<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K

   (Mark One)
{X}  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934
                  For the fiscal year ended DECEMBER 31, 1998
                                      OR
{ }  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
              For the transition period from _______ to ______.

                CNB BANCSHARES, INC.                             0-11510
(Exact name of registrant as specified in its charter)  (Commission file number)

                 INDIANA                                      35-1568731
(State or other jurisdiction of incorporation             (I.R.S. Employer
or organization)                                          Identification No.)

20 N.W. THIRD STREET, EVANSVILLE, INDIANA                      47739
 (Address of principal executive offices)                    (Zip Code)

      Registrant's telephone number, including area code:  (812) 456-3400

         Securities registered pursuant to Section 12(b) of the Act:

                                                          Name of Each Exchange
           Title of Each Class                             on Which Registered
           -------------------                             --------------------
        COMMON STOCK, NO PAR VALUE                       NEW YORK STOCK EXCHANGE

          Securities registered pursuant to Section 12(g) of the Act:

                                     NONE

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

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. { }

   The aggregate market value of the voting stock held by non-affiliates of the
registrant was $1,259,576,000 as of March 5, 1999.

   The number of shares outstanding of the registrant's common stock, without
par value, as of March 5, 1999 was 35,206,103 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

(1)  Portions of the Registrant's Annual Report to Shareholders for the year
     ended December 31, 1998. (Part I, Part II and Part IV)

(2)  Portions of the Registrant's Proxy Statement for Annual Meeting of
     Shareholders to be held April 21, 1999.  (Part III)

     Exhibit index is on pages 20 and 21.
                                        
                                       1
<PAGE>
 
                                    PART I

ITEM 1. BUSINESS

OVERVIEW

   CNB Bancshares, Inc. (the Corporation) is a regional, bank holding company
headquartered in Evansville, Indiana.  Incorporated on May 26, 1983, under the
laws of the State of Indiana, the Corporation began operating in 1984 as a one-
bank holding company for The Citizens National Bank of Evansville, which was
chartered in 1874.  Since that time, the Corporation has acquired additional
financial subsidiaries and on December 31, 1998, the Corporation combined the
charters of its eight subsidiary banks into one Michigan state bank charter
under the name of Citizens Bank of MidAmerica (Citizens).  Citizens operated 144
offices in Indiana, Kentucky, Illinois and Michigan and had total assets and
shareholders' equity of $7,134,268,000 and $571,140,000, respectively at
December 31, 1998.  The Corporation also owns a consumer finance company and a
leasing company.  As of December 31, 1998, the Corporation had consolidated
total assets of $7,141,797,000 and total shareholders' equity of $527,046,000.

   Citizens offers a broad range of commercial and retail banking and other
financial products and services to its customers.  Deposit products include
certificates of deposit, individual retirement accounts and other time deposits,
checking and other demand deposit accounts, including interest bearing checking
accounts, savings and money market accounts and cash management services.  Loans
include commercial and industrial, real estate mortgage and servicing, consumer,
agricultural and leasing services.  Other products and services include deposit
and investment brokerage, trust and asset management, credit-related insurance,
automatic teller machines and safe deposit boxes.  Citizens is the Corporation's
principal subsidiary.

   The Corporation also has four non-banking subsidiaries.  Citizens Life
Assurance Company underwrites credit life and disability insurance sold through
the Corporation's banking subsidiary.  Citizens Insurance of Evansville provides
risk management, employee benefits and personal insurance.  Small Parker &
Blossom is a third party administrator of employee benefit plans.  Wedgewood
Partners is a full service broker/dealer and asset management firm.

   The Corporation operates with a super community bank philosophy--
decentralizing day-to-day customer services such as pricing and lending
decisions, while centralizing data processing systems, product development and
back office support functions.  The Corporation's operations in each market are
managed by a president under the guidance of a regional board of directors.  By
keeping the decision-making process close to the customer, the Corporation
believes it has a competitive advantage over super regional companies, while
providing the necessary scale to manage expenses.  Management believes that the
Corporation's size gives it a considerable advantage over community banks
through a much more diverse product offering and greater access to resources,
especially technology.  The Corporation has operations in six of the ten largest
Indiana counties.  Based upon the most recently available FDIC deposit data, 78%
of its deposits come from markets where the Corporation ranks first, second or
third in deposit market share.

                                       2
<PAGE>
 
   The Corporation continues to explore new products and services to meet the
needs and demands of its growing customer base and to remain competitive with
other financial institutions operating in its market areas.

PENDING AND RECENTLY COMPLETED ACQUISITIONS

   The Corporation has grown significantly through 33 acquisitions of banks and
non-banks since 1986.  The future growth of the Corporation will be dependent in
part upon the ability of the Corporation to acquire businesses at favorable
prices, terms and conditions and to properly manage and integrate their
operations.  The Corporation's ability to expand successfully through
acquisitions depends upon many factors, including the successful identification
and acquisition of financial institutions and other related businesses and
management's ability to effectively integrate the acquired businesses.  Future
acquisitions by the Corporation may involve the issuance of its common stock
which would have the effect of diluting the ownership interests of the existing
shareholders of the Corporation.

   Acquisitions entail risks that business judgments will prove inaccurate with
respect to anticipated market growth, projected revenue enhancements and
expected operating expense savings.  Acquisitions also entail the risks of the
diversion of management's attention and the conversion of the operations and
assimilation of personnel of the acquired companies, each of which could
adversely affect the Corporation's results of operations.  In addition, the
success of any acquisition will depend in part upon the Corporation's ability to
effectively integrate the acquired company into the Corporation's operations and
implement its business style and philosophy.  There can be no assurance that
future acquisition opportunities, if any, can be consummated on favorable terms,
that the Corporation will be successful in acquiring any businesses or that any
such acquisitions will enhance the earnings of the Corporation.

