<PAGE>

                              UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549


                                FORM 10-QSB


 X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---     EXCHANGE ACT OF 1934 (no fee required)
          For the quarterly period ended   September 30, 1996
                                         ---------------------
                                    OR

__        TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 (no fee required)
          For the transition period from ________ to ________





                       Commission File No.  0-25988

                                  CNB, Inc.
                    ----------------------------------
                      (NAME OF SMALL BUSINESS ISSUER)


                    FLORIDA                                59-2958616
          ---------------------------------            ------------------
          (State or other jurisdiction                 (I.R.S. Employer
          of incorporation or organization)            Identification No.)

          Post Office Box 3239
          201 North Marion Street
          Lake City, Florida                                 32056
          ----------------------------------           ------------------
          (Address of principal executive offices)         (Zip Code)


          Registrant's telephone number, including area code: (904) 755-3240


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
                                                         ---     ---

The number of shares of the registrant's common stock outstanding as of
October 31, 1996 was 1,937,905 shares, $0.01 par value per share.

<PAGE>

                                 CNB, INC.
                      FINANCIAL REPORT ON FORM 10-QSB




                             TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION
     Item 1. Financial Statements
                Consolidated Balance Sheets (Unaudited) ....................  3
                Consolidated Statements of Income (Unaudited) ..............  4
                Consolidated Statements of Shareholders' Equity (Unaudited).  5
                Consolidated Statements of Cash Flows (Unaudited) ..........  6
                Notes to Consolidated Financial Statements (Unaudited) .....  7
     Item 2. Management's Discussion and Analysis of Financial Condition
             and Results of Operations

                Consolidated Financial Highlights ..........................  9
                Overview ................................................... 10
                Results of Operations ...................................... 10
                Earning Assets ............................................. 13
                Funding Sources ............................................ 18
                Interest Rate Sensitivity/Liquidity ........................ 18
                Capital Resources .......................................... 20


PART II - OTHER INFORMATION ................................................ 21

                                     2

<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1.   Financial Statements

                            CNB, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                    (Unaudited, dollar amounts in thousands)
<TABLE>                                                                       
<CAPTION>                                                                     
                                                     Sept. 30,     Sept. 30,
                                                        1996          1995
                                                     -----------   -----------
<S>                                                  <C>           <C>
ASSETS                                                                        
Cash and due from banks                              $    13,607   $     7,006
Federal funds sold                                        12,015         2,800
Interest bearing deposits                                    410           402
                                                     -----------   -----------
   Cash and cash equivalents                              26,032        10,208
Securities available for sale                             56,279        15,667
Securities held to maturity                               11,324        40,193
Loans:                                                                        
  Commercial, financial and agricultural                  59,319        43,173
  Real estate - construction                               5,628         2,370
  Real estate - residential                               52,994        35,772
  Installment and consumer lines                          19,152        15,777
                                                     -----------   -----------
     Total loans, net of unearned discount               137,093        97,092
Less:  Allowance for loan losses                          (1,419)         (927)
                                                     -----------   -----------
     Net loans                                           135,674        96,165
                                                                              
Premises and equipment, net                                8,770         6,458
Other assets                                               4,147         2,821
                                                     -----------   -----------
     TOTAL ASSETS                                    $   242,226   $   171,512
                                                     ===========   ===========
                                                                              
LIABILITIES                                                                   
Non-interest bearing deposits                        $    29,777   $    18,511
Interest bearing deposits:                                                    
NOW, money market, savings, and other time deposits      166,093       121,993
Time deposits of $100,000 or more                         22,365        13,450
                                                     -----------   -----------
     Total deposits                                      218,235       153,954
Notes payable                                              2,950         1,250
Other liabilities                                          2,003         1,733
                                                     -----------   -----------
     TOTAL LIABILITIES                                   223,188       156,937
                                                     -----------   -----------
                                                                              
Mandatory convertible subordinated debentures                274           274
                                                     -----------   -----------
                                                                              
SHAREHOLDERS' EQUITY                                                          
Common stock - $.01 par value,  10,000,000                                    
     shares authorized; issued and outstanding                                
     1,937,905 in 1996 and 1,639,733 in 1995                  19            16
Additional paid-in capital                                12,683         9,784
Retained earnings                                          6,227         4,504
Net unrealized loss on securities available for             (165)           (3)
sale
                                                     -----------   -----------
     TOTAL SHAREHOLDERS' EQUITY                           18,764        14,301
                                                     -----------   -----------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $   242,226   $   171,512
                                                     ===========   ===========
</TABLE>                                                                      

                                        3

<PAGE>

                             CNB, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                    (Unaudited, dollar amounts in thousands)
<TABLE>                                                                               
<CAPTION>                                                                             
                                              Three Months Ended    Nine Months Ended
                                                September  30,        September 30,

                                             1996        1995       1996        1995
                                            -------    -------   ---------   ---------
<S>                                        <C>         <C>       <C>         <C>
INTEREST INCOME                                                                       
Loan interest and fees                      $ 2,797    $ 2,385   $   7,810   $   6,703
Securities available for sale                   654        258       1,740         712
Securities held to maturity                     189        543         539       1,669
Federal funds sold                              152         85         368         329
Interest bearing deposits                                                             
     in other financial institutions              5          4          17          15
                                            -------    -------   ---------   ---------
    Total interest income                     3,797      3,275      10,474       9,428
                                                                                      
INTEREST EXPENSE                                                                      
Interest on deposits                          1,610      1,498       4,505       4,301
Interest on debentures                            6          7          18          19
Interest on borrowed funds                       20         33          53         109
                                            -------    -------   ---------   ---------
    Total interest expense                    1,636      1,538       4,576       4,429
                                            -------    -------   ---------   ---------
NET INTEREST INCOME                           2,161      1,737       5,898       4,999
                                                                                      
Provision for possible loan losses              (80)       (50)       (285)       (170)
                                            -------    -------   ---------   ---------
Net interest income after provision for                                               
    possible loan losses                      2,081      1,687       5,613       4,829
                                                                                      
NON-INTEREST INCOME                                                                   
Service charges                                 347        311         948         871
Other fees and charges                           68         62         288         187
                                            -------    -------   ---------   ---------
   Total non-interest income                    415        373       1,236       1,058
                                                                                      
NON-INTEREST EXPENSE                                                                  
Salaries and employee benefits                  778        675       2,163       2,032
Occupancy and equipment                         252        215         667         609
Other                                           809        382       1,654       1,249
                                            -------    -------   ---------   ---------
    Total non-interest expenses               1,839      1,272       4,484       3,890
                                                                                      
Realized losses on securities                                                           
        available for sale                     -            -          (25)         (3)
                                            -------    -------   ---------   ---------
Income before income taxes                      657        788       2,340       1,994
                                                                                      
Provision for income taxes                     (226)      (275)       (817)       (697)
                                            -------    -------   ---------   ---------
NET INCOME (1)                              $   431    $   513   $   1,523   $   1,297
                                            =======    =======   =========   =========
                                                                                      
Per Common Share                                                                      
Net income per common share                 $  0.25    $  0.31   $    0.91   $    0.79
Cash dividends paid                            0.06       0.05        0.16        0.13
                                                                                      
Book value                                                       $    9.68   $    8.72
Weighted average shares outstanding                              1,672,380   1,639,733
Return on average shareholders' equity                              12.92%      12.67%
</TABLE>

(1) Includes one time SAIF recapitalization assessment of $326,823.34
     ($204,918.23 or $.12 per share net of income taxes) paid during the third
     quarter of 1996.  See note 4.

