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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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(Mark One)

|x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------

For fiscal year ended December 31, 2006



| ̈ | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------

For the transition period from  to

Commission file number 333-74250



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CNB BANCORP, INC.

(Name of Small Business Issuer in Its Charter)



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|                                                               |  |                                    
|-------------------------------------------------------------- |  | -----------------------------------
|Virginia                                                       |  | 54-2059214                         
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. EmployerIdentification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|11407 Windsor Blvd., Windsor, VA         |  | 23487     
|(Address of Principal Executive Offices) |  | (Zip Code)

(757) 242-4422

(Issuers Telephone Number, Including Area Code)



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Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par.

Check whether the issuer: (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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
past 90 days.    Yes  x    No ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

State issuers revenues for its most recent fiscal year: $2,724,000.

The aggregate market value of common stock held
by non-affiliates (shareholders each holding less than 5% of an outstanding class of stock, excluding directors and executive officers) of the Company on March 26, 2007 was $7,290,253. This calculation is based upon an estimate of the fair
market value of the Companys common stock at $6.40 per share, which was the price of the last trade of which management is aware prior to this date.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: As of March 12, 2007, 1,497,429 shares of the registrants common stock, $.01 par value, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement dated April 4,
2007 to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on May 3, 2007, are incorporated by reference into Part III.

Transitional Small Business Disclosure format (check one):    Yes ̈No  x



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TABLE OF CONTENTS



|           |  |                                                                                                                                       |  |   
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | --
|           |  | Page                                                                                                                                 
|PART I     |  | 3                                                                                                                                    
|           |  |                                                                                                                                      
|Item 1.    |  | Description of Business                                                                                                               |  | 3 
|Item 2.    |  | Description of Property                                                                                                               |  | 12
|Item 3.    |  | Legal Proceedings                                                                                                                     |  | 12
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                                                   |  | 12
|           | 
|PART II    |  | 12                                                                                                                                   
|           |  |                                                                                                                                      
|Item 5.    |  | Market for Common Equity and Related Stockholder Matters                                                                              |  | 12
|Item 6.    |  | Managements Discussion and Analysis or Plan of Operation                                                                             |  | 13
|Item 7.    |  | Financial Statements                                                                                                                  |  | 22
|Item 8.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                                  |  | 42
|Item 8A.   |  | Controls and Procedures                                                                                                               |  | 42
|Item 8B.   |  | Other Information                                                                                                                     |  | 42
|           | 
|PART III   |  | 42                                                                                                                                   
|           |  |                                                                                                                                      
|Item 9.    |  | Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act |  | 42
|Item 10.   |  | Executive Compensation                                                                                                                |  | 42
|Item 11.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                        |  | 42
|Item 12.   |  | Certain Relationships and Related Transactions, and Director Independence                                                             |  | 42
|Item 13.   |  | Exhibits                                                                                                                              |  | 43
|Item 14.   |  | Principal Accountant Fees and Services                                                                                                |  | 43
|           | 
|SIGNATURES |  |                                                                                                                                      



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PART I



|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

Special Cautionary Notice Regarding
Forward-Looking Statements

This Report contains statements that constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934. Various matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption
Managements Discussion and Analysis of Financial Condition and Results of Operations, may constitute forward-looking statements for purposes of the Securities Act and the Securities Exchange Act. These statements are based on many
assumptions and estimates and are not guarantees of future performance and may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CNB Bancorp, Inc. (the
Company or CNB) to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words expect, anticipate, intend,
plan, believe, seek, estimate, and similar expressions are intended to identify such forward-looking statements. The Companys actual results may differ materially from the results anticipated in
these forward-looking statements due to a variety of factors, including, without limitation:



| |  |  | The effects of future economic conditions;
| | - |  | ------------------------------------------



| |  |  | Governmental monetary and fiscal policies, as well as legislative and regulatory changes;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | The risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest-rate
protection agreements, as well as interest-rate risks;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The effects of competition from other financial institutions and financial service providers operating in the Companys market area and elsewhere, including
institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, and computer and the Internet; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The failure of assumptions underlying the establishment of reserves for possible loan losses and estimations of values of collateral and various financial assets
and liabilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All written or oral forward-looking statements attributable to the Company are expressly qualified in
their entirety by these cautionary statements.

CNB Bancorp, Inc.

CNB was incorporated as a Virginia corporation on November 12, 2001, to serve as a bank holding company that holds all of the outstanding capital stock of Citizens National Bank (the Bank), a
nationally chartered bank located in Windsor, Virginia. Other than its investment in the Bank, the Company has no other material asset, nor does it conduct any other business activity.

During its organization, the Companys operations, pre-opening expenses and capital costs from April 23, 2001 through the opening of the Bank
were funded by and conducted through CNB Bancorp, LLC (the LLC), a limited liability company formed by the Companys organizing directors. The Company closed its public offering on December 31, 2002. The offering raised $5.4
million, net of offering expenses. Upon opening the Bank, the Company and the Bank used part of the offering proceeds to reimburse the LLC for operational and pre-opening expenses related to the Company and the Bank and the LLC was subsequently
dissolved. The amount of the pre-opening expenses paid by the LLC was $439,000. The proceeds of the offering net of offering expenses and pre-opening expenses totaled $4.97 million.

During the fourth quarter of 2006, the Company completed an offering of 650,000 shares of its common stock in a rights offering and a public offering.
The offering raised $4.0 million, net of offering expenses. The Company used the net proceeds from the offering to increase equity and subsequently the Banks legal lending limit. The funds will also be used for general corporate purposes,
including future growth and expansion. Also during the fourth quarter, CNB Bancorp, Inc. common stock began trading on the OTC Bulletin Board with the symbol CNBV.

We have chosen this holding company structure because we believe it provides flexibility that would not otherwise be available to us. Subject to Federal Reserve debt guidelines, through a holding company structure, we
can assist the Bank in maintaining its required capital ratios by borrowing money and contributing the proceeds to the Bank as primary capital. Additionally, under provisions of the Gramm-Leach-Bliley Act, a holding company may engage in activities
that are financial in nature or incidental or complementary to a financial activity including some insurance transactions, real estate development activities and merchant banking activities, which a bank may not do. Although we do not presently
intend to engage in these types of activities, we will be able to do so with a proper notice or filing to the Federal Reserve if we believe that there is a need for these services in our market area and that these activities could be profitable.



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Citizens National Bank

Citizens National Bank received final approval to become a national bank from the Office of the Comptroller of Currency (OCC) on April 28, 2003 and began operations on April 29, 2003.

Market Area and Competition. Our primary service area consists of the 15-mile radius surrounding our main office location in the Town of Windsor,
Virginia. This area includes all of the County of Isle of Wight, the Cities of Franklin and Suffolk, and portions of Southampton, Surry and Sussex Counties.

Isle of Wight County and the adjacent City of Suffolk are growing marketplaces that we believe will support the expected growth of Citizens National Bank. The population of Isle of Wight County grew 18.7% from 1990 to
2000, increasing from 25,053 to 29,728 during such decade. Given its consistent economic base, which includes five industrial parks, we believe that Isle of Wight County is positioned to continue its growth trend during the next ten years.

As of December 31, 2006, our primary service area was serviced by 13 financial institutions with 32 banking offices, and
there was only one other bank operating in the Town of Windsor. Almost all of the institutions operating within our primary service area are large national, regional or super-regional banks. With the exception of two local banks, Farmers Bank and
SuffolkFirst Bank, none of these financial institutions are headquartered in our primary service area.

The majority of our competitors
have substantially greater resources and lending limits than Citizens National Bank has and provide other services, such as extensive and established branch networks and trust services, which we do not expect to provide in the near future. As a
result of these competitive factors, Citizens National Bank may have to pay higher interest rates to attract depositors or extend credit with lower interest rates to attract borrowers.

Lending Policy. The Bank aggressively seeks creditworthy borrowers within its primary service area. As of December 31, 2006, the Banks
loan portfolio was comprised of the following:



|                          |  |                          |  
|------------------------- |  | ------------------------ | -
|Loan Classification       |  | Percentage ofTotal Loans |  
|Real estate-related loans |  | 70.6                     | %
|                          | 
|Commercial loans          |  | 11.5                     | %
|                          | 
|Consumer loans            |  | 17.9                     | %

Loan Approval and Review. The Banks loan approval policies provide for various levels
of officer lending authority. When the total amount of loans to a single borrower exceeds an individual officers lending authority, an officer with a higher lending limit or the Banks director loan committee determines whether to approve
the loan request. As part of its lending policy, the Bank does not make loans to its directors or executive officers unless a majority of its disinterested board members approves the loan and the terms of the loan are no more favorable than would be
available to any other borrower similarly situated.

Lending Limits. The Banks lending activities are subject to a variety of
lending limits imposed by federal law. Differing limits apply based on the type of loan and the nature of the borrower, including the borrowers relationship to the Bank. In general, however, the Bank is able to loan any one borrower a maximum
principal amount equal to either:



| |  |  | 15% of the Banks capital and surplus; or
| | - |  | -----------------------------------------



| |  |  | 25% of its capital and surplus if the excess over 15% is within federal guidelines, which provides an exception to the 15% limit for debt secured by readily
marketable collateral, as defined by OCC regulations.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Bank complies with the statutory lending limits, as described
above. The Banks legal lending limits will increase or decrease as the Banks capital increases or decreases as a result of, among other reasons, its earnings or losses. The Bank may sell loan participations to other financial
institutions to meet the needs of customers requiring loans above these limits.