   On August 3, 1998, the Corporation issued 1,143,389 shares and assumed the
terms of stock options that allow the purchase of 30,846 shares of its common
stock in exchange for all of the outstanding shares of National Bancorp
(National) of Tell City, Indiana.  The acquisition was accounted for under the
pooling of interests method of accounting without restatement of prior periods,
as the amounts involved were not material to the Corporation's financial
results.

   On April 17, 1998, the Corporation issued 13,771,974 shares and assumed the
terms of stock options to allow the purchase of 123,901 shares of its common
stock in exchange for all of the outstanding shares of Pinnacle Financial
Services, Inc. (Pinnacle), headquartered in St. Joseph, Michigan.  The
acquisition was accounted for under the pooling of interests method of
accounting and, accordingly, all financial data of the Corporation for prior
periods has been restated to include the financial position and operating
results of Pinnacle.

   On January 1, 1998, the Corporation issued 115,290 shares of its common stock
for the acquisition of Wedgewood Partners, a full service broker/dealer and
asset management firm based in St. Louis, Missouri.  Goodwill of $2,345,000
related to this acquisition is being amortized on a straight-line basis over 15
years.  The acquisition was accounted for under the purchase method of
accounting; and, accordingly, the consolidated financial statements include the
assets and liabilities and results of operations from the January 1, 1998
transaction date forward.

                                       3
<PAGE>
 
COMPETITION

   The business of the Corporation and its subsidiaries is highly competitive.
There are numerous banks and bank holding companies located in southern
Illinois, Indiana, Kentucky, Michigan and Tennessee, which offer substantial
competition in the acquisition and operation of banks, savings associations and
non-bank financial institutions.  The banking and financial subsidiaries and the
Corporation's non-banking subsidiaries encounter substantial competition in all
of their banking and related activities and expect such competition to intensify
as the financial industry expands due to more non-bank competitors offering
financial services.  In addition, recent changes in laws relating to interstate
banking have permitted some local institutions to become part of larger regional
and national organizations.

   The Corporation competes with other commercial banks, savings associations
and credit unions for loans and deposits and with money market funds for
deposits.  Consumer and commercial finance companies, mortgage banks, securities
brokerage companies, investment banking firms and insurance companies also
compete for various types of loans and financial services.  Some of these
entities and institutions are not subject to the same regulatory restrictions as
financial institution holding companies and their subsidiary banks and savings
associations and, therefore enjoy certain competitive advantages.  The principal
methods of competition in banking activities are price, service and convenience.

REGULATIONS AND SUPERVISION

   The United States banking industry is highly regulated, with federal and
state agencies having supervisory authority regarding the chartering,
supervision and examination of banks, savings banks and their bank holding
companies.  There are numerous laws and regulations which limit how a bank
holding company and its subsidiaries conduct their businesses, including minimum
capital levels, limitations on the payment of dividends and regulation of
acquisitions and mergers.

   As a bank holding company, the Corporation is subject to regulation under the
Bank Holding Company Act of 1956, as amended (the BHC Act), which is
administered by the Board of Governors of the Federal Reserve System (Federal
Reserve Board).  The Corporation is required to file reports with the Federal
Reserve Board and various other federal and state agencies and to provide such
additional information as may be required.

   A bank holding company must obtain Federal Reserve Board approval before
acquiring, directly or indirectly, ownership or control of any voting shares of
any bank or bank holding company if, after such acquisition, it would own or
control more than 5% of such shares (unless it already owns or controls a
majority of such shares).  Federal Reserve Board approval must also be obtained
before any bank holding company acquires all or substantially all of the assets
of another bank or bank holding company or merges or consolidates with another
bank holding company.

   The BHC Act also prohibits a bank holding company, with certain limited
exceptions, from acquiring or retaining direct or indirect ownership or control
of more than 5% of the voting shares of any company which is not a bank or bank
holding company, or from engaging in any activities other than those of banking,
managing or controlling banks, or providing services for its subsidiaries.  The
principal exceptions to these prohibitions involve certain activities which the
Federal Reserve Board has 

                                       4
<PAGE>
 
determined to be so closely related to the business of banking or managing or
controlling banks as to be a proper incident thereto.

   The Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA)
was signed into law on September 30, 1996.  EGRPRA streamlined the non-banking
activities application process for well-capitalized and well-managed bank
holding companies.  Under EGRPRA, qualified bank holding companies may commence
a regulatorily approved non-banking activity without prior notice to the Federal
Reserve Board; written notice is required within 10 days after commencing the
activity.  Under EGRPRA, the prior notice period is reduced to 12 days in the
event of any non-banking acquisition or share purchase, assuming the size of the
acquisition does not exceed 10% of risk-weighted assets of the acquiring bank
holding company and the consideration does not exceed 15% of Tier 1 capital.
The Federal Reserve Board has adopted comprehensive amendments to its
regulations under the BHC Act that implement the foregoing provisions of the
EGRPRA, including provisions allowing the 12-day prior notice for acquisitions
that exceed the 10% of risk-weighted assets limit, under certain circumstances,
and that also streamline the application/notice process for acquisitions of
banks and bank holding companies and eliminate regulatory provisions that the
Federal Reserve Board considered unnecessary.

   In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (Interstate Act) was signed into law, authorizing, among
other things, interstate acquisitions by bank holding companies, interstate
mergers of banks and "agency banking" with affiliates in different states.  The
Interstate Act amended the BHC Act to allow an adequately capitalized and
managed bank holding company to acquire banks located in any state, beginning
September 29, 1995, subject to state deposit caps and a 10% nationwide deposit
cap.  Adequately capitalized banks were permitted to merge across state lines
without regard to whether the merger is prohibited by the laws of any state
(except for states that "opted-out" of the interstate branching authorization,
specifically Texas and Montana) beginning June 1, 1997.  The Interstate Act's
"agency banking" provisions, effective September 29, 1995, permit affiliated
banks to act as agent for each other in the conduct of most core banking
activities.  Affiliated banks may receive deposits, renew time deposits, close
loans, service loans and receive payments on loans and other obligations on
behalf of each other, without being treated as branches.