                                        4

<PAGE>

                            CNB, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    (Unaudited, dollar amounts in thousands)

<TABLE>                                                                                            
<CAPTION>                                                                                          
                                                            Additional                      Total      
                                                 Common        Paid-in      Retained  Shareholders'
                                                  Stock        Capital      Earnings       Equity      
                                               --------       --------      --------  -------------
<S>                                            <C>            <C>           <C>           <C>       
Balance at December 31, 1994                   $     16       $  9,784      $  3,420      $ 12,927 
                                                                                                   
Net income for the nine months                                                                     
   Ended September 30, 1995                     -                 -            1,297         1,297 
                                                                                                   
Cash dividends                                  -                 -             (213)         (213) 
                                                                                                   
Change in unrealized loss on securities                                                            
   Available for sale, net of taxes             -                 -             -              290 
                                               --------       --------      --------      -------- 
Balance at September 30, 1995                  $     16       $  9,784      $  4,504      $ 14,301 
                                               ========       ========      ========      ======== 
                                                                                                   
                                                                                                   
Balance at December 31, 1995                   $     16       $  9,784      $  4,967      $ 14,754 
                                                                                                   
Acquisition of Riherd Bank Holding                                                                 
   Company, effective September 1, 1996               3          2,899         -             2,902 
                                                                                                   
Net income for the nine months                                                                     
   Ended September 30, 1996                     -                 -             1,523        1,523 
                                                                                                   
Cash Dividends                                  -                 -             (263)         (263) 
                                                                                                   
Change in unrealized loss on securities                                                            
   Available for sale, net of taxes             -                 -             -             (152) 
                                               --------       --------      --------      -------- 
Balance at September 30, 1996                  $     19       $ 12,683      $  6,227      $ 18,764 
                                               ========       ========      ========      ======== 


                                        5
<PAGE>

                            CNB, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (Unaudited, dollar amounts in thousands)

</TABLE>
<TABLE>                                                                      
<CAPTION>                                                                    
                                                            Nine Months Ended
                                                              September 30,
                                                              1996      1995
                                                           --------  --------
<S>                                                        <C>       <C>
OPERATING ACTIVITIES                                                         
Net Income                                                 $  1,523  $  1,297
Cash and Cash Equivalents Acquired in Merger                  2,885         -
Adjustments to Reconcile Net Income to                                       
Cash Provided By(Used In) Operating                                          
Activities :                                                                 
    Depreciation and Amortization                               397       379
    Provision for Loan Loss                                     285       170
    Security Amortization, net                                  177       193
    Changes In Period-End Balances of:                                       
        Other Assets                                            460      (689)
        Other Liabilities                                       374       733
                                                           --------  --------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                6,101     2,083
                                                           --------  --------
INVESTING ACTIVITIES                                                         
Purchases of Securities Available for Sale                   (9,995)   (2,030)
Purchases of Securities Held to Maturity                       -       (9,548)
Maturities of Securities Available for Sale                   1,500     6,350
Maturities of Securities Held to Maturity                      -          500
Sales of Securities Available for Sale                        4,039     1,500
Securities Available for Sale Called by Issuer                2,500        -
Securities Held to Maturity Called by Issuer                   -        8,000
Mortgage Backed Securities - Principal Payments               4,702     2,088
Net Increase in Loans                                        (9,836)  (11,115)
Net Increase in Premises & Equipment                           (500)     (565)
Net Cash Paid Related to Acquisition                         (2,674)       -
Net Cash Paid Related to Acquisition                           (250)       -
                                                           --------  --------
     NET CASH USED IN INVESTING ACTIVITIES                  (10,514)   (4,820)
                                                           --------  --------
FINANCING ACTIVITIES                                                         
Net Increase In Deposits                                     15,736     1,342
Proceeds from Note Payable                                    2,650        -
Principal Repayments of Note Payable                           (650)     (450)
Cash Dividend(s)                                               (263)     (213)
                                                           --------  --------
     NET CASH PROVIDED BY FINANCING ACTIVITIES               17,473       679
                                                           --------  --------
                                                                             
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS        $ 13,060  $ (2,058)
                                                                             
Beginning Balance                                            12,972    12,266
                                                           --------  --------
Cash and cash equivalents at end of period                 $ 26,032  $ 10,208
                                                           ========  ========
                                                                             
SUPPLEMENTAL DISCLOSURES                                                     
     Interest Paid                                         $  4,640  $  4,062
     Taxes Paid                                                 993       605
</TABLE>                                                                     

                                        6
<PAGE>

                            CNB, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1996
                                   (Unaudited)


Note 1. Consolidation
The  consolidated financial statements include the accounts of CNB, Inc. and its
subsidiary  bank, CNB National Bank.  All significant intercompany accounts  and
transactions have been eliminated.


Note 2. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with  the  instructions to Form 10-QSB which do not require all information  and
footnotes  necessary for a complete presentation of financial position,  results
of  operations  and cash flows in conformity with generally accepted  accounting
principles.  In the opinion of management, such financial statements reflect all
adjustments  (consisting only of normal recurring adjustments) necessary  for  a
fair  statement  of  the results for the interim periods  presented.   Operating
results  for  the  nine  months ended September 30,  1996  are  not  necessarily
indicative of the results that may be expected for the year ending December  31,
1996.


Note 3. Completed Acquisitions
On  September 1, 1996 the Company issued 298,172 shares of common stock and paid
$2.7  million in cash to acquire all the outstanding common stock of Riherd Bank
Holding Company of Lake Butler, Florida.  CNB borrowed $2.7 million to fund  the
cash  portion  of  this acquisition.  Pursuant to this merger, all  of  Riherd's
assets  were  acquired and liabilities assumed by the Company, and  accordingly,
are included in the accompanying September 30, 1996 balances.


                           RIHERD BANK HOLDING COMPANY
                                August 31, 1996
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                        Amount
                                       -------
<S>                                    <C>
          ASSETS
          Cash and cash equivalents    $ 2,885
          Earning assets                42,303
          All other assets               2,823
                                       -------
          Total assets                 $48,011
                                       -------
          LIABILITIES
          Deposits                     $43,372
          All other liabilities              6
                                       -------
          Total liabilities             43,378
                                       -------
          Net assets acquired          $ 4,633
                                       =======
</TABLE>

Note 4. Commitments and Contingencies
At  the  end  of  1995,  $65.3  million of "adjustable  attributable  deposits",
resulting from thrift acquisitions, were insured through the Savings Association
Insurance Fund (SAIF).  During the third quarter of 1996 legislation was enacted
to  recapitalize the SAIF.  This resulted in a one-time assessment  of  $326,823
during  the  third  quarter.   As part of the recapitalization  plan,  the  SAIF
assessment  schedule  will  be  reduced  and  management  does  not  expect  any
additional one-time or ongoing assessments that will have a significant  adverse
effect on the operating expenses and results of operations of CNB.

