to be asignificant market risk that could potentially have a material effect on theCompany's financial condition and results of operations (See Net Income - NetInterest Income).  Other types of market risks, such as foreign currency riskand commodity price risk, do not arise in the normal course of the Company'sbusiness 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:  August 10, 2004**

**25**

**PART II.**

**Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**AnAnnual Meeting of shareholders of CNB Corporation was held in the ConwayBanking Office of The Conway National Bank at 1411 Fourth Avenue, Conway, SouthCarolina, at 4:15 p.m., Conway, South Carolina time, on May 11, 2004.**

**The purpose of the Annual Meeting was to: (1) elect three Directors; and (2)ratify the appointment of Elliott Davis, LLC as the Company's independentpublic accountant for the fiscal year ending December 31, 2004.**

**Proxies for the meeting were solicited pursuant to Regulation 14 under the Act;there was no solicitation in opposition to the management's nominees as listedin the proxy statement; and all of such nominees were elected.**

**There were 470,485 of the 717,542 shares issued present or represented by proxyand the majority of shares were voted for the election of the three Directorslisted as management's nominees in the proxy statement; and for theratification of Elliott Davis, LLC as the Company's 2004 independent publicaccountant.**

**Item 6.  EXHIBITS AND REPORTS ON FORM 8-KSee Exhibit Index.**

**(b)  Reports on Form 8-K - No reports on Form 8-K were filed duringthe quarter     covered by this report.**

**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 andChief Financial               Officerpursuant to 18 U.S.C. Section 1350, as adopted pursuant to               Section906 of the Sarbanes-Oxley Act of 2002.**

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