   Subsidiary banks of a bank holding company are prohibited from engaging in
certain tie-in arrangements in connection with the extension of credit or the
lease or sale of any property or the furnishing of services.  Bank holding
companies and their non-bank subsidiaries that engage in electronic benefit
transfer services are also subject to certain anti-tying restrictions.
Subsidiary banks of a bank holding company are also subject to certain
restrictions imposed by the Federal Reserve Act on any extensions of credit to
the bank holding company or any of its subsidiaries, or investments in stock or
other securities thereof, and on the taking of such stock or other securities as
collateral for loans.

   The Federal Reserve Board has prescribed capital adequacy guidelines for use
in its examination and regulation of bank holding companies.  If the capital of
a bank holding company falls below the minimum levels established by these
guidelines, it may be denied approval to acquire or establish additional banks
or non-bank businesses.  The guidelines established by the Federal Reserve Board
set a minimum leverage ratio of 3.0% for the most highly rated bank holding
companies that do not anticipate significant growth.  All other institutions are
required to maintain a ratio of 4.0% to 5.0% depending on their particular
circumstances and risk profile.  This ratio is defined as shareholders' equity
less non-qualifying intangible assets plus perpetual preferred stock, as a
percentage of the sum of quarter-to-date total average assets less non-
qualifying intangible assets.  The Federal Reserve Board has also adopted 

                                       5
<PAGE>
 
risk-based capital guidelines which assign various risk weightings to assets and
off-balance sheet items and set minimum capital requirements. Under the current
rules, banks are required to have core capital (Tier 1) of at least 4.0% of 
risk-weighted assets and total capital of 8.0% of risk-weighted assets. Tier 1
capital consists primarily of shareholders' equity, less intangible assets plus
perpetual preferred stock; and total capital consists of Tier 1 capital, certain
long-term debt and convertible debentures and a portion of the allowance for
loan losses. The $172,500,000 of trust preferred securities issued by the
Corporation in June 1998 qualify as Tier 1 capital. At December 31, 1998, the
Corporation's leverage, Tier 1 and total capital ratios were 9.3%, 14.8% and
16.0%, respectively, all well above regulatory minimums.

   The Federal Reserve Board has issued a policy statement on the payment of
cash dividends by bank holding companies.  In the statement, the Federal Reserve
Board expressed its view that a holding company experiencing earnings weaknesses
should not pay cash dividends exceeding its net income nor pay a dividend which
can only be funded in a way that weakens the holding company's financial health,
such as by borrowing.  The Federal Reserve Board periodically examines bank
holding companies and possesses cease and desist powers over bank holding
companies and their non-bank subsidiaries if their actions represent unsafe or
unsound practices.

   The Corporation's banking subsidiary is subject to supervision and regulation
by its chartering authority.  The primary supervisory authorities of the
Corporation's banking subsidiary are the Federal Reserve Board and the Michigan
Financial Institutions Bureau.  These regulators regularly examine such areas as
reserves, loans, investments, management practices and other aspects of bank
operations, and has the authority to prevent a bank from engaging in an unsafe
or an unsound practice in conducting its business.  In addition, the
Corporation's banking subsidiary is a member of, and subject to regulation by,
the Federal Deposit Insurance Corporation (FDIC).

   Federal and state banking laws and regulations govern, among other things,
the scope of a bank's business, the investments it may make, the reserves
against deposits it must maintain, loans a bank makes and collateral it takes,
minimum capital levels, activities with respect to mergers and consolidations,
and the establishment of branches.

   In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA) was enacted.  FDICIA contains various provisions relating to
the supervision, regulation, and operation of banks and bank holding companies.
Various regulations implementing FDICIA have been promulgated by bank
regulators.  FDICIA, among other things, identifies the following capital
standards for depository institutions:  well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized.  A depository institution is well capitalized if it
significantly exceeds the minimum level required by regulation for each relevant
capital measure, adequately capitalized if it meets each such measure,
undercapitalized if it fails to meet any such measure, significantly
undercapitalized if it is significantly below any such measure, and critically
undercapitalized if it fails to meet any critical capital level set forth in the
regulations.  FDICIA requires a bank that is determined to be undercapitalized
to submit a capital restoration plan, and the bank's holding company, subject to
certain limitations, must guarantee that the bank will meet its capital plan.
FDICIA also prohibits banks from making any capital distribution or paying any
management fee if the bank would thereafter be undercapitalized.  Under these
rules, institutions must have a leverage ratio of 5.0% or above, Tier 1 capital
to risk-based assets of 6.0% or above, and total capital to risk-based assets of
10.0% or above in order to qualify as well capitalized.  The Corporation's
banking subsidiary was well 

                                       6
<PAGE>
 
capitalized for purposes of FDICIA and exceeded all other regulatory capital
requirements at year-end 1998.

   FDICIA grants the FDIC authority to impose special assessments on insured
depository institutions to repay FDIC borrowings from the United States Treasury
or other sources and to establish semiannual assessment rates on Bank Insurance
Fund (BIF) and Savings Association Insurance Fund (SAIF) member banks so as to
maintain the funds at the designated reserve ratios defined in FDICIA.  FDICIA
also required the FDIC to implement a risk-based insurance assessment system
pursuant to which the premiums paid by a depository institution are based on the
probability that the BIF or SAIF will incur a loss in respect of such
institution.  At December 31, 1998, the Corporation's banking subsidiary was in
the category of institutions that paid deposit assessments at the lowest rates.

   Because of concerns relating to competitiveness and the safety and soundness
of the banking industry, Congress is considering a number of wide-ranging
proposals for altering the structure, regulation and competitive relationships
of the nation's financial institutions.  Among such bills are new proposals to
merge the BIF and the SAIF insurance funds, to eliminate the federal thrift
charter, to alter the statutory separation of commercial and investment banking,
to allow a wider variety of financial services companies to affiliate with banks
and to further expand the powers of banks, bank holding companies and
competitors of banks.  It cannot be predicted whether or in what form any of
these proposals will be adopted or the extent to which the business of the
Corporation may be affected thereby.