Real Estate Loans. The Bank makes and holds real
estate-related loans, consisting primarily of mortgage loans, home equity lines of credit and non-farm, non-residential loans secured by real estate (typically owner-occupied commercial buildings). The Bank is involved in both the originating and
servicing of its first and second mortgage loans, and generally requires an aggregated loan-to-value ratio of no more than 80%. For construction loans, the Bank requires a first lien position on the land associated with the project with terms not
exceeding one year. Loan disbursements on construction loans require on-site inspections to assure the project



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is on budget and that the loan proceeds are not being diverted to another project. The loan-to-value ratios for construction loans are typically 80% of the
lower of the as-built appraised value or project cost, and a maximum of 90% if the loan is amortized. The Bank also offers home equity lines of credit, which equaled approximately 2.8% of the Banks total loans, as of December 31, 2006,
and have interest rate terms that are variable rather than fixed.

As of December 31, 2006, approximately 53.7% of the Banks
real estate-related loans had interest rate terms that are variable or carried a term of 12 months or less. Additionally, the terms of the Banks real estate loans generally do not exceed five years. Loans for construction can present a high
degree of risk to the lender and depend upon, among other things, the builders ability to sell the home to a buyer, the buyers ability to obtain permanent financing and the construction projects ability to produce income in the
interim.

Commercial Loans. The Banks commercial lending is directed principally toward small to medium-size businesses whose
demands for funds fall within the legal lending limits of the Bank. The Banks commercial loans are made to individual, partnership or corporate borrowers, and are obtained for a variety of business purposes. Of the Banks commercial loans
as of December 31, 2006, approximately 60.8% were adjustable-rate loans or mature within one year and 39.2% had maturities extending beyond 12 months but less than 60 months. Risks associated with these loans can be significant and include, but
are not limited to, fraud, bankruptcy, economic downturn, deteriorated or non-existing collateral and changes in interest rates.

Consumer Loans. The Bank makes consumer loans, consisting primarily of installment loans to individuals for personal, family and household purposes, including loans for automobiles, home improvements and investments. Almost all of
the Banks consumer loans are fixed rate loans generally with maturities ranging from 3 to 5 years. Risks associated with consumer loans include, but are not limited to, fraud, deteriorated or non-existing collateral, general economic downturn
and customer financial problems.

Investments. In addition to its loan operations, the Bank makes other investments
primarily in obligations of the United States or obligations guaranteed as to principal and interest by the United States and other taxable securities. The Bank also may invest in certificates of deposits in other financial institutions. The amount
invested in such time deposits, as viewed on an institution by institution basis, would not exceed $100,000. Therefore, the amounts invested in certificates of deposit are fully insured by the FDIC. No investment held by the Bank exceeds any
applicable limitation imposed by law or regulation. Our asset and liability management committee reviews the investment portfolio on an ongoing basis to ascertain investment profitability and to verify compliance with the Banks investment
policies.

Deposits. The Banks core deposits include checking accounts, money market accounts, a variety of certificates of
deposit and IRA accounts. The Banks primary sources of deposits are residents of, and businesses and their employees located in Isle of Wight County. The Bank has obtained its deposits primarily through personal solicitation by its officers
and directors and advertisements published in the local media. We plan to continue generating deposits by offering competitively priced deposit services, including demand deposits, regular savings accounts, money market deposits, certificates of
deposit, retirement accounts and other legally permitted deposit or fund transfer services.

Other Banking Services. In addition to
its lending and deposit products and services, the Bank offers mortgage brokering, debit cards, travelers checks, notary public services, wire services, safe deposit box rental, ATM services, On-Call telephone banking, and other traditional
bank services to its customers.

Asset and Liability Management. The Bank has established an asset and liability management
committee to manage its assets and liabilities. The goal of this committee is to maintain an optimum and stable net interest margin, a profitable after-tax return on assets and return on equity and adequate liquidity. The committee conducts these
management functions within the framework of written loan and investment policies that the Bank has adopted. The committee also attempts to maintain a balanced position between rate sensitive assets and rate sensitive liabilities. Specifically, the
committee charts the Banks assets and liabilities on a matrix by maturity and interest adjustment period and attempts to manage any gaps in maturity ranges.

Employees. As of December 31, 2006, the Bank has a total of 17 full time equivalent employees. CNB does not have any employees who are not also employees of Citizens National Bank.



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Supervision and Regulation

Both the Company and the Bank are subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of their operations. These laws are generally
intended to protect depositors and not shareholders. The following discussion describes the material elements of the regulatory framework that applies to us.

The Company

The Company owns all of the capital stock of the Bank; therefore, it is a bank holding company under the Bank
Holding Company Act of 1956. As a result, the Company is primarily subject to the supervision, examination, and reporting requirements of the Bank Holding Company Act and the regulations of the Federal Reserve. As a bank holding company registered
under the Virginia Banking Act, the Virginia Bureau of Financial Institutions, a division of the Virginia State Corporation Commission, also regulates and monitors all significant aspects of the Companys operations.

Acquisitions of Banks.The Bank Holding Company Act requires every bank holding company to obtain the Federal Reserves prior approval
before:



| |  |  | Acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly
own or control more than 5% of the banks voting shares;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Acquiring all or substantially all of the assets of any bank; or
| | - |  | ----------------------------------------------------------------



| |  |  | Merging or consolidating with any other bank holding company.
| | - |  | -------------------------------------------------------------

Additionally, the Bank Holding Company Act provides that the Federal Reserve may not approve any of these transactions if it would result in or tend to create a monopoly or substantially lessen competition or
otherwise function as a restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served. The Federal Reserves consideration of financial
resources generally focuses on capital adequacy, which is discussed below.

Under the Bank Holding Company Act, if adequately capitalized
and adequately managed, the Company or any other bank holding company located in Virginia may purchase a bank located outside of Virginia. Conversely, an adequately capitalized and adequately managed bank holding company located outside of Virginia
may purchase a bank located inside Virginia. In each case, however, restrictions, including the laws of other states, may be placed on the acquisition of a bank that has only been in existence for a limited amount of time or will result in specified
concentrations of deposits.

Change in Bank Control.Subject to various exceptions, the Bank Holding Company Act and
the Change in Bank Control Act, together with related regulations, require Federal Reserve approval prior to any person or company acquiring control of a bank holding company. Control is conclusively presumed to exist if an individual or
company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:



| |  |  | the bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | no other person owns a greater percentage of that class of voting securities immediately after the transaction.
| | - |  | ---------------------------------------------------------------------------------------------------------------

Our common stock is registered under the Securities Exchange Act of 1934. The regulations provide a procedure for challenging the rebuttable presumption
of control.

Permitted Activities. A bank holding company is generally permitted under the Bank Holding Company Act to engage in or
acquire direct or indirect control of more than 5% of the voting shares of any company engaged in the following activities:



| |  |  | Banking or managing or controlling banks; and
| | - |  | ---------------------------------------------



| |  |  | Any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the
business of banking include:



| |  |  | Factoring accounts receivable;
| | - |  | ------------------------------



| |  |  | Making, acquiring, brokering or servicing loans and usual related activities;
| | - |  | -----------------------------------------------------------------------------



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| |  |  | Leasing personal or real property;
| | - |  | ----------------------------------



| |  |  | Operating a non-bank depository institution, such as a savings association;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Trust company functions;
| | - |  | ------------------------



| |  |  | Financial and investment advisory activities;
| | - |  | ---------------------------------------------



| |  |  | Conducting discount securities brokerage activities;
| | - |  | ----------------------------------------------------



| |  |  | Underwriting and dealing in government obligations and money market instruments;
| | - |  | --------------------------------------------------------------------------------



| |  |  | Providing specified management consulting and counseling activities;
| | - |  | --------------------------------------------------------------------



| |  |  | Performing selected data processing services and support services;
| | - |  | ------------------------------------------------------------------



| |  |  | Acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Performing selected insurance underwriting activities.
| | - |  | ------------------------------------------------------

Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable
cause to believe that the bank holding companys continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries.

In addition to the permissible bank holding company activities listed above, a bank holding company may qualify and elect to become a financial holding
company, permitting the bank holding company to engage in additional activities that are financial in nature or incidental or complementary to financial activity. The Bank Holding Company Act expressly lists the following activities as financial in
nature:



| |  |  | Lending, trust and other banking activities;
| | - |  | --------------------------------------------



| |  |  | Insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing annuities, and acting as principal, agent, or broker for these purposes, in
any state;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Providing financial, investment, or advisory services;
| | - |  | ------------------------------------------------------



| |  |  | Issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Underwriting, dealing in or making a market in securities;
| | - |  | ----------------------------------------------------------



| |  |  | Other activities that the Federal Reserve may determine to be so closely related to banking or managing or controlling banks as to be a proper incident to managing
or controlling banks;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Foreign activities permitted outside of the United States if the Federal Reserve has determined them to be usual in connection with banking operations abroad;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Merchant banking through securities or insurance affiliates; and
| | - |  | ----------------------------------------------------------------



| |  |  | Insurance company portfolio investments.
| | - |  | ----------------------------------------

To qualify to become a financial holding company, the Bank and any other depository institution subsidiary of the Company must be well capitalized and well managed and must have a Community Reinvestment Act rating of at least
satisfactory. Additionally, the Company must file an election with the Federal Reserve to become a financial holding company and must provide the Federal Reserve with 30 days written notice prior to engaging in a permitted
financial activity. While the Company meets the qualification standards applicable to financial holding companies, the Company has not elected to become a financial holding company at this time.

Support of Subsidiary Institution. Under Federal Reserve policy, the Company is expected to act as a source of financial strength for the Bank and
to commit resources to support the Bank. This support may be required at times when, without this Federal Reserve policy, the Company might not be inclined to provide it. In addition, any capital loans made by the Company to the Bank will be repaid
only after the Banks deposits and various other obligations are repaid in full. In the unlikely event of the Companys bankruptcy, any commitment by it to a federal bank regulatory agency to maintain the capital of the Bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment.

The Bank

Since the Bank is chartered as a national bank, it is primarily subject to the supervision, examination and reporting requirements of the National Bank
Act and the regulations of the Office of the Comptroller of the Currency. The Office of the Comptroller of the Currency regularly examines the Banks operations and has the authority to approve or disapprove mergers, the establishment of
branches and similar corporate actions. The Office of the Comptroller of the Currency also has the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law. Because the Banks deposits
are insured by the FDIC to the maximum extent provided by law, it is also subject to certain FDIC regulations. The Bank is also subject to numerous state and federal statutes and regulations that affect its business, activities and operations.