                                        7
<PAGE>

Item  2.    Management's  Discussion and Analysis  of  Financial  Condition  and
Results of Operations.

The  following  tables  and  discussion set  forth  certain  selected  financial
information  and  should be read in conjunction with the consolidated  financial
statements  (unaudited)  of  the  Company and the  Bank  included  in  "Item  1.
Financial   Statements"   above.   The  Company  has  no   foreign   operations;
accordingly,  there  are  no  assets  or  liabilities  attributable  to  foreign
operations.

                                        8
<PAGE>

                            CNB, INC. AND SUBSIDIARY
                       CONSOLIDATED FINANCIAL HIGHLIGHTS
         (Unaudited, dollar amounts in thousands except per share data)
<TABLE>                                                                                 
<CAPTION>                                                                               
                                                        Nine Months Ended
                                                          September 30,
                                                        1996          1995       Change%
                                                      ---------     ---------    -------
DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION                                       
=========================================================================================
<S>                                                   <C>           <C>             <C>
SUMMARY OF OPERATIONS                                                                   
Total Interest Income                                 $  10,474     $   9,428         11%
Total Interest Expense                                   (4,576)       (4,429)         3
                                                      ---------     ---------           
   Net Interest Income                                    5,898         4,999         18
                                                                                        
Provision for Possible Loan Losses                         (285)         (170)        68
                                                      ---------     ---------           
   Net Interest Income After                                                            
       Loan Loss Provision                                5,613         4,829         16
                                                                                        
Non-Interest Income                                       1,236         1,058         17
Non-Interest Expense                                     (4,484)       (3,890)        15
                                                      ---------     ---------           

Gains (losses) on securities sold                           (25)           (3)           
                                                      ---------     ---------           
Income Before Income Taxes                                2,340         1,994         17
Provision For Income Taxes                                 (817)         (697)        17
                                                      ---------     ---------           
Net Income                                            $   1,523     $   1,297         17
                                                      =========     =========           

=========================================================================================
PER COMMON SHARE                                                                        
Net Income Per Common Share                           $    0.91     $    0.79         15%
Book Value                                                 9.68          8.72         11
Dividends                                                  0.16          0.13         23
Shares Outstanding                                    1,937,905     1,639,733         18
Weighted Average Shares Outstanding                   1,672,380     1,639,733          2


=========================================================================================
KEY RATIOS                                                                              
Return on Average Assets                                   1.09          1.01          8%
Return on Average Shareholders' Equity                    12.92         12.67          2
Dividend Payout                                           17.23         16.44          5
Overhead Ratio                                            65.47         66.08         (1)
Total Risk-Based Capital Ratio                            14.07         15.06         (7)
Average Shareholders' Equity to Assets                     8.43          7.98          6
Tier 1 Leverage                                            8.52          7.80          9


=========================================================================================
FINANCIAL CONDITION AT PERIOD END                                                       
Assets                                                  242,226       171,512         41%
Total Loans, net of unearned discount                   137,093        97,092         41
Total Deposits                                          218,235       153,954         42
Common Shareholders' Equity                              18,764        14,301         31
</TABLE>


                                        9
<PAGE>
Overview

Earnings  for  the  nine months ended September 30, 1996 were $1.5  million,  or
$0.91 per share, representing a 15.2% increase when compared to $1.3 million, or
$0.79 per share, for the same period in 1995.  During the third quarter the bank
absorbed an FDIC assessment of $327,000 to recapitalize the SAIF, which  had  an
after  tax  impact  of  $205,000 or $.12 per share.  Without  the  SAIF  charge,
earnings  would have been $1.03 per share, which was an increase of 30%  from  a
year   earlier.   Year-to-date  earnings  have  produced  a  return  on  average
shareholders'  equity  and  return  on  average  assets  of  12.92%  and  1.09%,
respectively, compared to 12.67% and 1.01%, one year ago.  Total assets were  up
41.2%  to  $242.2 million on September 30, 1996, compared to $171.5  million  on
September  30, 1995.  Total loans and deposits were also up 41.1% and  41.8%  to
$135.7 million and $218.2 million, respectively.  Shareholders' equity was $18.8
million  at September 30, 1996, up 31.2% from the same period ended in  1995  of
which $2.9 million is attributable to the merger and $1.7 million resulted  from
retained earnings.

Improved  earnings  for  the year-to-date are mainly attributable  to  an  18.0%
increase  in  net  interest income to $5.9 million, from $5.0  million  for  the
comparable  period in 1995.  The increased net interest income  is  primarily  a
result of loan growth, improved yields on securities, and a slightly lower  cost
of  funds.   Provision for loan losses for the period was $285,000  compared  to
$170,000  in 1995, an increase of $115,000, or 67.7%, due mainly to loan  growth
and  a  low  provision requirement in the first three quarters  of  1995.   Non-
interest  expenses,  net of non-interest income, increased $416,000,  or  14.7%,
during  the  first  nine months of 1996 compared to 1995.    The  one-time  SAIF
assessment  of  $327,000 during the third quarter contributed  significantly  to
this increase. The provision for income taxes for 1996 was $817,000 compared  to
$697,000 in 1995, representing an increase of 17.2%, due solely to the increased
earnings.

Cash  dividends paid for the first nine months of 1996 were $0.16 per  share,  a
23% increase when compared to $0.13 per share for the comparable period in 1995.
The  Board of Directors has declared a cash dividend payable on November 5, 1996
of $0.06 per share, which is unchanged from the previous quarter.


Results Of Operations

Net Interest Income
Net  interest  income,  the primary source of revenue for  the  Bank,  was  $5.9
million  for   the  first nine months of 1996, an increase of  $.9  million,  or
18.0%,  compared  to the same period last year.  This increase was  primarily  a
result of loan growth and a higher net interest margin.  The earning asset yield
has  grown  at  a rate of 1.9% while the funding liability cost decreased  3.7%.
The  Company's net interest margin of 4.60%, an increase of 8.2%, was positively
impacted  by  loan  growth coupled with a $3.2 million, or  17.7%,  increase  in
average  non-interest  bearing deposits.  Total loans  have  averaged  64.1%  of
earning  assets, up from 58.2% for the same period in 1995.  The  improved  loan
ratio  is a result of increasing average total loans by $18.2 million, or 19.9%,
while earning assets have increased by $14.0 million, or 8.9%.

There  was  a significant reallocation of interest income between the securities
portfolios due to a FASB ruling which allowed banks to reclassify securities  as
available  for sale or held to maturity at the end of 1995. Interest on  federal
funds sold increased during the third quarter due to increased liquidity in 1996
compared  to  1995.  Interest on notes payable declined 44.5%  as  a  result  of
management's  decision to make payments on the indebtedness  in  excess  of  the
scheduled  amortization, combined with lower interest rates.  Table  1:  Average
Balances  - Yields and Rates, below, indicates the Company's average  volume  of
interest  earning  assets and interest bearing liabilities for  the  first  nine
months of 1996 and 1995.