GOVERNMENT POLICIES

   The policies of federal and state agencies including the Federal Reserve
Board, the FDIC and other regulatory authorities may have a significant effect
on the operating results of the Corporation and the banking industry.  An
important function of the Federal Reserve Board is to regulate aggregate money
supply and credit conditions and interest rates in order to influence general
economic conditions.  The Federal Reserve Board, primarily through open market
operations of U.S. Government securities, and by varying the discount rate for
member bank borrowings and changing reserve requirements against member bank
deposits, can exercise significant influence on the overall growth and
distribution of bank loans and deposits and interest rates charged on loans and
earned on investments or paid for time and savings deposits.  The general
effect, if any, of such policies upon the future business and earnings of the
Corporation and its financial subsidiaries cannot be determined.

FORWARD LOOKING STATEMENTS

   Statements contained in this Report and in future filings by the Corporation
with the Securities and Exchange Commission, in the Corporation's press releases
and in oral statements made with the approval of an authorized executive
officer, which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended).  There can be no assurance that such forward-looking statements will
in fact transpire.  The words "intend," "expect," "project," "estimate,"
"predict," "anticipate," "should," "believe" and similar expressions also are
intended to identify forward-looking statements.  Important factors which may
cause actual results to differ from those contemplated in such forward-looking
statements include, but are not limited to:  (i) the results of the
Corporation's efforts to implement its business strategy, (ii) expected cost
savings that may be associated with future and recently completed or 

                                       7
<PAGE>
 
announced acquisitions, including Pinnacle and National, cannot be fully
realized and/or revenues following such acquisitions are lower than expected
and/or expenses following such acquisitions are higher than expected, (iii)
greater than expected deposit attrition or customer loss following the
acquisition of Pinnacle and National, (iv) costs or difficulties related to the
integration of the businesses of the Corporation and Pinnacle and National are
greater than expected, (v) changes in the interest rate environment reduce
margins, (vi) legislation or regulatory requirements or changes adversely
affecting the businesses in which the Corporation is engaged, (vii) adverse
changes in business conditions and inflation, (viii) general economic
conditions, either nationally or regionally, which are less favorable than
expected and that result in, among other things, a deterioration in credit
quality, (ix) competitive pressures among financial institutions increase
significantly, (x) changes in the securities markets, (xi) actions of the
Corporation's competitors and the Corporation's ability to respond to such
actions, (xii) the cost of the Corporation's capital, which may depend in part
on the Corporation's portfolio quality, ratings, prospects and outlook, (xiii)
changes in governmental regulation, tax rates and similar matters, (xiv) "Year
2000" computer and data processing issues, and (xv) other risks detailed in the
Corporation's other filings with the Securities and Exchange Commission. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those
indicated. All subsequent written and oral forward-looking statements
attributable to the Corporation or persons acting on its behalf are expressly
qualified in their entirety by the foregoing factors. Undue reliance should not
be placed on such statements, which speak only as of the date hereof. The
Corporation undertakes no obligation to release publicly any revisions to these
forward-looking statements after the date hereof to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

                                       8
<PAGE>
 
EXECUTIVE OFFICERS OF THE REGISTRANT

  The following table sets forth the names and ages of all executive officers of
the Corporation, including all positions and offices with the Corporation held
by each such person, the term of office and the period during which he has
served as such.

<TABLE>
<CAPTION>
     NAME                  AGE               OFFICE AND BUSINESS EXPERIENCE
<S>                        <C>       <C>
H. Lee Cooper               60       Chairman of the Board of the Corporation since 1986.
                                     Previously, Mr. Cooper also served as Chief Executive
                                     Officer and President of the Corporation and in
                                     various capacities as a senior executive officer of
                                     both the Corporation and Citizens.
James J. Giancola           50       President and Chief Executive Officer of the
                                     Corporation.  Mr. Giancola has been President since
                                     1994 and was named Chief Executive Officer in 1996.
                                     Prior to joining the Corporation in 1992, Mr.
                                     Giancola was President of Gainer Bank of
                                     Merrillville, Indiana.
M. Lynn Cooper              48       Executive Vice President of the Corporation since
                                     1994.  Prior to 1994, Mr. Cooper served as Chairman
                                     of the Board, President and Chief Executive Officer
                                     of the Kentucky Division of Citizens.
Anthony L. Guerrerio        51       Executive Vice President of the Corporation since
                                     1999.  Mr. Guerrerio has been President and Chief
                                     Executive Officer of Wedgewood Partners, Inc. since
                                     1988.  The Corporation acquired Wedgewood in 1998.
Marvin Huff, Jr.            65       Executive Vice President of the Corporation since
                                     1996 and President of the CIS/Operations Division of
                                     Citizens since 1994.  Previously, Mr. Huff served in
                                     various capacities as an officer of Citizens.
David L. Knapp              59       Executive Vice President of the Corporation since
                                     1986.  Mr. Knapp was named Chief Banking Officer in
                                     1999.  Previously, Mr. Knapp served as President and
                                     Chief Executive Officer of the Evansville Division of
                                     Citizens and in various other capacities as a senior
                                     executive officer of both the Corporation and
                                     Citizens.
John R. Spruill             56       Executive Vice President and Chief Administrative
                                     Officer of the Corporation since 1999.  Previously
                                     Mr. Spruill served as Executive Vice President and
                                     Chief Financial Officer of the Corporation.  Prior to
                                     joining the Corporation in 1995, Mr. Spruill served
                                     as Executive Vice President and Chief Financial
                                     Officer of Southern National Corporation in North
                                     Carolina.
</TABLE> 