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Branching.National banks are required by the National Bank Act to adhere to branch office banking
laws applicable to state banks in the states in which their main office is located. Under current Virginia law, the Bank may open branch offices throughout Virginia with the prior approval of the Office of the Comptroller of the Currency. In
addition, with prior regulatory approval, the Bank will generally be able to acquire existing banking operations in Virginia.Furthermore, federal legislation has been passed which permits interstate branching. These laws permit out-of-state
acquisitions by bank holding companies, interstate branching by banks if allowed by state law, and interstate merging by banks.

Prompt
Corrective Action.The Federal Deposit Insurance Corporation Improvement Act of 1991 established a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking
regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) in which all institutions are placed. The federal banking agencies have
specified by regulation the relevant capital level for each category. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the
three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an
institution that is critically undercapitalized. At December 31, 2006, the Bank qualified for the well-capitalized category.

An
institution that is categorized as undercapitalized, significantly undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. A bank holding company must
guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding companys obligation to fund a capital restoration plan is limited to the lesser of 5% of an
undercapitalized subsidiarys assets at the time it became undercapitalized or the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets,
making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution to a lower
capital category based on supervisory factors other than capital.

FDIC Insurance Assessments.The FDIC has adopted a risk-based
assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The system assigns an institution to one of three capital categories:
(1) well capitalized; (2) adequately capitalized; and (3) undercapitalized. These three categories are substantially similar to the prompt corrective action categories described above, with the undercapitalized category
including institutions that are undercapitalized, significantly undercapitalized, and critically undercapitalized for prompt corrective action purposes. The FDIC also assigns an institution to one of three supervisory subgroups based on a
supervisory evaluation that the institutions primary federal regulator provides to the FDIC and information that the FDIC determines to be relevant to the institutions financial condition and the risk posed to the deposit insurance
funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the institutions capital group and supervisory subgroup. In addition, the FDIC imposes assessments to help pay off the $780 million in annual interest payments on
the $8 billion Financing Corporation bonds issued in the late 1980s as part of the government rescue of the thrift industry.

The FDIC may
terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order, or condition
imposed by the FDIC.

Community Reinvestment Act. The Community Reinvestment Act requires that, in connection with examinations of
financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the Comptroller of the Currency, shall evaluate the record of each financial institution in meeting the credit needs of its local
community, including low and moderate-income neighborhoods. These facts are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional
requirements and limitations on the Bank. Since our aggregate assets are not more than $250 million, under the Gramm-Leach-Bliley Act, we are generally subject to a Community Reinvestment Act examination only once every 60 months if we receive an
outstanding rating, once every 48 months if we receive a satisfactory rating and as needed if our rating is less than satisfactory.Additionally, we must publicly disclose the terms of various Community
Reinvestment Act-related agreements.

Other Regulations. Interest and other charges collected or contracted for by the Bank are
subject to state usury laws and federal laws concerning interest rates. For example, under the Service Members Civil Right Acts, which amended the Soldiers and Sailors Civil Relief Act of 1940, a lender is generally prohibited from
charging an annual interest rate in excess of 6% on any obligation for which the borrower is a person on active duty with the United States military.



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The Banks loan operations are subject to federal laws applicable to credit transactions, such as
the:



| |  |  | Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a
financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Soldiers and Sailors Civil Relief Act of 1940, as amended, governing the repayment terms of, and property rights underlying, secured obligations of
persons in military service; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

The deposit operations of the Bank are subject to:



| |  |  | The Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with
administrative subpoenas of financial records; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from
deposit accounts and customers rights and liabilities arising from the use of automated teller machines and other electronic banking services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital Adequacy

The Company and the Bank are required to comply with the capital adequacy standards
established by the Federal Reserve, in the case of the Company, and the Office of the Comptroller of the Currency, in the case of the Bank. The Federal Reserve has established a risk-based and a leverage measure of capital adequacy for bank holding
companies. Since the Companys consolidated total assets are less than $150 million, under the Federal Reserves capital guidelines, our capital adequacy is measured on a bank-only basis, as opposed to a consolidated basis. The Bank is
also subject to risk-based and leverage capital requirements adopted by the Office of the Comptroller of the Currency, which are substantially similar to those adopted by the Federal Reserve for bank holding companies.

The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk
categories, each with appropriate risk weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.

The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. Total capital consists of two components, Tier 1 Capital and Tier 2 Capital. Tier 1 Capital generally consists of common stock,
minority interests in the equity accounts of consolidated deposit institution subsidiaries, noncumulative perpetual preferred stock in consolidated non-depository subsidiaries, and a limited amount of qualifying cumulative perpetual preferred stock,
less goodwill and other specified intangible assets. Tier 1 Capital must equal at least 4% of risk-weighted assets. Tier 2 Capital generally consists of subordinated debt, other preferred stock, and a limited amount of loan loss reserves. The total
amount of Tier 2 Capital is limited to 100% of Tier 1 Capital. At December 31, 2006, our consolidated ratio of total capital to risk-weighted assets was 26.0% and our consolidated ratio of Tier 1 Capital to risk-weighted assets was 24.9%.

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide
for a minimum ratio of Tier 1 Capital to average assets, less goodwill and other specified intangible assets, of 3% for bank holding companies that meet specified criteria, including having the highest regulatory rating and implementing the Federal
Reserves risk-based capital measure for market risk. All other bank holding companies generally are required to maintain a leverage ratio of at least 4%. At December 31, 2006, our consolidated leverage ratio was 19.1%. The guidelines also
provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without reliance on intangible assets. The Federal
Reserve considers the leverage ratio and other indicators of capital strength in evaluating proposals for expansion or new activities.



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Failure to meet capital guidelines could subject a bank or bank holding company to a variety of
enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other restrictions on its business. As described above, significant
additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements.

Payment of Dividends

The Company is a legal entity separate and distinct from the Bank. The principal sources of the Companys cash flow, including
cash flow to pay dividends to its shareholders, are dividends that the Bank pays to its sole shareholder, the Company. Statutory and regulatory limitations apply to the Banks payment of dividends to the Company as well as to the Companys
payment of dividends to its shareholders.

The Bank is required by federal law to obtain prior approval of the Office of the Comptroller of
the Currency for payments of dividends if the total of all dividends declared by the Banks board of directors in any year will exceed (1) the total of the Banks net profits for that year, plus (2) the Banks retained net
profits of the preceding two years, less any required transfers to surplus.

The payment of dividends by the Company and the Bank may also
be affected by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. If, in the opinion of the Office of the Comptroller of the Currency, the Bank were engaged in or about to engage in an unsafe or unsound
practice, the Office of the Comptroller of the Currency could require, after notice and a hearing, that the Bank stop or refrain from engaging in the practice. The federal banking agencies have indicated that paying dividends that deplete a
depository institutions capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividend if payment
would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of
current operating earnings.

Restrictions on Transactions with Affiliates

The Company and the Bank are subject to the provisions of Section 23A of the Federal Reserve Act. Section 23A places limits on the amount of:



| |  |  | a banks loans or extensions of credit to affiliates;
| | - |  | -----------------------------------------------------



| |  |  | a banks investment in affiliates;
| | - |  | ----------------------------------



| |  |  | assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | a banks guarantee, acceptance or letter of credit issued on behalf of an affiliate.
| | - |  | ------------------------------------------------------------------------------------

The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a banks capital and surplus and, as to all
affiliates combined, to 20% of a banks capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. The Bank must also comply with
other provisions designed to avoid the taking of low-quality assets.

The Company and the Bank are also subject to the provisions of
Section 23B of the Federal Reserve Act which, among other things, prohibit an institution from engaging in the above transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the
institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

The Bank is
also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features.

Privacy

Financial institutions are required to
disclose their policies for collecting and protecting confidential information. Customers generally may prevent financial institutions from sharing nonpublic personal financial information with nonaffiliated third parties



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##### Table of Contents

except under narrow circumstances, such as the processing of transactions requested by the consumer or when the financial institution is jointly sponsoring a
product or service with a nonaffiliated third party. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing to
consumers.

Consumer Credit Reporting

On December 4, 2003, the President signed the Fair and Accurate Credit Transactions Act (the FACT Act), amending the federal Fair Credit Reporting Act (the FCRA). Certain amendments to the FCRA (the FCRA Amendments) became effective
during the fourth quarter of 2004.

The FCRA Amendments include, among other things:



| |  |  | new requirements for financial institutions to develop policies and procedures to identify potential identity theft and, upon the request of a consumer, place a
fraud alert in the consumers credit file stating that the consumer may be the victim of identity theft or other fraud;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | for entities that furnish information to consumer reporting agencies (which would include the Bank), new requirements to implement procedures and policies regarding
the accuracy and integrity of the furnished information, and regarding the correction of previously furnished information that is later determined to be inaccurate; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a requirement for mortgage lenders to disclose credit scores to consumers.
| | - |  | --------------------------------------------------------------------------

The FCRA Amendments also will prohibit a business that receives consumer information from an affiliate from using that information for marketing
purposes unless the consumer is first provided a notice and an opportunity to direct the business not to use the information for such marketing purposes (the opt-out), subject to certain exceptions. We do not plan to share consumer
information among our affiliated companies for marketing purposes, except as may be allowed under exceptions to the notice and opt-out requirements. Because no affiliate of the Company is currently sharing consumer information with any other
affiliate of the Company for marketing purposes, the new limitations on sharing of information for marketing purposes has not had a significant impact on the Company.