The  net  interest margin for the first nine months of 1996 increased  to  4.60%
from  4.25%  a year ago.  The 35 basis point improvement over last year  is  due
mainly to the increase in loans as a percentage of earning assets, combined with
securities yields increasing to 5.89% in 1996 from 5.49% in 1995.  The 28  basis
point decrease in the loan portfolio's yield is due mainly to lower market rates
in the first nine months of 1996, compared to the same period in 1995.

                                       10
<PAGE>

Average  time  deposits for the first nine months of 1996 represented  51.6%  of
total  average  deposits,  compared to 53.2% a year  earlier.  Average  interest
bearing deposits increased 7.8% from $136.2 million to $146.7 million, while the
average rate on these deposits declined from 4.21% to 4.09% in 1996.  Table  1a:
Analysis  of Changes in Interest Income and Expense, below, indicates  that  the
change  in  interest  income  was due mainly to volume  increases  in  the  loan
portfolio.

                       TABLE 1: AVERAGE BALANCES AND RATES
                    (Unaudited, dollar amounts in thousands)
<TABLE>                                                                                               
<CAPTION>                                                                                             
                                             September 30, 1996            September 30, 1995                     
                                             ------------------            ------------------
                                                   Interest                         Interest          
                                         Average  Income or Average      Average   Income or Average  
                                         Balance    Expense    Rate      Balance     Expense    Rate 
                                        --------  --------- -------     --------   --------- -------  
<S>                                     <C>       <C>       <C>       <C>         <C>        <C>     
ASSETS                                                                                                
     Federal funds sold                 $  9,537   $    368    5.15 %   $  7,537    $    329    5.84 %
     Securities available for sale        39,091      1,740    5.95       17,409         712    5.47  
     Securities held to maturity          12,485        539    5.77       40,405       1,669    5.52  
     Loans, net unearned (1)             109,624      7,810    9.52       91,451       6,703    9.80  
     Interest bearing deposits               404         17    5.62          354          15    5.66  
                                        --------  --------- -------     --------   --------- -------  
Total earning assets                     171,142     10,474    8.17      157,156       9,428    8.02  
     All other assets                     15,810                          14,267                      
                                        --------                        --------                      
TOTAL ASSETS                            $186,951                        $171,423                      
                                        ========                        ========                      
LIABILITIES AND                                                                                       
     SHAREHOLDERS' EQUITY                                                                            
Deposits:                                                                                             
     NOW and money market accounts        46,881        933    2.66       41,670         786    2.52  
     Savings                              12,933        202    2.09       12,220         250    2.74  
     Time deposits                        86,903      3,370    5.18       82,260       3,265    5.31  
Notes payable and debentures               1,121         71    8.44        1,723         128    9.62  
                                        --------  --------- -------     --------   --------- -------  
Total interest bearing liabilities       147,838      4,576    4.13      137,873       4,429    4.29  
Demand deposits                           21,629                          18,384                      
Other liabilities                          1,733                           1,486                      
Shareholders' equity                      15,751                          13,680                      
                                        --------                        --------                      
TOTAL LIABILITIES AND                                                                                 
     SHAREHOLDERS EQUITY                $186,951                        $171,423                      
                                        ========                        ========                      
                                                                                                      
                                                            -------                          -------  
INTEREST SPREAD (2)                                            4.04 %                           3.73 %
                                                  --------- =======                --------- =======  
NET INTEREST INCOME                                $  5,898                         $  4,999          
                                                  =========                        =========          
NET INTEREST MARGIN (3)                                        4.60 %                           4.25 %
                                                            =======                          =======  
</TABLE>
- ---------------------------------------------------------------
(1) Interest income on average loans includes loan fee recognition
      of $274,000 and $301,000 in 1996 and 1995 respectively.
(2) Represents the average rate earned minus average rate paid.
(3) Represents net interest income divided by total earning assets.


                                       11
<PAGE>

          TABLE 1A: ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE
                    (Unaudited, dollar amounts in thousands)


<TABLE>                                                                                           
<CAPTION>                                                                                         
                                     NET CHANGE SEPTEMBER 30,          NET CHANGE SEPTEMBER 30,
                                     1995-1996 ATTRIBUTABLE TO:        1994-1995 ATTRIBUTABLE TO:
                                     -----------------------------   -----------------------------
                                                               Net                             Net
                                      Volume(1)  Rate(2)    Change    Volume(1)  Rate(2)    Change
                                     --------- ---------  --------   --------- ---------  --------
<S>                                  <C>       <C>        <C>        <C>       <C>        <C>
INTEREST INCOME                                                                                  
   Federal funds sold                  $    88   $   (49)   $   39    $     (1)   $  109    $  108
   Securities available for sale           889       139     1,028        (302)      145      (157)
   Securities held to maturity          (1,153)       23    (1,130)        139       124       263
   Loans, net of unearned                1,340      (233)    1,107         943       796     1,739
   Interest bearing deposits                 2         -         2           3         5         8
                                     --------- ---------  --------   --------- ---------  --------
      TOTAL INTEREST INCOME            $ 1,166   $ (120)    $1,046     $   782    $1,179    $1,961
                                                                                                  
                                                                                                  
INTEREST EXPENSE                                                                                 
   Deposits                                                                                      
      NOW and money market accounts    $    99    $   48    $  147    $    (37)   $   52    $   15
      Savings                               15       (63)      (48)          1        49        50
      Time deposits                        190       (85)      105         218       781       999
   Notes payable and debentures            (43)      (10)      (53)        (30)       26        (4)
                                     --------- ---------  --------   --------- ---------  --------
       TOTAL INTEREST EXPENSE              261      (110)      151         152       908     1,060
                                     --------- ---------  --------   --------- ---------  --------
NET INTEREST INCOME                    $   905   $   (10)   $  895     $   630    $  271    $  901
                                     ========= =========  ========   ========= =========  ========
</TABLE>
- ---------------------------------------------------------------
(1)  The volume variance reflects the change in the average balance outstanding
        multiplied by the actual average rate during the prior period.
(2)   The rate variance reflects the change in the actual average rate
        multiplied by the average balance outstanding during the prior period.
        Also includes changes in interest income and expense not due soley
        to volume or rate changes.


Provision for Loan Losses
The  allowance for loan losses represents a reserve for potential losses in  the
loan  portfolio.  The provision for loan losses is a charge to earnings  in  the
current period to maintain the allowance at a level management has determined to
be  adequate.   Management periodically evaluates the adequacy of the  allowance
for  loan  losses based on a review of all significant loans, with a  particular
emphasis on past due and other loans that management believes require attention.
As  a result of this procedure, the provision was increased from 1995 levels  to
help  ensure that the allowance would be adequate to absorb possible future loan
losses  in the portfolio.  The provision for loan losses increased $115,000,  or
67.7%, to $285,000 during the first nine months of 1996, as compared to $170,000
for  the  comparable period in 1995.  This increase is also  a  result  of  loan
growth and a low provision requirement in the first three quarters of 1995.

Non-Interest Income
Non-interest income at September 30, 1996 was $1.2 million, an increase  of  $.2
million, or 16.8%, from one year earlier.  This increase is due mainly  to  fees
and revenues associated with demand deposit accounts and safe deposit box rental
income.   As  a  result, non-interest income as a percentage  of  average  total
assets  increased  to 0.88% for the first nine months of 1996,  from  0.82%  for
1995.