                                       9
<PAGE>
 
<TABLE>
<S>                         <C>      <C> 
David M. Viar               49       Executive Vice President and Treasurer of the
                                     Corporation since 1996.  Previously, Mr. Viar served
                                     as Senior Vice President and Treasury Officer of the
                                     Corporation.  Prior to joining the Corporation in
                                     1993, Mr. Viar was Senior Vice President--Funds
                                     Management of Dominion Bancshares in Virginia.
Ralph L. Alley              47       Senior Vice President and Controller of the
                                     Corporation and Senior Vice President and Controller
                                     of Citizens since 1985.  Previously, Mr. Alley served
                                     in various capacities as an officer of Citizens.
Thomas E. Bajusz            45       Senior Vice President and Chief Credit Officer of the
                                     Corporation since 1999.  Previously, Mr. Bajusz
                                     served as Senior Vice President--Commercial Lending
                                     of the Northern Division of Citizens.  Prior to
                                     joining the Corporation in 1998, Mr. Bajusz served as
                                     First Vice President--Commercial Lending of NBD.
John N. Daniel, Jr.         53       Senior Vice President of the Corporation and
                                     President of the Evansville Division of Citizens
                                     since 1999.  Previously, Mr. Daniel served as Senior
                                     Vice President and Chief Credit Officer of the
                                     Corporation.  Prior to 1997, Mr. Daniel served as
                                     Senior Vice President--Commercial Lending of the
                                     Evansville Division of Citizens.
James R. Dodd               53       Senior Vice President of the Corporation since 1993.
                                     In 1996, Mr. Dodd was named President of the Trust
                                     Division of Citizens.  Prior to joining the
                                     Corporation in 1993, he was President of BancOklahoma
                                     Trust Company.
Douglas R. Hanks            52       Senior Vice President and Director of Marketing of
                                     the Corporation since 1994.  Prior to joining the
                                     Corporation in 1994, Mr. Hanks served as Vice
                                     President--Director of Field Marketing for BancOne
                                     Corporation.
John M. Oberhelman          57       Senior Vice President of Human Resources for the
                                     Corporation and Citizens since 1992.  Previously, Mr.
                                     Oberhelman served in various capacities as an officer
                                     of Citizens.
</TABLE>

  There are no family relationships between any of the named persons.  Each
executive officer is elected by the Corporation's Board of Directors to serve
until the close of the next annual meeting of the shareholders following his
election and until the election of his successor.  No executive officer of the
Corporation was selected to his position pursuant to any arrangement or
understanding with any other person.

                                       10
<PAGE>
 
STATISTICAL DISCLOSURE

  The statistical disclosures of the Corporation on a consolidated basis,
included on pages 18 to 37 of the Corporation's Annual Report to Shareholders
for the year ended December 31, 1998, are hereby incorporated by reference
herein.

ITEM 2.  PROPERTIES

  Citizens owns a modern, 15-story office building which houses the
Corporation's principal offices and the main banking offices of Citizens. The
building is located at 20 Northwest Third Street, Evansville, Indiana, and is in
excellent condition. The Corporation and Citizens presently occupy approximately
85% of the building and the remainder is leased to various tenants. The
Corporation and Citizens also utilize four other buildings in close proximity to
the main banking office in downtown Evansville which are also owned and are
available for future office needs of the Corporation. A portion of this space is
also currently being leased by various tenants. The Corporation's subsidiaries
own 112 of the 172 remaining offices in which they conduct their businesses. The
net investment, as of December 31, 1998, of the Corporation and its subsidiaries
in property and equipment was $101,160,000. Two properties are security for real
estate mortgages payable which balances totaled $1,866,000 at December 31, 1998.
None of the other properties are subject to material liens or other
encumbrances.

  Management of the Corporation believes that, as a group, the facilities are in
satisfactory condition and repair and will be adequate to meet its foreseeable
needs.

ITEM 3.  LEGAL PROCEEDINGS

  The Corporation presently is engaged in routine litigation incidental to its
business and management does not believe such litigation will materially
adversely affect the Corporation's consolidated financial position or
operations.

ITEM 4.  SUBMISSION MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 1998.


                                    PART II
                                        
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND STOCKHOLDER MATTERS

  Pages 1 and 65 of the Corporation's Annual Report to Shareholders for the year
ended December 31, 1998, are hereby incorporated by reference herein.

ITEM 6.  SELECTED FINANCIAL DATA

  Page 18 of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1998, is hereby incorporated by reference herein.

                                       11
<PAGE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

       Pages 19 to 37 of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1998, are hereby incorporated by reference herein.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       Managing interest rate risk is fundamental to the financial services
industry. The Corporation's policies are designed to manage the inherently
different maturity and repricing characteristics of its loan and deposit
portfolios to achieve a desired interest sensitivity position and to limit
exposure to interest rate risk.  By using a combination of on- and off-balance
sheet financial instruments, the Corporation manages interest rate sensitivity
while seeking to optimize net interest income within the constraints of prudent
capital adequacy and liquidity needs.  Principal maturities and repricing
profiles are monitored through static gap analysis and future operating results
are simulated through computer modeling.

       The management of interest rate sensitivity includes monitoring the
maturities and repricing opportunities of interest earning assets and interest
bearing liabilities.  The Corporation's interest rate sensitivity analysis as of
December 31, 1998 is summarized in the Liquidity and Interest Rate Sensitivity
section of Management's Discussion and Analysis in the Corporation's Annual
Report to Shareholders on pages 34 and 35.  A rate sensitivity position is
computed for various repricing intervals by calculating rate sensitivity gaps.
Interest earning assets and interest bearing liabilities have been distributed
based on their repricing opportunities.  The maturities of certain investments,
loans and deposits have been adjusted based on projected prepayment patterns or
historical relationships to changes in market interest rates.  The repricing of
certain liabilities has been adjusted to reflect the expected benefit of
interest rate contracts in place at year-end.  Although rate sensitivity gaps
constantly change as funds are acquired and invested, the Corporation's positive
gap of $23,089,000 at one year or less as of December 31, 1998, was
approximately .3% of total assets.  This, in the opinion of management,
represented a relatively balanced position and was well within the current
Board-approved policy limits of plus or minus 10% of total assets.