Anti-Terrorism and Money Laundering Legislation

The Bank is subject to the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT) as it amended the Bank Secrecy Act, and the rules and regulations of the Office of Foreign Assets Control (OFAC). These statutes and
related rules and regulations impose requirements and limitations on specific financial transactions and account relationships, intended to guard against money laundering and terrorism financing. The Bank has established a customer identification
program under Section 326 of the USA PATRIOT Act and the Bank Secrecy Act and has otherwise implemented procedures and policies to comply with those rules.

Federal Deposit Insurance Reform

On February 8, 2006, President Bush signed the Federal Deposit Insurance Reform Act
of 2005 (FDIRA). The FDIC must adopt rules implementing the various provisions of FDIRA by November 5, 2006.

Among other things,
FDIRA changes the Federal deposit insurance system by:



| |  |  | a raising the coverage level for retirement accounts to $250,000;
| | - |  | -----------------------------------------------------------------



| |  |  | indexing deposit insurance coverage levels for inflation beginning in 2012; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | prohibiting undercapitalized financial institutions from accepting employee benefit plan deposits;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | merging the Bank Insurance Fund and Savings Association Insurance Fund into a new Deposit Insurance Fund (the DIF); and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | providing credits to financial institutions that capitalized the FDIC prior to 1996 to offset future assessment premiums.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

FDIRA also authorizes the FDIC to revise the current risk-based assessment system, subject to notice and comment and caps the amount of the DIF at 1.50%
of domestic deposits. The FDIC must issue cash dividends, awarded on a historical basis, for the amount of the DIF over the 1.50% ratio. Additionally, if the DIF exceeds 1.35% of domestic deposits at year-end, the FDIC must issue cash dividends,
awarded on a historical basis, for half of the amount of the excess.

Proposed Legislation and Regulatory Action

New regulations and statutes are regularly proposed that contain wide-ranging proposals for altering the structures, regulations



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##### Table of Contents

and competitive relationships of financial institutions operating and doing business in the United States. We cannot predict whether or in what form any
proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.

Effect of
Governmental Monetary Policies

Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the
United States government and its agencies. The Federal Reserve Banks monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve affect the levels of bank loans, investments and deposits through its control over the issuance of United States
government securities, its regulation of the discount rate applicable to member banks and its influence over reserve requirements to which member banks are subject. We cannot predict the nature or impact of future changes in monetary and fiscal
policies.



|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

Banking operations began
in the second quarter of 2003 at a temporary modular facility that was located on the site for our permanent office building, located at 11407 Windsor Blvd., Windsor, Virginia. Construction of our permanent office building, with approximately
7,000 square feet of finished office space with space for expansion, began in August, 2003 and was completed in March, 2004, at which time we began operations in the permanent office building.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

No matter was submitted to a vote of holders of the Companys securities during the fourth quarter of the fiscal year covered by this Report.

PART II



|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | --------------------------------------------------------

In December 2002, the Company completed its initial public offering of its common stock. This offering was registered under the Securities Act of 1933, and raised $5.4 million in net proceeds through the sale of 561,137 shares of common
stock (841,706 shares adjusted for 3-for-2 stock split in 2006). Out of the net proceeds of the offering, $5.25 million was used to capitalize the Bank in exchange for 100% of its outstanding common stock as required by the Banks primary
regulator. No unregistered securities of the Company were sold or issued during the period covered by this Report.

During the fourth
quarter of 2006, the Company completed a rights offering and a public offering, selling 650,000 shares of its common stock. The offering was registered under the Securities act of 1933 and raised $4 million in net proceeds. The Company will use the
net proceeds from the offering to increase equity and subsequently the Banks legal lending limit and for general corporate purposes, including future growth and expansion.

The Companys common stock is traded on the Over-the-Counter Bulletin Board under the symbol CNBV. To the Companys knowledge, the last price
at which our stock was sold was $6.40 per share on March 22, 2007. As of December 31, 2006, we had approximately 888 shareholders of record.

To date, the Company has not paid cash dividends on its common stock. The Companys board of directors currently intends to retain earnings to support future operations and therefore do not anticipate paying cash
dividends in the foreseeable future. All of the Companys outstanding shares of common stock are entitled to share equally in dividends from funds legally available when, and if, declared by the board of directors.



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##### Table of Contents

|ITEM 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|------- | ---------------------------------------------------------

The following discussion provides information about the major components of the results of operations and financial condition, liquidity, and capital resources of CNB. This discussion and analysis should be read in
conjunction with the Companys Consolidated Financial Statements and Notes to Consolidated Financial Statements. All per share information has been retroactively adjusted to reflect the 3-for-2 stock split on September 28, 2006.

Overview

The Company is headquartered
in Windsor, Virginia and conducts its primary operations through its wholly owned subsidiary, Citizens National Bank. The Bank is a community bank serving the County of Isle of Wight, the Cities of Franklin and Suffolk, and portions of Southampton,
Surry and Sussex Counties with one full service branch.

Like most financial institutions, our profitability depends largely upon net
interest income, which is the difference between the interest received on earning assets, such as loans and investment securities, and the interest paid on interest-bearing liabilities, principally deposits and borrowings. Our results of operations
are also affected by our provision for loan losses; non-interest expenses, such as salaries, employee benefits, and occupancy expenses; and non-interest income, such as mortgage loan fees and service charges on deposit accounts.

Economic conditions, competition and federal monetary and fiscal policies also affect financial institutions. For example, 2004 through the first six
months of 2006 were characterized by managed increases in interest rates by the Federal Reserve intended to stabilize the economy and stimulate industrial economic growth. Lending activities are also influenced by regional and local economic
factors, such as housing supply and demand, competition among lenders, customer preferences and levels of personal income and savings in our primary market area.

The Company began operations on April 29, 2003. As of December 31, 2006, total assets were $41.4 million, consisting primarily of securities of $6.5 million, loans, net of allowance for loan losses, of $27.6
million and premises and equipment of $1.6 million. Comparatively, at December 31, 2005, total assets were $32.8 million, which consisted primarily of securities of $6.4 million, loans, net of allowance for loan losses, of $21.4 million and
premises and equipment of $1.7 million. At December 31, 2006, total deposits were $33.8 million compared to total deposits at December 31, 2005 of $29.4 million. Interest bearing deposits at December 31, 2006 and 2005 were $30.8
million and $26.4 million, respectively. For the year ended December 31, 2006, the Company had net operating income of $100,000 compared to a net operating loss of $544,000 for the year ended December 31, 2005.

Critical Accounting Policies

The financial condition
and results of operations presented in the consolidated financial statements, accompanying notes to the consolidated financial statements and managements discussion and analysis are, to a large degree, dependent upon the accounting policies of
the Company. The selection and application of these accounting policies involve judgments, estimates, and uncertainties that are susceptible to change.

Presented below is a discussion of those accounting policies that management believes are the most important to the portrayal and understanding of the Companys financial condition and results of operations.
These critical accounting policies require managements most difficult, subjective and complex judgments about matters that are inherently uncertain. In the event that different assumptions or conditions were to prevail, and depending upon the
severity of such changes, the possibility of materially different financial condition or results of operations is a reasonable likelihood.

Allowance
for Loan Losses

The Company monitors and maintains an allowance for loan losses to absorb an estimate of probable losses inherent in
the loan portfolio. The Company maintains policies and procedures that address the systems of controls over the following areas of maintenance in the allowance: the systematic methodology used to determine the appropriate level of the allowance to
provide assurance they are maintained in accordance with accounting principles generally accepted in the United States of America; the accounting policies for loan charge-offs and recoveries; the assessment and measurement of impairment in the loan
portfolio; and the loan grading system.

The Company evaluates various loans individually for impairments required by SFAS No. 114,
Accounting by Creditors for Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment of a Loan  Income Recognition and Disclosures. Loans evaluated individually for impairment include non-performing loans, such as
loans on non-accrual, loans past due by 90 days or more, restructured loans and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is
individually impaired, then a specific reserve is established for the amount of impairment. If a loan evaluated individually is not impaired, then the loan is assessed for impairment under SFAS No. 5, Accounting for Contingencies, with a group
of loans that have similar characteristics.



13



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##### Table of Contents

For loans without individual measures of impairment, the Company makes estimates of losses for groups of
loans as required by SFAS No. 5. Loans are grouped by similar characteristics, including the type of loan, the assigned loan grade and general collateral type. A loss rate reflecting the expected loss inherent in a group of loans is derived
based upon estimates of default rates for a given loan grade, the predominant collateral type for the group and the terms of the loan. The resulting estimate of losses for groups of loans are adjusted for relevant environmental factors and other
conditions of the portfolio of loans and leases, including: borrower and industry concentrations; levels and trends in delinquencies, charge-offs and recoveries; changes in underwriting standards and risk selection; level of experience, ability and
depth of lending management; peer group comparison; results of examinations and evaluations of the overall portfolio by senior management, external auditors, and regulatory examiners; and national and local economic conditions.

Since inception, the Company has no material delinquencies, nor a trend or an indication of a trend that would indicate the expectation of material
losses. The Company recognizes the inherent imprecision in estimates of losses due to various uncertainties and variability related to the factors used, and therefore a reasonable range around the estimate of losses is derived and used to ascertain
whether the allowance is adequate. The establishment of allowance factors is a continuing exercise and may change from period to period, resulting in an increase or decrease in the amount of provision or allowance based upon the same volume or
classification of loans. The Companys current policy is to maintain the allowance at approximately 1.25% of total loans. If different assumptions or conditions were to prevail and it is determined that the allowance is not adequate to absorb
the new estimate of probable losses, an additional provision for loan losses would be made, which amount may be material to the Consolidated Financial Statements.

Accounting for Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized
for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company has recorded a 100%
deferred tax valuation allowance related to various temporary differences, principally consisting of the provision for loan losses and its net operating loss carryforwards. Since the Company has only been in operation since April 29, 2003 and
did not show a profit during 2003, 2004, or 2005, it is managements opinion that it is prudent at this time to only recognize the deferred tax asset to the extent that income tax benefits are realized. The Company has determined that since it
does not have a proven earnings record, it is more likely than not that some portion of the deferred tax asset may not be realized.