Non-Interest Expense
Non-interest  expense  increased by $.6 million, or 15.3%  for  the  first  nine
months  of  1996,  as  compared  to  1995.  The  one-time  SAIF  assessment  was
responsible  for  55.1%  of  this  increase.   Salaries  and  employee  benefits
increased 6.5%, due mainly to additional staff and wage increases.  However,  as
a  percent of average total assets, personnel costs decreased from 1.58% in 1995
to  1.55%  in 1996.  There were 133 full-time equivalent employees at  September
30,  1996,  which is up significantly from the prior year due primarily  to  the
merger.

Occupancy  and  equipment expenses increased 9.5% due to higher operating  costs
associated  with  ownership and maintenance, such as taxes,  insurance,  service
contracts,  utilities,  and  maintenance of building  and  grounds.   Additional
facilities  and  equipment acquired in the merger increased depreciation  during
the third quarter.

                                       12
<PAGE>

Other operating expenses increased from $1.2 million in 1995 to $1.7 million  in
1996,  primarily due to the SAIF assessment.  This increase of 32.4% would  have
only been 6.3% if the assessment had not been imposed.  Other Operating Expenses
were  .88%  of  average  assets, compared to .73% in 1995.   Adjusting  for  the
assessment would result in a decline to .71% of average assets. The bank's  data
processor also doubled their fees during the third quarter.

At September 30, 1996 and 1995, non-interest expenses as a percentage of average
total  assets  were 3.2% and 3.0%, respectively.   Without the SAIF  assessment,
this ratio would have been 3.0% for 1996.

The  overhead efficiency ratio, which is the percentage of overhead  expense  to
total  revenue  less interest expense and provision for loan  losses,  decreased
from  66.1%  to 65.5% for the nine months ended September 30, 1996, compared  to
1995.   Excluding  the impact of the special SAIF assessment  during  the  third
quarter,   the  overhead  ratio  would  have  declined  to  60.7%  from   65.5%,
representing  an  efficiency ratio improvement of  7.3%.   The  following  table
details the areas of significant non-interest expense.


                        Table 2: Other Operating Expenses
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                Nine months Ended September 30,

                                                1996        1995
                                               -----       -----
      <S>                                 <C>          <C>
      Marketing                                 $208        $151
      Data processing                            181         159
      Regulatory fees (1)                        480         244
      Loan Expenses                               74          67
      Amortization of intangible assets          110         110
      Postage and delivery                        99         106
      Supplies                                   106          82
      Telephone                                   71          70
      Administrative                              64          61
      Legal and professional                      89          71
      Courier                                     54          44
      Other                                      118          84
                                          ----------   ---------
      Total other operating expenses      $    1,654   $   1,249
                                          ==========   =========
</TABLE>
- -------------------------
(1) Includes one-time SAIF recapitalization assessment of $326,823 in 1996.

Income Taxes
The  Company's income tax expense in interim reporting periods is determined  by
estimating  the combined federal and state effective tax rate for the  year  and
applying this rate to taxable income.  The Company's estimated tax rate for 1996
is  35%.  The provision for income taxes was $226,000 and $817,000 in the  third
quarter and first nine months of 1996, compared to $275,000 and $697,000 in  the
same periods last year.


Earning Assets
Total  earning assets at September 30, 1996 were $215.7 million, an increase  of
39.0% from $155.3 million one year ago.  Average earning assets during the first
nine months increased 8.9% from $157.2 million to $171.1 million.

Loans
During the first nine months of 1996, average loans were $109.6 million and were
64.1%  of average earning assets, compared to $91.5 million and 58.2% for  1995.
Total loans have increased by $40.0 million, or 41.2%, since September 30,  1995
to  $137.1 million from $97.1 million.  Of this increase, 63%, or $25.1 million,

                                       13
<PAGE>

can  be  attributed to the merger.  The remaining $14.9 million of the  increase
resulted  from internal growth of the loan portfolio, up 15% from  the  previous
year.

Due  mainly  to  the  merger, the Company's loan-to-deposit ratio  has  slightly
declined from 63.1% at September 30, 1995 to 62.8% in 1996.  The following table
compares  the  composition of the Company's loan portfolio as of  September  30,
1996,  to  1995.   Management expects this loan portfolio  composition  to  stay
approximately the same throughout 1996.



                       Table 3: Loan Portfolio Composition
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                    September 30,
                                                   1996         1995
                                               --------     --------
<S>                                            <C>          <C>
Commercial, financial and agricultural         $ 59,319     $ 43,173
Real estate construction                          5,628        2,370
Real estate residential                          52,994       35,772
Installment and consumer lines                   19,152       15,777
                                               --------     --------
Total loans, net of unearned discount           137,093       97,092
Less: Allowance for loan losses                  (1,419)        (927)
                                               --------     --------
Net loans                                      $135,674     $ 96,165
                                               ========     ========
</TABLE>

The following table sets forth the maturity distribution for selected components
of  the Company's loan portfolio on September 30, 1996.  Loan maturity is  based
upon scheduled principal payments.


                  Table 4: Maturity Schedule of Selected Loans
                               September 30, 1996
                    (Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
                                        0-12       1-5     Over5   
                                      Months     Years     Years      Total
                                     -------   -------  --------   --------
<S>                                  <C>       <C>      <C>        <C>
All loans other than construction    $13,970   $54,242  $ 63,467   $131,679
Real estate construction               4,049       396     1,183      5,628
                                     -------   -------  --------   --------
Total                                $18,019   $54,638  $ 64,650   $137,307
                                     =======   =======  ========   ========

Fixed interest rate                  $ 7,768   $32,778  $ 13,913   $ 54,459
Variable interest rate               $10,251   $21,860  $ 50,737   $ 82,848
</TABLE>

Non-Performing Assets
Total  non-performing assets have decreased $63,000, or 12.8%,  to  $429,000  on
September 30, 1996 from $492,000 on September 30, 1995.   Non-accrual loans have
decreased  $260,000  since December 31, 1995.  Of the  decrease  in  non-accrual
loans  since year-end, $55,000 was the result of a single charge-off, while  the
remainder  was  attributable  to  loans  which  have  been  liquidated   without
significant losses, or paid off without loss.

                                       14
<PAGE>
                         Table 5: Non-Performing Assets
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                   September 30,       Year-end
                                                1996           1995       1995
                                               -----          -----      -----
<S>                                            <C>            <C>        <C>
Non-accrual loans                              $ 112          $ 364      $ 372
Past due loans 90 days or more                                                
     and still accruing                          192              7        159
Other real estate owned                          125            121        126
                                               -----          -----      -----
Total non-performing assets                    $ 429          $ 492      $ 657
                                               =====          =====      =====

Percent of total assets                        0.18%          0.29%      0.37%
Percent covered by the allowance                                              
     for loan losses                            331%           188%       144%
</TABLE>

The  allowance for loan losses on September 30, 1996, was 1.04% of total  loans,
compared  to  0.95% on September 30, 1995.  Table 6 Allocation of Allowance  for
Loan  Losses, set forth below, indicates the specific reserves allocated by loan
type.