       The Corporation utilizes a simulation model to measure and evaluate the
impact of changing interest rates on net interest income.  The simulation
techniques involve assumptions regarding changes in interest rate relationships,
asset and liability mixes, prepayment options inherent in financial instruments
and directional changes in prevailing interest rates.  These assumptions are
inherently uncertain; and, consequently, the model cannot precisely measure net
interest income or predict the impact of fluctuations in interest rates on net
interest income.  Actual results may differ from simulated results due to
timing, magnitude and frequency of interest rate changes as well as changes in
market conditions or changes in customer preferences.

       The Corporation's Asset/Liability Management Committee, which includes
Board members and senior management representatives, monitors and manages
interest rate risk within Board-approved policy limits.  The Corporation's
current interest rate risk policy limits are determined by measuring the
anticipated change in net interest income over a twelve month horizon assuming a
200 basis point uniform and gradual increase or decrease in all interest rates.
Current policy limits this exposure to plus or minus 3% of net interest income
over a twelve month horizon.

                                       12
<PAGE>
 
     The table below illustrates the projected change in the Corporation's net
interest income during the next twelve months if all market rates were to
uniformly and gradually increase or decrease by as much as 200 basis points
compared to the results of a flat rate environment.  These projections, based
upon the Corporation's balance sheet as of December 31, 1998, were prepared
using the modeling techniques and assumptions which were then used for
asset/liability management purposes.

<TABLE>
<CAPTION>
                                                                 Increase       (Decrease)
                                                 ----------------------------------------------------------
<S>                                              <C>                 <C>              <C>             <C>
Basis point change in interest rates from
 current level                                         (200)         (100)            100             200
  
Change in net interest income                          (1.5)%        (1.1)%            .5%              0%  
</TABLE>

     The table indicates that if rates were to gradually increase or decrease by
200 basis points, net interest income would be expected to remain substantially
the same or decrease by 1.5%, respectively, compared to a flat rate environment.
These estimated changes in net interest income are well within the policy
guidelines established by the Board of Directors.  This model is based solely on
gradual, uniform changes in market rates and does not reflect the levels of
interest rate risk that may arise from other factors such as changes in the
spreads between key market rates or the shape of the Treasury yield curve.

     To assist in achieving the desired level of interest rate sensitivity, the
Corporation has entered into interest rate swaps as a hedge against changing
interest rates.  The Corporation's interest rate swaps represent an exchange of
interest payments requiring the Corporation to pay a fixed rate of interest
ranging from 5.32% to 5.60% and receive a variable rate based on one-month or
three-month LIBOR.  At December 31, 1998, the notional values of the interest
rate swaps totaled $440,000,000.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Pages 26 and 38 to 62 of the Corporation's Annual Report to Shareholders
for the year ended December 31, 1998, are hereby incorporated by reference
herein.

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

     None

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information under the headings "Information Regarding Nominees for
Class II Directors" and "Information Regarding Directors Continuing in Office"
on pages 3 and 4 of the Corporation's Proxy Statement for its Annual Meeting of
Shareholders to be held April 21, 1999, is hereby incorporated by reference
herein.  The information on Executive Officers is included in Part I, Item 1 of
this Annual Report on Form 10-K.

                                       13
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION

     The information under the heading "Executive Compensation" on pages 7 to 13
of the Corporation's Proxy Statement for its Annual Meeting of Shareholders to
be held April 21, 1999, is hereby incorporated by reference herein.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information regarding beneficial ownership of the Common Stock of the
Corporation set forth under the headings "Certain Beneficial Ownership,"
"Information Regarding Nominees for Class II Directors," "Information Regarding
Directors Continuing in Office" and "Security Ownership of Management," on pages
2 through 6 of the Corporation's Proxy Statement for its Annual Meeting of
Shareholders to be held April 21, 1999, is hereby incorporated by reference
herein.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information under the heading "Transactions with Directors, Officers
and Associates" on pages 14 and 15 of the Corporation's Proxy Statement for its
Annual Meeting of Shareholders to be held April 21, 1999, is hereby incorporated
by reference herein.

                                       14
<PAGE>
 
                                    PART IV

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

(A)  FINANCIAL STATEMENTS AND SCHEDULES

     (1)  The following consolidated financial statements of the Corporation,
          included on pages 38 through 62 of the Corporation's Annual Report to
          Shareholders for the year ended December 31, 1998, are hereby
          incorporated by reference herein:

          .    Consolidated Balance Sheet at December 31, 1998 and 1997.
          .    Consolidated Statement of Income, years ended December 31, 1998,
               1997 and 1996.
          .    Consolidated Statement of Changes in Shareholders' Equity, years
               ended December 31, 1998, 1997 and 1996.
          .    Consolidated Statement of Cash Flows, years ended December 31,
               1998, 1997 and 1996.
          .    Notes to Consolidated Financial Statements.
          .    Independent Auditors' Report.

     (2)  All schedules are omitted because they are not applicable or not
          required, or because the required information is included in the
          consolidated financial statements or related notes.

(B)  REPORTS ON FORM 8-K

     None.

(C)  EXHIBITS

     (1)  Exhibits required to be filed by Item 601(a) of Regulation S-K are
          included as exhibits to or incorporated by reference in this Report as
          follows:

           3(i) -  Restated Articles of Incorporation of the Corporation, filed
                   as Exhibit 3(a) to the Corporation's Registration Statement
                   on Form S-8 POS dated May 18, 1998, Registration Statement
                   No. 333-46837, is incorporated herein by reference.
               