Results of
Operations

Net Income(Loss)

It is
normal for new banks to experience operating losses in their formative years through start up and operating expenses. For the year ended December 31, 2006, the Companys net income from operations was $100,000; $0.11 and $0.10 earnings per
basic and diluted share, respectively, compared to a net loss from operations of $544,000 for the year ended December 31, 2005, a $0.64 loss per basic and diluted share. Return on average assets (ROA) measures how effectively CNB employs its
assets to produce net income. For the year ended December 31, 2006, ROA was 0.29% compared to (1.91%) for the year ended December 31, 2005. Return on average equity (ROE), another measure of earnings performance, indicates the amount
of net income earned in relation to the total equity capital invested. ROE for the year ended December 31, 2006 was 2.69% compared with (15.63%) for the year ended December 31, 2005. Average equity to average assets was 10.62% and
12.22% for the years ended December 31, 2006 and 2005, respectively.



14



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TABLE 1: Average Balances, Interest Income and Expense, Yields and Rates

The following table shows the average balance sheet for the years ended December 31, 2006 and 2005. In addition, the amount of interest earned on
earning assets, with related yields and interest on interest bearing liabilities, together with rates, is shown.



|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|------------------------------------------ |  | -------------- | ------ | - | ---------------------- | - | ---------- |  | ---- | -------------- |  | - | ---------------------- | - | ---------- | - | ----- |  | ---- | -
|                                           |  | 2006           |        |   | 2005                   |  
|(Dollars in thousands)                     |  | AVERAGEBALANCE |        |   | INTERESTINCOME/EXPENSE |   | YIELD/RATE |  |      | AVERAGEBALANCE |  |   | INTERESTINCOME/EXPENSE |   | YIELD/RATE |  
|Assets:                                    |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Securities, taxable                        |  | $              | 7,426  |   |                        | $ | 340        |  | 4.58 | %              |  | $ | 5,956                  |   |            | $ | 170   |  | 2.85 | %
|Loans                                      |  |                | 24,073 |   |                        |   | 2,063      |  | 8.57 | %              |  |   | 18,503                 |   |            |   | 1,382 |  | 7.47 | %
|Federal funds sold                         |  |                | 1,213  |   |                        |   | 61         |  | 5.03 | %              |  |   | 1,786                  |   |            |   | 59    |  | 3.30 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total earnings assets                      |  |                | 32,712 |   |                        | $ | 2,464      |  | 7.53 | %              |  |   | 26,245                 |   |            | $ | 1,611 |  | 6.14 | %
|Less: Allowance for loan losses            |  |                | (297   | ) |                        |   |            |  |      |                |  |   | (208                   | ) |            |   |       |  |      |  
|Total non-earning assets                   |  |                | 2,593  |   |                        |   |            |  |      |                |  |   | 2,441                  |   |            |   |       |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total Assets                               |  | $              | 35,008 |   |                        |   |            |  |      |                |  | $ | 28,478                 |   |            |   |       |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Liabilities and shareholders equity:      |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Interest bearing deposits:                 |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Checking                                   |  | $              | 862    |   |                        | $ | 9          |  | 1.04 | %              |  | $ | 964                    |   |            | $ | 10    |  | 1.04 | %
|Money market savings                       |  |                | 1,484  |   |                        |   | 24         |  | 1.62 | %              |  |   | 1,707                  |   |            |   | 27    |  | 1.58 | %
|Regular savings                            |  |                | 1,326  |   |                        |   | 16         |  | 1.21 | %              |  |   | 1,280                  |   |            |   | 15    |  | 1.17 | %
|Time Deposits:                             |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|$100,000 and over                          |  |                | 6,138  |   |                        |   | 275        |  | 4.48 | %              |  |   | 4,784                  |   |            |   | 175   |  | 3.66 | %
|Under $100,000                             |  |                | 17,899 |   |                        |   | 782        |  | 4.37 | %              |  |   | 13,554                 |   |            |   | 463   |  | 3.42 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total interest bearing deposits            |  |                | 27,709 |   |                        |   | 1,106      |  | 3.99 | %              |  |   | 22,289                 |   |            |   | 690   |  | 3.10 | %
|Federal funds purchased                    |  |                | 149    |   |                        |   | 9          |  | 6.04 | %              |  |   |                       |   |            |   |      |  | 0.00 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total interest bearing liabilities:        |  |                | 27,858 |   |                        | $ | 1,115      |  | 4.00 | %              |  |   |                        |   |            | $ | 690   |  | 3.10 | %
|Non-interest bearing liabilities:          |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Demand deposits                            |  |                | 3,274  |   |                        |   |            |  |      |                |  |   | 2,604                  |   |            |   |       |  |      |  
|Other liabilities                          |  |                | 158    |   |                        |   |            |  |      |                |  |   | 105                    |   |            |   |       |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total liabilities                          |  |                | 31,290 |   |                        |   |            |  |      |                |  |   | 24,998                 |   |            |   |       |  |      |  
|Shareholders equity                       |  |                | 3,718  |   |                        |   |            |  |      |                |  |   | 3,480                  |   |            |   |       |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Total Liabilities and Shareholders equity |  | $              | 35,008 |   |                        |   |            |  |      |                |  | $ | 28,478                 |   |            |   |       |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Net interest income                        |  |                |        |   |                        | $ | 1,349      |  |      |                |  |   |                        |   |            | $ | 921   |  |      |  
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Interest rate spread                       |  |                |        |   |                        |   |            |  | 3.53 | %              |  |   |                        |   |            |   |       |  | 3.04 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Interest expense to average earning assets |  |                |        |   |                        |   |            |  | 3.41 | %              |  |   |                        |   |            |   |       |  | 2.63 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  
|Net interest margin                        |  |                |        |   |                        |   |            |  | 4.12 | %              |  |   |                        |   |            |   |       |  | 3.51 | %
|                                           |  |                |        |   |                        |   |            |  |      |                |  |   |                        |   |            |   |       |  |      |  



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The following table describes the impact on the net interest income resulting from changes in average
balances and average rates for the periods indicated. The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

TABLE 2: Rate and Volume Analysis



|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|---------------------------------- |  | ------------------------ | --- | - | --------------------- | - | ------ |  | - | ---------- | - | ---- | - | ------ |  | - | --- |  | - | --- | -
|                                   |  | Years ended December 31, |    
|                                   |  | 2006 compared to 2005    |     |   | 2005 compared to 2004 |  
|                                   |  | Change Due To:           |     |   | Change Due To:        |  
|                                   |  | Increase                 |     |   |                       |   |        |  |   | Increase   |   |      |   |        | 
|                                   |  | (Decrease)               |     |   | Rate                  |   | Volume |  |   | (Decrease) |   | Rate |   | Volume | 
|Interest income:                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Securities                         |  | $                        | 170 |   |                       | $ | 121    |  | $ | 49         |   |      | $ | 25     |  | $ | 5   |  | $ | 20  |  
|Loans                              |  |                          | 681 |   |                       |   | 224    |  |   | 457        |   |      |   | 776    |  |   | 77  |  |   | 699 |  
|Federal funds sold                 |  |                          | 2   |   |                       |   | 5      |  |   | (3         | ) |      |   | 32     |  |   | 37  |  |   | (5  | )
|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Total interest income              |  |                          | 853 |   |                       |   | 350    |  |   | 503        |   |      |   | 833    |  |   | 119 |  |   | 714 |  
|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Interest expense:                  |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Interest bearing deposits:         |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Checking                           |  |                          | (1  | ) |                       |   | 0      |  |   | (1         | ) |      |   | 3      |  |   | 1   |  |   | 2   |  
|Money market savings               |  |                          | (3  | ) |                       |   | 1      |  |   | (4         | ) |      |   | 11     |  |   | 3   |  |   | 8   |  
|Regular savings                    |  |                          | 1   |   |                       |   | 0      |  |   | 1          |   |      |   | 3      |  |   | 1   |  |   | 2   |  
|Time Deposits:                     |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|$100,000 and over                  |  |                          | 100 |   |                       |   | 44     |  |   | 56         |   |      |   | 91     |  |   | 19  |  |   | 72  |  
|Under $100,000                     |  |                          | 319 |   |                       |   | 148    |  |   | 171        |   |      |   | 264    |  |   | 60  |  |   | 204 |  
|Federal funds purchased            |  |                          | 9   |   |                       |   |       |  |   | 9          |   |      |   | 264    |  |   | 60  |  |   | 204 |  
|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Total interest bearing liabilities |  |                          | 425 |   |                       |   | 193    |  |   | 232        |   |      |   | 372    |  |   | 84  |  |   | 288 |  
|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  
|Net interest income                |  | $                        | 428 |   |                       | $ | 157    |  | $ | 271        |   |      | $ | 461    |  | $ | 35  |  | $ | 426 |  
|                                   |  |                          |     |   |                       |   |        |  |   |            |   |      |   |        |  |   |     |  |   |     |  

Net Interest Income

Net interest income, CNBs primary source of consolidated earnings, is the amount by which interest generated from earning assets exceeds the expense of funding those assets. Changes in volume and mix of interest
earning assets and interest bearing liabilities, as well as their respective yields and rates, have a significant impact on the level of net interest income. Other factors affecting net interest income included paying higher interest rates to
attract depositors and extending credit with lower interest rates to attract borrowers. For the year ended December 31, 2006, interest income was $2.5 million and interest expense was $1.1 million. For the year ended December 31, 2005,
interest income and interest expense were $1.6 million and $690,000, respectively. The increase in interest revenues and expenses were directly related to growth in loans and deposits and interest rate increases.