                   Table 6: Allocation of Allowance for Loan Losses
                         (Dollars amounts in thousands)
<TABLE>
<CAPTION>
                                           September 30, 1996         September 30, 1995
                                         ---------------------      ---------------------
                                                    Percent of                 Percent of
                                                 Loans in Each              Loans in Each
                                                   Category to                Category to
                                         Amount    Total Loans      Amount    Total Loans
                                        -------  -------------      ------  -------------
<S>                                     <C>               <C>       <C>              <C>
Commercial, financial and agricultural     $805            57%        $476            52%
Real estate construction                     16             1%           4             -
Real estate residential                     142            10%          65             7%
Consumer                                    397            28%         369            40%
Unallocated                                  59             4%          13             1%
                                        -------           ----       -----           ----
Total                                   $ 1,419           100%       $ 927           100%
                                        =======           ====       =====           ====
</TABLE>

The  determination of the reserve level rests upon management's  judgment  about
factors  affecting  loan quality and assumptions about the economy.   Management
considers  the  period-end allowance appropriate and adequate to cover  possible
losses  in the loan portfolio;  however, management's judgment is based  upon  a
number  of assumptions about future events, which are believed to be reasonable,
but  which  may or may not prove to be valid.  Thus, there can be  no  assurance
that charge-offs in future periods will not exceed the allowance for loan losses
or  that  additional  increases in the allowance for loan  losses  will  not  be
required.


Net  charge-offs increased by $113,000 to $183,000 or .17% of average loans  for
the first nine months of 1996. This compares to $70,000 or .08% of average loans
for  the  same  period  of  1995.  A significant portion  of  this  increase  is
attributable to the charge-off of a single commercial loan in the first  quarter
of 1996, along with a higher volume of small consumer charge-offs earlier in the
year.  During the third quarter, loan charge-off activity declined from that  of
the first two quarters.   Table 7: Activity in Allowance for Loan Losses, below,
indicates  activity in the allowance for loan losses for the  first  nine  month
period of 1996 as compared to 1995.


                                       15
<PAGE>

                 TABLE 7: ACTIVITY IN ALLOWANCE FOR LOAN LOSSES
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                   Nine months Ended September 30,
                                                                1996        1995
                                                              ------      ------
<S>                                                       <C>          <C>
   Allowance for loan loss balance applicable to
        Balance at beginning of year                          $  946      $  827
        Allowance acquired in merger                             371         -
                                                                                
   Loans charged-off                                
        Commercial, financial, and agricultural                   61         -
        Real estate construction                                   -         -
        Real estate residential                                    1         -
        Consumer                                                 142         114
                                                              ------      ------
             Total loans charged-off                             204         114
                                                              ------      ------

   Recoveries on loans previously charged-off
        Commercial, financial, and agricultural                    7           6
        Real estate construction                                   -         -
        Real estate residential                                    1         -
        Consumer                                                  13          38
                                                              ------      ------
             Total loans recoveries                               21          44
                                                              ------      ------

   Net loans charged-off                                         183          70
                                                              ------      ------
   Provision for loan losses charged to expense                  285         170

                                                              ------      ------
   Balance at end of period                                   $1,419      $  927
                                                              ======      ======

   Total loans outstanding                                $  137,093   $  97,092
   Average loans outstanding                              $  109,624   $  91,451
   Allowance for loan losses to loans outstanding              1.04%       0.95%
   Net charge-offs to average loans outstanding                0.17%       0.08%
</TABLE>

Securities
When  the  Company's  liquidity position exceeds  expected  loan  demand,  other
investments  are  considered by management as a secondary earnings  alternative.
Typically,  management remains short-term (under 5 years)  in  its  decision  to
invest  in  certain securities and always strives to ensure  a  portion  of  its
investment  portfolio to be maturing in the next quarter.  As these  investments
mature, they will be used to meet cash needs or will be reinvested to maintain a
desired  liquidity  position.   A portion of the investment  portfolio  is  also
designated as available for sale in case an immediate need for liquidity arises.
The  Federal  Reserve  Bank and the Federal Home Loan Bank also  require  equity
investments to be maintained by the Bank as a member of their services.

The  following tables set forth the maturity distribution of securities held  to
maturity  and  available  for  sale, and the  weighted  average  yields  of  the
Company's total investment portfolio.  Weighted average yields declined in  some
maturity  ranges due to changes in the distribution resulting from  the  merger.
In  addition  to  this, normal security calls, maturities,  and  mortgage-backed
securities paydowns totaled $8.7 million in addition to sales of $4.0 million.


                                       16
<PAGE>


          TABLE 8: MATURITY DISTRIBUTION OF SECURITIES HELD TO MATURITY
                        AND SECURITIES HELD FOR SALE (1)
                               SEPTEMBER 30, 1996
                          (Dollar amounts in thousands)
<TABLE>                                                                                                          
<CAPTION>                                                                                                        
                                                   SECURITIES HELD TO MATURITY      SECURITIES AVAILABLE FOR SALE
                                                   ---------------------------      -----------------------------
                                                     Amortized     Estimated        Amortized          Estimated
                                                        Cost     Marktet Value         Cost          Market Value
                                                    ----------   -------------      ---------        ------------
<S>                                                 <C>               <C>            <C>                 <C>
U.S. Treasuries                                                                                                 
  One Year or Less                                    $     -         $     -        $ 6,538             $ 6,506 
  Over One Through Five Years                               -               -         19,483              19,400 
  Over Five Through Ten Years                               -               -              -                   - 
  Over Ten Years                                            -               -              -                   - 
                                                      -------         -------        -------             ------- 
Total U.S. Treasuries                                 $     -         $     -        $26,021             $25,906 
                                                                                                                 
U.S. Government Agencies and Corporations
  One Year or Less                                        859             864          3,732               3,735 
  Over One Through Five Years                          10,465          10,001         10,918              10,782 
  Over Five Through Ten Years                               -               -          3,364               3,314 
  Over Ten Years (4)                                        -               -          9,652               9,660 
                                                      -------         -------        -------             ------- 
Total U.S. Government Agencies                        $11,324         $10,865        $27,666             $27,491 
    and Corporations                                                                                             
                                                                                                                 
Obligations of State and Political Subdivisions
  One Year or Less                                          -               -            150                 150 
  Over One Through Five Years                               -               -            100                 104 
  Over Five Through Ten Years                               -               -            705                 737 
  Over Ten Years                                            -               -            857                 853 
                                                      -------         -------        -------             ------- 
Total Obligations of State                            $     -         $     -        $ 1,812             $ 1,844 
    and Political Subdivisions                                                                                   
                                                                                                                 
Other securities                                                                                                 
  One Year or Less  (2)                               $     -         $     -            332                 332 
  Over One Through Five Years (2)                           -               -             78                  73 
  Over Five Through Ten Years                               -               -              -                   - 
  Over Ten Years (3)                                        -               -          1,043               1,038 
                                                      -------         -------        -------             ------- 
Total Other Securities                                $     -         $     -        $ 1,453             $ 1,443 
                                                      -------         -------        -------             ------- 
Total Securities                                      $11,324         $10,865        $56,952             $56,684 
                                                      =======         =======        =======             ======= 
</TABLE>
- -----------------------------------------------------------------
(1)  All securities, excluding Obligations of State and Political
       Subdivisions, are taxable.
(2)  Represents Interest-bearing deposits in other banks.
(3)  Represents investment in Federal Reserve Bank and Federal Home
       Bank stock and other marketable equity securities.
(4)  Represents investments in mortgage-backed securities which are subject
       to early repayment.