           3(ii)-  Amended Bylaws of the Corporation, filed as Exhibit 3(ii) to
                   the Corporation's 1995 Annual Report on Form 10-K, is
                   incorporated herein by reference.

           4    -  No long-term debt instrument issued by the Corporation
                   exceeds 10% of the consolidated total assets of the
                   Corporation and its subsidiaries. In accordance with
                   paragraph 4 (iii) of Item 601(b) of Regulation S-K, the
                   Corporation will furnish to the Securities and Exchange
                   Commission upon request copies of long-term debt instruments
                   and related agreements.

          10*   -  (1) The following Executive Compensation Plans and
                       Arrangements, filed as Exhibits 10(1)(c) and (d) to the
                       Corporation's 1992 Annual Report on Form 10-K, are
                       incorporated herein by reference:
                       (a) CNB Bancshares, Inc. 1992 Incentive Stock Option
                           Plan; and

                                       15
<PAGE>
 
                       (b) Citizens Incentive Savings Plan.
 
                   (2) The following Management Contract and Executive
                       Compensation Plans, filed as exhibits 10 (3)(b) and 10
                       (3)(c) to the Corporation's 1994 Annual Report on Form 
                       10-K, are incorporated herein by reference.
                       (a) CNB Bancshares, Inc. Savings Equalization Plan, dated
                           May 1, 1994.
                       (b) CNB Bancshares, Inc. Pension Equalization Plan, dated
                           May 1, 1994.
                           
                   (3) The CNB Bancshares, Inc. 1995 Incentive Stock Option Plan
                       is incorporated herein by reference to the Corporation's
                       filing with the Securities and Exchange Commission as an
                       exhibit to a Registration Statement on Form S-8,
                       Registration No. 33-60431.

                   (4) The following Management Contracts are incorporated
                       herein by reference to the Corporation's filing with the
                       Securities and Exchange Commission as exhibits (10) (a)
                       through (10) (e) to a Registration Statement on Form S-4,
                       Registration No. 333-46837:
                       (a) Change of Control Agreement, effective August 8,
                           1997, between the Corporation and M. Lynn Cooper; and
                       (b) Change of Control Agreement, effective June 3, 1997,
                           between the Corporation and James J. Giancola; and
                       (c) Change of Control Agreement, effective June 3, 1997,
                           between the Corporation and Marvin Huff, Jr.; and
                       (d) Change of Control Agreement, effective May 28, 1997,
                           between the Corporation and David L. Knapp; and
                       (e) Change of Control Agreement, effective May 23, 1997,
                           between the Corporation and John R. Spruill.

                   (5) The following Management Contracts filed as exhibits
                       10(5)(a) through 10(5)(d) to the Corporation's 1997
                       Annual Report on Form 10-K, are incorporated herein by
                       reference:
                       (a) Change of Control Agreement, effective May 23, 1997,
                           between the Corporation and John N. Daniel, Jr.; and
                       (b) Change of Control Agreement, effective June 9, 1997,
                           between the Corporation and James R. Dodd; and
                       (c) Change of Control Agreement, effective May 23, 1997,
                           between the Corporation and Douglas R. Hanks; and
                       (d) Change of Control Agreement, effective May 23, 1997,
                           between the Corporation and David M. Viar.

                                       16
<PAGE>
 
                   (6)(a) Change of Control Agreement, effective February 16,
                          1998, between the Corporation and Roger Forystek; and
                      (b) Change of Control Agreement, effective January 12,
                          1998, between the Corporation and Thomas A. Galovic;
                          and
                      (c) Change of Control Agreement, effective January 1,
                          1998, between the Corporation and Anthony L.
                          Guerrerio; and
                      (d) Change of Control Agreement, effective January 1,
                          1998, between the Corporation and David A. Rolfe; and
                      (e) Employment and Non-Compete Agreement, effective
                          January 1, 1998, among the Corporation, Wedgewood and
                          Anthony L. Guerrerio; and
                      (f) Employment and Non-Compete Agreement, effective
                          January 1, 1998, among the Corporation, Wedgewood and
                          David A. Rolfe.

          13  -  Portions of the Annual Report to Shareholders for the year
                 ended December 31, 1998.
                 
          21  -  Significant Subsidiaries of the Corporation.
 
          23  -  Consent of KPMG LLP
 
          27  -  Financial Data Schedule

     (2)  The following exhibit will be submitted at a later date:

          The annual financial statements and independent auditors' report
          thereon for Citizens Incentive Savings Plan for the year ended
          December 31, 1998, will be filed as an amendment to the 1998 Annual
          Report on Form 10-K no later than June 29, 1999.

*  The documents identified herein as 10-(1)(a) and 10-(1)(b), 10-(2)(a) and 10-
(2)(b), 10-(3), 10-(4)(a) through 10-(4)(e), 10-(5)(a) through 10-(5)(d) and 10-
(6)(a) through 10-(6)(f) constitute all management contracts and compensatory
plans and arrangements required to be filed as an exhibit to this Form, pursuant
to Item 14(c) of this Report.

                                       17
<PAGE>
 
                                  SIGNATURES
                                        
       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 16th day of
March, 1999.

                                CNB BANCSHARES, INC.