Non-Interest Income

Non-interest income has been and
will continue to be an important factor for increasing profitability. Management recognizes this importance and continues to review and consider areas where non-interest income can be increased. Non-interest income for the year ended
December 31, 2006 was $260,000, compared to $145,000 for the year ended December 31, 2005. The primary sources of non-interest income for the year ended December 31, 2006 were $120,000 from non-sufficient fund/overdraft accounts,
$53,000 from fixed rate mortgage brokerage fees, $25,000 from shares owned in a local title insurance agency, and $22,000 from debit card and ATM activity. Main sources of non-interest income for the year ended December 31, 2005 were $127,000
from non-sufficient fund/overdraft accounts, $30,000 from fixed rate mortgage brokerage fees, $14,000 from shares owned in a local title insurance agency, and $22,000 from debit card and ATM activity. During the fourth quarter of 2005, the Company
realized losses of $80,000 on the disposition of securities to better position the Company for future profitability.



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##### Table of Contents

TABLE 3: Non-Interest Income



|                                    |  |                        |     |      |   |     |  
|----------------------------------- |  | ---------------------- | --- | ---- | - | --- | -
|                                    |  | Year EndedDecember 31, |    
|(Dollars in thousands)              |  | 2006                   |     | 2005 |  
|Service charges on deposit accounts |  | $                      | 15  |      | $ | 16  |  
|Other fees and commissions          |  |                        | 130 |      |   | 137 |  
|Realized loss on sale of securities |  |                        |    |      |   | (80 | )
|Other operating income              |  |                        | 115 |      |   | 72  |  
|                                    |  |                        |     |      |   |     |  
|Total non-interest income           |  | $                      | 260 |      | $ | 145 |  
|                                    |  |                        |     |      |   |     |  

Non-Interest Expense

Improving operating efficiency is as important to management as enhancing non-interest income. Higher non-interest expenses are expected during the first years of operation. For the year ended December 31, 2006,
major components of other operating expenses were ATM expense  $44,000, insurance  $24,000, and regulatory assessments  $19,000. The same major components for the year ended December 31, 2005 were $37,000, $23,000, and
$20,000, respectively.

TABLE 4: Non-Interest Expense



|                           |  |                        |       |      |   |      
|-------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                           |  | Year EndedDecember 31,
|(Dollars in thousands)     |  | 2006                   |       | 2005
|Personnel                  |  | $                      | 792   |      | $ | 825  
|Occupancy and equipment    |  |                        | 141   |      |   | 142  
|Professional fees          |  |                        | 136   |      |   | 140  
|Advertising                |  |                        | 33    |      |   | 35   
|Computer services          |  |                        | 109   |      |   | 109  
|Other operating expenses   |  |                        | 226   |      |   | 215  
|                           |  |                        |       |      |   |      
|Total non-interest expense |  | $                      | 1,437 |      | $ | 1,466
|                           |  |                        |       |      |   |      

Summary of Loan Loss Experience

The allowance for loan losses is an estimate of the amount that will be adequate to provide for potential losses in CNBs loan portfolio.
Managements methodology in evaluating the adequacy of the allowance for loan losses considers potential specific losses, as well as the volume, growth and composition of the loan portfolio. Once past loan loss experience has been established,
it will also be included in the evaluation. General economic trends as well as any conditions affecting individual borrowers may also affect the level of loan losses. The allowance is periodically examined by bank regulators for adequacy. Examiners
take into account factors such as the methodology used to calculate the allowance and the size of allowance in comparison to peer financial institutions.

CNBs Loan Committee and Board of Directors review problem loans monthly, including their effect on the allowance for loan losses. In managements opinion, the allowance for loan losses is adequate to absorb
the current estimated risk of loss in the loan portfolio. CNBs management continually evaluates the adequacy of the allowance for loan losses, and changes in the provision are based on the analyzed inherent risk of the loan portfolio. The
allowance is increased by the provision for loan losses and reduced by loans charged off, net of recoveries. The following table summarizes loans charged off, recoveries of loans previously charged off and additions to the reserve that have been
charged to operating expense for the periods indicated. We have no lease financing or foreign loans.

TABLE 5: Allowance for Loan Losses



|                                           |  |                        |     |   |      |   |     |  
|------------------------------------------ |  | ---------------------- | --- | - | ---- | - | --- | -
|                                           |  | Year EndedDecember 31, |    
|(Dollars in thousands)                     |  | 2006                   |     |   | 2005 |  
|Allowance, beginning of period             |  | $                      | 275 |   |      | $ | 151 |  
|Provision for loan losses                  |  |                        | 72  |   |      |   | 144 |  
|Loans charged off                          |  |                        | (2  | ) |      |   | (20 | )
|Recoveries of loans previously charged off |  |                        | 2   |   |      |   |    |  
|                                           |  |                        |     |   |      |   |     |  
|Allowance, end of period                   |  | $                      | 347 |   |      | $ | 275 |  
|                                           |  |                        |     |   |      |   |     |  



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##### Table of Contents

The allocation of the allowance at December 31, 2006 and 2005 and the ratio of related outstanding
loan balances to total loans are as follows:

TABLE 6: Allocation of Allowance for Loan Losses



|                          |  |                          |     |                                           |        |   |                          |   |                                           |  |        |  
|------------------------- |  | ------------------------ | --- | ----------------------------------------- | ------ | - | ------------------------ | - | ----------------------------------------- |  | ------ | -
|                          |  | 2006                     |     |                                           | 2005   |  
|(Dollars in thousands)    |  | Allowance forLoan Losses |     | Percent of Loansin Category toTotal Loans |        |   | Allowance forLoan Losses |   | Percent of Loansin Category toTotal Loans | 
|Commercial and industrial |  | $                        | 27  |                                           | 11.83  | % |                          | $ | 18                                        |  | 11.73  | %
|Real estate commercial    |  |                          | 82  |                                           | 44.12  |   |                          |   | 69                                        |  | 47.41  |  
|Real estate consumer      |  |                          | 41  |                                           | 26.16  |   |                          |   | 30                                        |  | 24.56  |  
|Consumer installment      |  |                          | 66  |                                           | 17.89  |   |                          |   | 47                                        |  | 16.30  |  
|Unallocated               |  |                          | 131 |                                           | N/A    |   |                          |   | 111                                       |  | N/A    |  
|                          |  |                          |     |                                           |        |   |                          |   |                                           |  |        |  
|Balance, December 31      |  | $                        | 347 |                                           | 100.00 | % |                          | $ | 275                                       |  | 100.00 | %
|                          |  |                          |     |                                           |        |   |                          |   |                                           |  |        |  

Financial Condition

Summary

A financial institutions primary sources of revenue are generated by its earning assets, while its major
expenses are produced by the funding of those assets with interest-bearing liabilities. Effective management of these sources and uses of funds is essential in attaining profitability while maintaining an acceptable level of risk. At
December 31, 2006, the Company had $41.4 million in total assets. Interest-earning assets and interest-bearing liabilities were $38.9 million and $30.8 million, respectively. At December 31, 2005, the Company had $32.8 million in total
assets. Interest-earning assets were $30.2 million and interest-bearing liabilities were $26.4 million.

Loan Portfolio

CNBs loan portfolio is its largest and most profitable component of earning assets, totaling 72.0% of interest-earning assets at December 31,
2006 and 71.7% at December 31, 2005. The Company, through the bank, engages in a wide range of lending activities, which include one-to-four family and multi-family residential mortgage loans, commercial real estate loans, construction loans,
land acquisition and development loans, consumer loans, and commercial business loans. CNB continues to emphasize loan portfolio growth and diversification as a means of increasing earnings while minimizing credit risk.

TABLE 7: Loan Portfolio



|                              |  |              |        |      |   |       
|----------------------------- |  | ------------ | ------ | ---- | - | ------
|                              |  | December 31,
|(Dollars in thousands)        |  | 2006         |        | 2005
|Commercial and industrial     |  | $            | 3,232  |      | $ | 2,456 
|Real estate construction      |  |              | 1,480  |      |   | 1,419 
|Real estate mortgage:         |  |              |        |      |   |       
|Residential (1-4 family)      |  |              | 5,148  |      |   | 3,257 
|Home equity lines             |  |              | 695    |      |   | 643   
|Non-farm, non-residential (1) |  |              | 12,350 |      |   | 10,268
|Agricultural                  |  |              | 80     |      |   | 84    
|Consumer installment          |  |              | 5,006  |      |   | 3,529 
|                              |  |              |        |      |   |       
|Total loans                   |  | $            | 27,991 |      | $ | 21,656
|                              |  |              |        |      |   |       

---

|(1) | This category generally consists of commercial and industrial loans where real estate constitutes a source of collateral.
|--- | -------------------------------------------------------------------------------------------------------------------------

Non-farm, non-residential loans are typically owner-occupied commercial buildings. At December 31, 2006, non-farm, non-residential loans were 44.1%
of the total portfolio, compared to 47.4% at December 31, 2005. Commercial, industrial and agricultural loan portfolio consists of secured and unsecured loans to small businesses, comprising 11.8% and 11.7% of the total portfolio at
December 31, 2006 and 2005, respectively.

CNBs unfunded loan commitments totaled $3.3 million at December 31, 2006 and
$3.2 million at December 31, 2005.

The following table reflects the maturity distribution of selected loan categories at
December 31, 2006.