             TABLE 9: WEIGHTED AVERAGE YIELD BY RANGE OF MATURITIES
                                        
<TABLE>                                                                          
<CAPTION>                                                                        
                                  September 30,     December 31,      September 30,    
                                      1996             1995             1995       
                                  -------------     -------------     -------------    
<S>                                     <C>               <C>               <C>        
One Year or Less                        5.79 %            5.83 %            4.64 %
Over One through Five Years             5.95 %            5.63 %            5.65 %
Over Five through Ten Years             6.39 %            7.80 %            5.91 %
Over Ten Years (1)                      6.19 %            6.23 %            6.19 %
                                        ------            ------            ------
Total Securities                        5.99 %            5.83 %            5.64 %
</TABLE>
- -----------------------------------------------------------------------
(1) Represents adjustable rate mortgage-backed securities which are
    repriceable within one year.


                                       17
<PAGE>

Other Earning Assets
Temporary  investment needs are created in the day-to-day liquidity movement  of
the  Bank  and  are  satisfied by selling excess funds overnight (federal  funds
sold)  to larger, well capitalized banking institutions.  If these funds  become
excessive, management determines what portion, if any, of the liquidity  may  be
placed into longer term investments as securities.  Due to the present liability
sensitive position of the Bank's balance sheet, management has elected to retain
a  larger position in federal funds sold than in the past to guard against  rate
sensitivity.


Funding Sources

Deposits
The Company relies on deposits acquired in the local market areas to provide for
funding  needs. CNB does not rely on purchased or brokered deposits as a  source
of  funds.   After  designating funds for liquidity and  lending  purposes,  the
remaining funds are allocated to the investment portfolio to provide a source of
additional  income  and liquidity.  The increase in deposits  at  September  30,
1996, compared to the prior year, was $64.3 million of which $43.4 million  were
assumed in the merger.

Money  market deposits more than doubled, increasing from $13.0 million in  1995
to  $28.7  million  on  September 30, 1996. Although some of  this  increase  is
related to the merger, most of the increase is a result of introducing a Premier
Money  Market  account  designed  to compete directly  with  other  ready  asset
investment  accounts offered by non-banking institutions.  The  following  table
sets  forth certain deposit categories for the periods ended September 30,  1996
and 1995.

                             TABLE 10: TOTAL DEPOSITS
                          (Dollar amounts in thousands)
<TABLE>                                                   
<CAPTION>                                                 
                                          September 30,

                                         1996            1995
                                    ---------       ---------
<S>                                 <C>             <C>
   Non-interest bearing                                     
        Demand checking             $  29,777       $  18,511
   Interest bearing                                      
        NOW checking                   33,496          24,565
        Money market checking          28,703          12,979
        Savings deposits               14,952          12,469
        Time deposits                 111,307          85,430
                                    ---------       ---------
   Total deposits                   $ 218,235       $ 153,954
                                    =========       =========
</TABLE>                                                  

Note Payable
CNB  borrowed  $2.7 million in connection with the acquisition  of  Riherd  Bank
Holding  Company.   Total  notes outstanding on September  30,  1996  were  $3.0
million,  compared to $1.3 million in 1995.  During the past year,  the  Company
has continued to voluntarily accelerate principal payments on its notes payable.


Interest Rate Sensitivity / Liquidity

Net  interest  income, the Company's primary source of revenue, is  affected  by
changes  in  interest  rates as well as levels and mix  of  earning  assets  and
interest-bearing liabilities.  The impact on net interest income as a result  of
changes  in  interest  rate  and  balance sheet mix  constitutes  the  Company's
interest rate sensitivity.  The interest rate sensitivity position at the end of
the  third quarter of 1996 is presented in Table 11 - Rate Sensitivity Analysis.
The difference between rate-sensitive assets and rate-sensitive liabilities,  or
the interest rate sensitivity gap, is shown at the bottom of the table.

The  Company  would  benefit  from increasing market  rates  when  it  is  asset
sensitive  and would benefit from decreasing market rates when it  is  liability
sensitive.   At  September 30, 1996, the Company had a liability  sensitive  gap
(more  liabilities than assets subject to repricing within the stated timeframe)
of   $18.9  million  within a one-year period.  This suggests that  if  interest

                                       18
<PAGE>

rates  should decline over this period, the net interest margin should  improve,
and  if  interest rates should increase, the net interest margin should decline.
Since all interest rates and yields do not adjust at the same velocity, the  gap
is only a general indicator of rate sensitivity.


                       TABLE 11: RATE SENSITIVITY ANALYSIS
                               SEPTEMBER 30, 1996
                    (Unaudited, dollar amounts in thousands)
<TABLE>                                                                                                 
<CAPTION>                                                                                               
                                            0-3        4-6        7-12        1-5     Over 5            
                                         Months     Months      Months      Years      Years       Total
                                       --------    -------     -------    -------    -------    --------
<S>                                    <C>       <C>         <C>        <C>         <C>         <C>
INTEREST EARNING ASSETS                                                                                   
Federal funds sold                     $ 12,015          -           -          -          -    $ 12,015
Securities held to maturity                 859          -           -     10,465          -      11,324
Securities available for sale (1,2)       5,650      7,685       5,209     30,079      8,329      56,952
Loans (3)                                50,100     10,299      20,661     42,583     13,664     137,307
                                       --------    -------     -------    -------    -------    --------
Total earning assets                   $ 68,624   $ 17,984    $ 25,870   $ 83,127   $ 21,993    $217,598
                                                                                                        
INTEREST BEARING LIABILITIES                                                                            
NOW and money market accounts(4)       $ 32,919          -           -          -   $ 29,280    $ 62,199
Savings(4)                                4,486          -           -          -     10,466      14,952
Time deposits                            27,405     29,205      34,168     20,319        210     111,307
Notes payable and debentures              2,950        274           -          -          -       3,224
                                       --------   --------    --------   --------   --------    --------
Total interest bearing liabilities     $ 67,760   $ 29,479    $ 34,168   $ 20,319   $ 39,956    $191,682
                                                                                                        
Interest rate sensitivity gap          $    864   $(11,495)   $ (8,298)  $ 62,808   $(17,963)   $ 25,916
Cumulative rate sensitivity gap        $    864   $(10,631)   $(18,929)  $ 43,879   $ 25,916    $ 25,916
                                                                                                        
Interest rate sensitivity gap ratio        1.01       0.61        0.76       4.09       0.55        1.14
Cumulative rate sensitivity gap ratio      1.01       0.89        0.86       1.29       1.14        1.14
                                                                                                        
Ratio of cumulative gap to                                                                              
    Total earning assets:                                                                               
       September 30, 1996                  0.40     (4.89)      (8.70)      20.17      11.91            
       September 30, 1995                 (0.17)    (7.00)      (9.96)      19.08      12.48            
</TABLE>
- ------------------------------
(1) Includes interest bearing deposits of $410,000.
(2) Includes equity in Federal Home Loan Bank of $586,000 and Federal Reserve
      Bank of $351,000.  Securities are shown at their amortized cost,
      excluding market value adjustment for unrealized losses of $263,000.
(3) Total loans including unearned discount of $214,000.
(4) Certain deposit accounts are included in the After Five Years category.
      If they had been included in the Within Three Months category, the ratio
      of cumulative gap to total earning assets would have been (26.96) for the
      category at September 30, 1996.