 
                                By  /s/ James J. Giancola
                                   ------------------------------------------
                                   James J. Giancola, President and Chief 
                                   Executive Officer
                                   (chief executive officer)
 
                                By  /s/ John R. Spruill
                                   ------------------------------------------
                                   John R. Spruill, Executive Vice President and
                                   Chief Administrative Officer
                                   (principal financial officer)
 
                                By  /s/ Ralph L. Alley
                                   ------------------------------------------
                                   Ralph L. Alley, Senior Vice President and 
                                   Controller
                                   (principal accounting officer)

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report on Form 10-K has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         SIGNATURE                     CAPACITY                 DATE
         ---------                     --------                 ----
 
/s/ H. Lee Cooper                      Director            March 16, 1999
-----------------------------           
H. Lee Cooper                           

                                        
/s/ John D. Engelbrecht                Director            March 16, 1999
-----------------------------                     
John D. Engelbrecht                               

                                                  
/s/ Terrence A. Friedman               Director            March 16, 1999
-----------------------------                     
Terrence A. Friedman                              

                                                  
/s/ James J. Giancola                  Director            March 16, 1999
-----------------------------                              
James J. Giancola                                          

                                                           
/s/ Edmund L. Hafer                    Director            March 16, 1999
-----------------------------                              
Edmund L. Hafer                                            
                                                           

/s/ James E. Hutton                    Director            March 16, 1999
-----------------------------                              
James E. Hutton                                            
                                                           

                                       18
<PAGE>
 
/s/ Robert L. Koch, II                 Director            March 16, 1999
-----------------------------                              
Robert L. Koch, II                                         

                                                           
/s/ Larry J. Kremer                    Director            March 16, 1999
-----------------------------                              
Larry J. Kremer                                            
                                                           

                                       Director            
-----------------------------                              
Burkley F. McCarthy                                        
                                                           

/s/Robert K. Ruxer                     Director            March 16, 1999
-----------------------------                              
Robert K. Ruxer                                            
                                                           

/s/Thomas W. Traylor                   Director            March 16, 1999
-----------------------------                              
Thomas W. Traylor                                          
                                                           

/s/Alton C. Wendzel                    Director            March 16, 1999
-----------------------------           
Alton C. Wendzel

                                       19
<PAGE>
 
                                 EXHIBIT INDEX
Reg. S-K

<TABLE>
<CAPTION>
Exhibit No.                              Description of Exhibit                                  Page
-----------                              ----------------------                                  ----
<S>                                                                                              <C> 
   3(i)      Restated Articles of Incorporation of the Corporation, filed as Exhibit
             3(a) to the Corporation's Registration Statement on Form S-8 POS dated
             May 18, 1998, Registration Statement No. 333-46837, is incorporated
             herein by reference.
            
   3(ii)     Amended Bylaws of the Corporation, filed as Exhibit 3(ii) to the
             Corporation's 1995 Annual Report on Form 10-K, is incorporated herein by
             reference.
            
10* - (1)    The following Executive Compensation Plans and Arrangements, filed as
             Exhibits 10(1)(c) and (d) to the Corporation's 1992 Annual Report on Form
             10-K, are incorporated herein by reference:
             (a)  CNB Bancshares, Inc. 1992 Incentive Stock Option Plan.
             (b)  Citizens Incentive Savings Plan.
 
  10(2)      The following Management Contract and Executive Compensation Plans filed as
             Exhibits 10(3)(b) and 10(3)(c) to the Corporation's 1994 Annual Report on
             Form 10-K are incorporated herein by reference:
             (a)  CNB Bancshares, Inc. Savings Equalization Plan dated May 1, 1994.
             (b)  CNB Bancshares, Inc. Pension Equalization Plan dated May 1, 1994.
 
  10(3)      The CNB Bancshares, Inc. 1995 Incentive Stock Option Plan is incorporated by
             reference to the Corporation's filing with the Securities and Exchange
             Commission as an exhibit to a Registration Statement on Form S-8,
             Registration No. 33-60431.
 
  10(4)      The following Management Contracts are incorporated herein by reference to
             the Corporation's filing with the Securities and Exchange Commission as
             exhibits (10)(a) through (10)(e) to a Registration Statement on Form S-4,
             Registration No. 333-46837:
             (a)  Change of Control Agreement, effective August 8, 1997, between the
                  Corporation and M. Lynn Cooper; and
             (b)  Change of Control Agreement, effective June 3, 1997, between the
                  Corporation and James J. Giancola; and
             (c)  Change of Control Agreement, effective June 3, 1997, between the
                  Corporation and Marvin Huff, Jr.; and
             (d)  Change of Control Agreement, effective May 28, 1997, between the
                  Corporation and David L. Knapp; and
             (e)  Change of Control Agreement, effective May 23, 1997, between the
                  Corporation and John R. Spruill.
</TABLE> 

                                       20
<PAGE>
 
<TABLE>
  <S>                                                                                          <C> 
  10(5)      The following Management Contracts filed as exhibits 10(5)(a) through
             10(5)(d) to the Corporation's 1997 Annual Report on Form 10-K, are
             incorporated herein by reference:
             (a)  Change of Control Agreement, effective May 23, 1997, between the
                  Corporation and John N. Daniel, Jr.; and
             (b)  Change of Control Agreement, effective June 9, 1997, between the
                  Corporation and James R. Dodd; and
             (c)  Change of Control Agreement, effective May 23, 1997, between the
                  Corporation and Douglas R. Hanks; and
             (d)  Change of Control Agreement, effective May 23, 1997, between the
                  Corporation and David M. Viar.
 
  10(6)      (a)  Change of Control Agreement, effective February 16, 1998, between the
                  Corporation and Roger Forystek; and
             (b)  Change of Control Agreement, effective January 12, 1998, between the
                  Corporation and Thomas A. Galovic; and
             (c)  Change of Control Agreement, effective January 1, 1998, between the
                  Corporation and Anthony L. Guerrerio; and
             (d)  Change of Control Agreement, effective January 1, 1998, between the
                  Corporation and David A. Rolfe; and
             (e)  Employment and Non-Compete Agreement, effective January 1, 1998, among
                  the Corporation, Wedgewood and Anthony L. Guerrerio; and
             (f)  Employment and Non-Compete Agreement, effective January 1, 1998, among
                  the Corporation, Wedgewood and David A. Rolfe.
 
 
  13         Portions of the Annual Report to Shareholders for the Year Ended December 31,
             1998..........................................................................    ----
     
  21         Significant Subsidiaries of the Corporation...................................    ---- 
     
  23         Consent of KPMG LLP...........................................................    ---- 

  27         Financial Data Schedule.......................................................    ---- 
</TABLE>

                                       21