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##### Table of Contents

TABLE 8: Remaining Maturities of Selected Loan Categories



|                       |  |                                       |       |                           |   |      
|---------------------- |  | ------------------------------------- | ----- | ------------------------- | - | -----
|(Dollars in thousands) |  | Commercial andIndustrial,Agricultural |       | Real Estate -Construction
|Variable Rate:         |  |                                       |       |                           |   |      
|Within 1 year          |  | $                                     | 1,452 |                           | $ | 928  
|1 to 5 years           |  |                                       | 103   |                           |   |     
|After 5 years          |  |                                       |      |                           |   |     
|Fixed Rate:            |  |                                       |       |                           |   |      
|Within 1 year          |  |                                       | 458   |                           |   | 456  
|1 to 5 years           |  |                                       | 1,299 |                           |   | 96   
|After 5 years          |  |                                       |      |                           |   |     
|                       |  |                                       |       |                           |   |      
|Total Maturities       |  | $                                     | 3,312 |                           | $ | 1,480
|                       |  |                                       |       |                           |   |      

Loans are placed on non-accrual status when collection of principal and interest is doubtful,
generally when a loan becomes 90 days past due. There are three negative implications for earnings when a loan is placed on non-accrual status. First, all interest accrued but unpaid at the date that the loan is placed on non-accrual status is
either deducted from interest income or written off as a loss. Second, accruals of interest are discontinued until it becomes certain that both principal and interest can be repaid. Finally, there may be actual losses that may require that
additional provision for loan losses be charged against earnings. For real estate loans, upon foreclosure, the balance of the loan is transferred to Other Real Estate Owned (OREO) and carried at the lower of the outstanding loan balance
or the fair market value of the property based on current appraisals and other current market trends. If a write down of the OREO property is necessary at the time of foreclosure, the amount is charged-off against the allowance for loan losses. A
review of the recorded property value is performed in conjunction with normal loan reviews, and if market conditions indicate that the recorded value exceeds the fair market value, additional write downs of the property value are charged directly to
operations.

Nonperforming assets consist of non-accrual loans, loans restructured due to debtors financial difficulties, loans past
due 90 days or more as to interest or principal and still accruing, and other real estate owned, which is real estate acquired through foreclosure and repossession. Non-accrual loans are those loans on which recognition of interest income has been
discontinued. Restructured loans generally allow for an extension of the original repayment period or a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. Loans, whether secured or
unsecured, are generally placed on non-accrual status when principal and/or interest is 90 days or more past due, or sooner if it is known or expected that the collection of all principal and/or interest is unlikely. Any loan past due 90 days or
more, if not classified as non-accrual based on a determination of collectibility, is classified as a past-due loan. Other real estate owned is initially recorded at the lower of cost or estimated market value at the date of acquisition. A provision
for estimated losses is recorded when a subsequent decline in value occurs.

At December 31, 2006, the Company had nonperforming
assets of one loan on non-accrual of $20,000, and delinquent loans of 90 days or more and still accruing of $42,000. There were no loans classified for regulatory purposes as loss or doubtful or other real estate owned. At December 31, 2005,
the Company did not have any nonperforming assets. There were no other loans classified for regulatory purposes as substandard or special mention which (i) represent or result from trends or uncertainties which management reasonably expects
will materially impact future operating results, liquidity, or capital resources, or (ii) represent material credits about which any information causes management to have serious doubts as to the ability of the borrowers to comply with the loan
repayment terms. We have no loans in our portfolio to borrowers in foreign countries.

Loan concentrations exist when large amounts of
money are loaned to multiple borrowers who would be similarly impacted by economic or other conditions. The loan portfolio is concentrated in various commercial, real estate and consumer loans to individuals and entities located in our primary
service area. Accordingly, the ultimate collectibility of the loans is largely dependent upon economic conditions of our primary service area. Other than our geographic concentrations due to our physical location and the loan type concentrations as
shown in the above table, we have no other concentrations of loans that exceed 10% of our total loan portfolio as of December 31, 2006.

We have no other interest-bearing assets that would be required to be disclosed as nonperforming assets if they were loans.



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##### Table of Contents

Securities Portfolio

The investment portfolio plays a primary role in the management of interest rate sensitivity of the Company and generates substantial interest income. In addition, the portfolio serves as a source of liquidity. Table
9 presents information pertaining to the composition of the securities portfolio. CNB manages its investment portfolio consistent with established policies that include guidelines for maturity distribution, rate sensitivity, and liquidity needs. The
investment portfolio consists of securities available for sale, which may be sold in response to established policies. These securities are carried at estimated fair value, which was $6.5 million at December 31, 2006.

TABLE 9: Securities Available for Sale, Maturity Distribution and Average Yields



|                                                |  |               |       |           |   |                      |  |      |  
|----------------------------------------------- |  | ------------- | ----- | --------- | - | -------------------- |  | ---- | -
|(Dollars in thousands)                          |  | AmortizedCost |       | FairValue |   | WeightedAverageYield | 
|U.S. government agencies and corporations:      |  |               |       |           |   |                      |  |      |  
|Maturing within 1 year                          |  | $             | 500   |           | $ | 490                  |  | 2.75 | %
|Maturing within 1 to 5 years                    |  |               | 3,827 |           |   | 3,807                |  | 4.74 |  
|Maturing after 5 years                          |  |               | 1,998 |           |   | 2,001                |  | 6.01 |  
|                                                |  |               |       |           |   |                      |  |      |  
|Total U.S. government agencies and corporations |  |               | 6,325 |           |   | 6,298                |  | 4.98 |  
|                                                |  |               |       |           |   |                      |  |      |  
|Other securities, restricted, no maturity       |  |               | 199   |           |   | 199                  |  | 4.93 |  
|                                                |  |               |       |           |   |                      |  |      |  
|Total securities                                |  | $             | 6,524 |           | $ | 6,497                |  | 4.98 | %
|                                                |  |               |       |           |   |                      |  |      |  

Deposits

Deposits are an important funding source and the primary supplier of CNBs growth. The Companys strategy has been to increase its core deposits at the same time that it controls its cost of funds.
CNBs deposit base is comprised of demand deposits, savings and money market accounts, time deposits and individual retirement accounts. These deposits are provided by individuals and businesses located within the communities served.

Table 10 presents the average deposit balances and average rates paid for the periods ended December 31, 2006 and 2005. Table 11
details maturities of certificates of deposit with balances of $100,000 or more at December 31, 2006.

TABLE 10: Average Deposits and
Rates Paid



|                                |  |              |        |      |      |   |        |   |        |  |      |  
|------------------------------- |  | ------------ | ------ | ---- | ---- | - | ------ | - | ------ |  | ---- | -
|                                |  | December 31, |       
|                                |  | 2006         |        |      | 2005 |  
|(In thousands)                  |  | Amount       |        | Rate |      |   | Amount |   | Rate   | 
|Non-interest bearing deposits   |  | $            | 3,274  |      |      |   |        | $ | 2,604  |  |      |  
|                                |  |              |        |      |      |   |        |   |        |  |      |  
|Interest bearing accounts:      |  |              |        |      |      |   |        |   |        |  |      |  
|Interest checking               |  |              | 862    |      | 1.04 | % |        |   | 964    |  | 1.04 | %
|Regular savings                 |  |              | 1,326  |      | 1.21 |   |        |   | 1,280  |  | 1.17 |  
|Money market accounts           |  |              | 1,484  |      | 1.62 |   |        |   | 1,707  |  | 1.58 |  
|Time deposits:                  |  |              |        |      |      |   |        |   |        |  |      |  
|$100,000 and greater            |  |              | 6,138  |      | 4.48 |   |        |   | 4,784  |  | 3.66 |  
|Under $100,000                  |  |              | 17,899 |      | 4.37 |   |        |   | 13,554 |  | 3.42 |  
|                                |  |              |        |      |      |   |        |   |        |  |      |  
|Total interest bearing deposits |  |              | 27,709 |      | 3.99 | % |        |   | 22,289 |  | 3.10 | %
|                                |  |              |        |      |      |   |        |   |        |  |      |  
|Total                           |  | $            | 30,983 |      |      |   |        | $ | 24,893 |  |      |  
|                                |  |              |        |      |      |   |        |   |        |  |      |  

TABLE 11: Maturities of Certificates of Deposits with Balances of $100,000 or More



|                       |  |                   |     |                   |   |                    |  |             |       |       |   |                         |  |   |       |  |       |  
|---------------------- |  | ----------------- | --- | ----------------- | - | ------------------ |  | ----------- | ----- | ----- | - | ----------------------- |  | - | ----- |  | ----- | -
|(Dollars in thousands) |  | WithinThreeMonths |     | Threeto SixMonths |   | Six toTwelveMonths |  | OverOneYear |       | Total |   | Percentof TotalDeposits | 
|At December 31, 2006   |  | $                 | 523 |                   | $ | 1,251              |  | $           | 2,226 |       | $ | 2,572                   |  | $ | 6,572 |  | 19.45 | %



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##### Table of Contents

Liquidity and Interest Rate Sensitivity

Liquidity represents an institutions ability to meet present and future financial obligations through either the sale or maturity of existing assets
or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, short-term investments, securities classified as available for sale as well as loans and
securities maturing within one year. As a result of CNBs management of liquid assets and the ability to generate liquidity through liability funding, management believes CNB maintains overall liquidity sufficient to satisfy its
depositors requirements and meet its customers credit needs.

Although maintaining and increasing deposits will serve as the
primary source of liquidity, CNB maintains additional sources of liquidity through a federal funds line with Community Bankers Bank. At December 31, 2006, cash, federal funds sold, securities available for sale, and loans maturing within one
year were 74.3% of total deposits and liabilities.

The Companys primary component of market risk is interest rate volatility.
Fluctuations in interest rates will impact both the level of interest income and interest expense and the market value of the Companys interest earning assets and interest bearing liabilities. The primary technique for managing interest rate
risk exposure is management of the interest sensitivity gap. The interest sensitivity gap is defined as the difference between the amount of interest earning assets anticipated to mature or re-price within a specific time period and the amount of
interest bearing liabilities anticipated to mature or re-price within that same time period. During a period of rising interest rates, a positive gap implies that net interest income would be positively affected because the yield of the
Companys interest earning assets is likely to rise more quickly than the cost of its interest bearing liabilities. In a period of falling interest rates, the opposite effect on net income is likely to occur. Table 12 sets forth the amounts of
interest earning assets and interest bearing liabilities outstanding at December 31, 2006.