The  Bank's interest rate sensitivity, gap and liquidity positions are  formally
reviewed quarterly by management to determine whether or not changes in policies
and procedures are necessary to achieve financial goals.  Included in the review
is  an  internal analysis of the possible impact on net interest income  due  to
market  rate  changes  of plus and minus 1%.  In the rate sensitivity  analysis,
current  average  rates within the repricing periods of affected  balance  sheet
categories  are adjusted to an historical percentage of market change  according
to  each  rate  shock  scenario.  The adjusted rates  are  then  substituted  in
interest  computations  and  compared to actual  results.   These  efforts  will
continue to provide the tools necessary in the Company's attempt to maximize its
primary earnings factor: net interest income.

Liquidity  represents the ability to provide steady sources of  funds  for  loan
commitments  and investment activities,  as well as to provide sufficient  funds
to  cover  deposit  withdrawals and payment of debt and  operating  obligations.
These  funds  can be obtained by converting assets to cash or by attracting  new
deposits.   Average  liquid assets (cash and amounts due  from  banks,  interest
bearing deposits in other banks, federal funds sold and securities available for
sale)  totaled  $56.1  million and represented 33.4% of average  total  deposits
during  the first nine months of 1996, compared to $31.6 million and  20.5%  for
1995.  At the end of 1995 banks were granted an opportunity to restructure their
securities  portfolios according to availability for sale.  The  Bank,  thereby,

                                       19
<PAGE>

reclassified $30.1 million of its securities held to maturity as those available
for  sale,  in effect increasing its liquidity position in anticipation  of  the
need  for  future loan demand.   Average loans were 65.1% and 59.2%  of  average
deposits  for  the  nine  month  period  ended  September  30,  1996  and  1995,
respectively.   As noted in Table 3 - Loan Portfolio Composition,  approximately
$117.9  million, or 86.0%, of the loan portfolio consisted of commercial  loans,
real   estate  residential  loans  and  real  estate  construction   loans   and
approximately  13.1% of the total loan portfolio matures within  one  year,  see
Table 4 - Maturity Schedule of Selected Loans.

Core  deposits, which represent all deposits other than time deposits in  excess
of $100,000, were 89.8% of total deposits at the end of the first nine months of
1996  and  91.3%  for the comparable period in 1995.  The Bank closely  monitors
its  reliance  on  time  deposits  in excess of $100,000,  which  are  generally
considered  less stable and less reliable than core deposits.  Table 12,  below,
sets  forth the amounts of time deposits with balances of $100,000 or more  that
mature  within  indicated periods.  The Bank does not nor has it ever  solicited
brokered deposits.

              Table 12: Maturity of Time Deposits $100,000 or More
                               September 30, 1996
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                        Amount
                                       -------
<S>                                    <C>
          Three months or less         $ 5,296
          Three though six months        4,719
          Six through twelve months      8,055
          Over twelve months             4,295
                                       -------
          Total                        $22,365
                                       =======
</TABLE>

CAPITAL RESOURCES
At  September 30, 1996, shareholders' equity totaled $18.8 million.  The Company
issued 298,172 shares of common stock in connection with the Riherd Bank Holding
Company  merger  which increased the shares of common stock  from  1,639,733  to
1,937,905 issued and outstanding.

CNB  paid  a dividend of $.06 per share for the third quarter, which is  up  20%
from  the $.05 paid last quarter.  Dividends for the nine months ended September
30,  1996  totaled $.16 per share, compared to $.13 per share  during  the  same
period  in  1995.   The dividend payout ratio for the year  to  date  is  17.2%,
compared to 16.4% for 1995.

The  Company  is  subject to risk-based capital guidelines that measure  capital
relative  to  risk-weighted assets and off-balance sheet financial  instruments.
Capital  guidelines  issued by the Federal Reserve Board  require  bank  holding
companies to have a minimum total risk-based capital of 8%, with Tier 1  capital
comprising  at  least  half of the total capital.  As shown  in  Table  13,  CNB
continues to exceed the guidelines with a Tier 1 capital ratio of  12.8%  and  a
total  capital  ratio of 14.1%.  An additional measure, the leverage  ratio,  is
used  to  measure the relationship of Tier 1 capital to average assets  for  the
most  recent  quarter.   On September 30, 1996, the Company's  ratio  was  8.5%,
compared to the requirement of 4%.


                               TABLE 13:  CAPITAL RATIOS
<TABLE>
<CAPTION>
                                    September  30,    Well Capitalized   Regulatory
                                   1996       1995      Requirements      Minimums
                                  -----      -----      ------------      --------
<S>                               <C>        <C>               <C>           <C>
Risk based capital ratios:                                                       
   Tier 1 capital ratio           12.8%      13.8%              6.0%         4.0%
   Total capital to                                                              
      Risk-weighted assets        14.1%      15.1%             10.0%         8.0%
Tier 1 Leverage ratio              8.5%       7.8%              5.0%         4.0%
</TABLE>

                                       20
<PAGE>

On  September  18, 1996, the Board of Directors approved the redemption  of  its
Series  A  Variable  Rate  Mandatory  Convertible  Subordinated  Debentures  due
November  15,  2000.   The  total face amount of the  issue  being  redeemed  is
$274,250  which, according to the terms of the Debentures, will be called  at  a
three percent (3%) premium over the face amount.  The planned date of redemption
is  November 15, 1996. Although these Debentures had qualified as Tier 2 capital
under  the risk-based capital guidelines, the impact of the redemption will  not
have a significant impact on the risk-based capital ratios of the company.


PART II - OTHER INFORMATION

     Item 1. Legal Proceedings - There are no material pending legal
             proceedings to which the Company or any of its subsidiaries is a
             party or of which any of their property is the subject.

     Item 2. Changes in Securities -

     (a)     Not applicable.

     (b)     Not applicable.


     Item 3. Defaults Upon Senior Securities - Not applicable.

     Item 4. Submission of Matters to a Vote of Security Holders -  Not
             applicable.


     Item 5. Other Information - Not applicable.

     Item 6. Exhibits and Reports on Form 8-K -

     (a)     Exhibits
             None

     (b)     Reports on Form 8-K - No reports on Form 8-K were filed by the
             registrant during the three month period ended September 30, 1996.


                                 SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                     CNB, INC.
                                        -----------------------------------
                                                    (Registrant)


                                        By: /s/ K. C. Trowell
                                            -------------------------------
                                            K. C. Trowell
                                            President, Principal Executive
                                            Officer

                                             /s/ Thomas M. Riherd, II
                                            -------------------------------
                                            Thomas M. Riherd, II
                                            Chief Financial Officer

                                        Date:      November 13, 1996

                                     21