TABLE 12: Interest Rate Sensitivity



|                                                                     |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|-------------------------------------------------------------------- |  | ----------- | ------ | - | ------------ | - | ------ | ---------- |  | - | ----------- | - |  | ----- | ------ | - |  | - | ------
|(Dollars in thousands)                                               |  | 0 - 3Months |        |   | 3 - 12Months |   |        | 1 - 5Years |  |   | Over 5Years |   |  | Total
|Interest Earning Assets                                              |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|Securities                                                           |  | $           | 489    |   |              | $ | 3,309  |            |  | $ | 2,500       |   |  | $     | 199    |   |  | $ | 6,497 
|Loans                                                                |  |             | 8,617  |   |              |   | 4,834  |            |  |   | 13,503      |   |  |       | 1,037  |   |  |   | 27,991
|Federal funds sold                                                   |  |             | 4,375  |   |              |   |       |            |  |   |            |   |  |       |       |   |  |   | 4,375 
|                                                                     |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|Total                                                                |  | $           | 13,481 |   |              | $ | 8,143  |            |  | $ | 16,003      |   |  | $     | 1,236  |   |  | $ | 38,863
|Cumulative totals                                                    |  | $           | 13,481 |   |              | $ | 21,624 |            |  | $ | 37,627      |   |  | $     | 38,863 |   |  |   |       
|                                                                     |  |             |        |   |             
|Interest Bearing Liabilities                                         |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|Interest checking (1)                                                |  | $           | 881    |   |              | $ |       |            |  | $ |            |   |  | $     |       |   |  | $ | 881   
|Savings (1)                                                          |  |             | 1,346  |   |              |   |       |            |  |   |            |   |  |       |       |   |  |   | 1,346 
|Money Market (1)                                                     |  |             | 1,115  |   |              |   |       |            |  |   |            |   |  |       |       |   |  |   | 1,115 
|Time Deposits                                                        |  |             | 2,438  |   |              |   | 16,439 |            |  |   | 8,534       |   |  |       |       |   |  |   | 27,411
|                                                                     |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|Total                                                                |  | $           | 5,780  |   |              | $ | 16,439 |            |  | $ | 8,534       |   |  | $     |       |   |  | $ | 30,753
|Cumulative totals                                                    |  | $           | 5,780  |   |              | $ | 22,219 |            |  | $ | 30,753      |   |  | $     | 30,753 |   |  |   |       
|                                                                     |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       
|Interest sensitivity gap                                             |  | $           | 7,701  |   |              | $ | (8,296 | )          |  | $ | 7,469       |   |  | $     | 1,236  |   |  | $ | 8,110 
|Cumulative interest sensitivity gap                                  |  | $           | 7,701  |   |              | $ | (595   | )          |  | $ | 6,874       |   |  | $     | 8,110  |   |  |   |       
|Cumulative interest sensitivity gap to total interest earning assets |  |             | 19.82  | % |              |   | -1.53  | %          |  |   | 17.69       | % |  |       | 20.87  | % |  |   |       
|                                                                     |  |             |        |   |              |   |        |            |  |   |             |   |  |       |        |   |  |   |       

---

|(1) | Non-maturity, interest sensitive, deposits are classified as repriceable within 0-3 months, under the subject to change weekly, at the discretion of management. assumption that
rates are subject to change weekly, at the discretion of management.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital Resources

The assessment of capital adequacy depends on a number of factors such as asset quality, liquidity, earnings performance, and changing competitive
conditions and economic forces. Management reviews the adequacy of capital on an ongoing basis and seeks to maintain a structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses.

At December 31, 2006, consolidated shareholders equity was $7.4 million or 18.0% of total assets. At December 31, 2005,
consolidated shareholders equity was $3.3 million or 10.1% of total assets. The Companys common stock had a tangible book value of $4.97 per share at December 31, 2006 and $3.89 per share at December 31, 2005. The increase in
capital position from December 31, 2005 to 2006 was primarily attributable to an issuance of common stock completed during the fourth quarter of 2006. This offering sold 650,000 shares of common stock, raising $4 million in net proceeds.



21



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##### Table of Contents

TABLE 13: Capital Analysis



|                                       |  |              |        |   |      |   |        |  
|-------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                       |  | December 31, |       
|(In thousands)                         |  | 2006         |        |   | 2005 |  
|Tier 1 Capital:                        |  |              |        |   |      |   |        |  
|Common stock                           |  | $            | 15     |   |      | $ | 6      |  
|Capital surplus                        |  |              | 9,585  |   |      |   | 5,564  |  
|Retained earnings (deficit)            |  |              | (2,126 | ) |      |   | (2,226 | )
|                                       |  |              |        |   |      |   |        |  
|Total Tier 1 capital                   |  |              | 7,474  |   |      |   | 3,344  |  
|Tier 2 Capital:                        |  |              |        |   |      |   |        |  
|Allowance for loan losses              |  |              | 347    |   |      |   | 275    |  
|                                       |  |              |        |   |      |   |        |  
|Total risk-based capital               |  | $            | 7,821  |   |      | $ | 3,619  |  
|                                       |  |              |        |   |      |   |        |  
|Risk weighted assets                   |  | $            | 30,051 |   |      | $ | 24,267 |  
|CAPITAL RATIOS:                        |  |              |        |   |      |   |        |  
|Tier 1 risk-based capital ratio        |  |              | 24.87  | % |      |   | 13.78  | %
|Total risk-based capital ratio         |  |              | 26.03  | % |      |   | 14.91  | %
|Tier 1 capital to average total assets |  |              | 19.11  | % |      |   | 10.30  | %

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers. These
financial instruments consist of commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby
letters of credit are written conditional commitments issued by a bank to guarantee the performance of a customer to a third party. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. A
commitment involves, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. Our exposure to credit loss in the event of non-performance by the other party to the instrument is
represented by the contractual notional amount of the instrument.

Because certain commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash requirements. We use the same credit policies in making commitments to extend credit as we do for on-balance-sheet instruments. Collateral held for commitments to extend
credit varies but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties.

Our
off-balance-sheet financial instruments whose contract amounts represented credit risk as of December 31, 2006 were unfulfilled loan commitments of $3.3 million. The Company had no standby letters of credit as of December 31, 2006.

No losses are anticipated as a result of the foregoing commitments and we do not feel that they are reasonably likely to have a material
effect on our consolidated financial condition.



|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

The following financial
statements are included in this Item 7:



| |  |  | Consolidated Financial Statements:
| | - |  | ----------------------------------



| | 1. | Consolidated Balance Sheets dated as of December 31, 2006 and 2005.
| | -- | -------------------------------------------------------------------



| | 2. | Consolidated Statements of Operations for years ended December 31, 2006 and 2005.
| | -- | ---------------------------------------------------------------------------------



| | 3. | Consolidated Statements of Changes in Shareholders Equity for years ended December 31, 2006 and 2005.
| | -- | ------------------------------------------------------------------------------------------------------



| | 4. | Consolidated Statements of Cash Flows for years ended December 31, 2006 and 2005.
| | -- | ---------------------------------------------------------------------------------



| | 5. | Notes to Consolidated Financial Statements.
| | -- | -------------------------------------------



| |  |  | Report of Independent Registered Public Accounting Firm
| | - |  | -------------------------------------------------------



22



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CNB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ | - | ---------------- | - | ------ | -
|( In thousands, except share and per share data)                                                                                                           |  | December 31,2006 |        |   | December 31,2005 |  
|Assets                                                                                                                                                     |  |                  |        |   |                  |   |        |  
|Cash and due from banks                                                                                                                                    |  | $                | 1,060  |   |                  | $ | 1,011  |  
|Federal funds sold                                                                                                                                         |  |                  | 4,375  |   |                  |   | 2,187  |  
|Securities available-for-sale, at fair value (amortized cost of $6,524 and $6,423 on December 31, 2006 and 2005)                                           |  |                  | 6,497  |   |                  |   | 6,377  |  
|Loans, net of allowance for loan losses of $347 and $275 on December 31, 2006 and 2005                                                                     |  |                  | 27,644 |   |                  |   | 21,381 |  
|Premises and equipment, net                                                                                                                                |  |                  | 1,587  |   |                  |   | 1,680  |  
|Other assets                                                                                                                                               |  |                  | 269    |   |                  |   | 184    |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Total assets                                                                                                                                               |  | $                | 41,432 |   |                  | $ | 32,820 |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Liabilities and Shareholders Equity                                                                                                                       |  |                  |        |   |                  |   |        |  
|Liabilities                                                                                                                                                |  |                  |        |   |                  |   |        |  
|Non-interest bearing deposits                                                                                                                              |  | $                | 3,037  |   |                  | $ | 3,021  |  
|Interest bearing deposits                                                                                                                                  |  |                  | 30,753 |   |                  |   | 26,399 |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Total deposits                                                                                                                                             |  |                  | 33,790 |   |                  |   | 29,420 |  
|Accrued interest payable                                                                                                                                   |  |                  | 171    |   |                  |   | 81     |  
|Other liabilities                                                                                                                                          |  |                  | 24     |   |                  |   | 21     |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Total liabilities                                                                                                                                          |  |                  | 33,985 |   |                  |   | 29,522 |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Shareholders Equity                                                                                                                                       |  |                  |        |   |                  |   |        |  
|Common stock, $.01 par, 10,000,000 shares authorized, 1,497,429 shares issued and outstanding at December 31, 2006 and 564,937 shares at
December 31, 2005 |  |                  | 15     |   |                  |   | 6      |  
|Additional paid-in capital                                                                                                                                 |  |                  | 9,585  |   |                  |   | 5,564  |  
|Retained earnings (deficit)                                                                                                                                |  |                  | (2,126 | ) |                  |   | (2,226 | )
|Accumulated other comprehensive (loss)                                                                                                                     |  |                  | (27    | ) |                  |   | (46    | )
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Total shareholders equity                                                                                                                                 |  |                  | 7,447  |   |                  |   | 3,298  |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  
|Total liabilities and shareholders equity                                                                                                                 |  | $                | 41,432 |   |                  | $ | 32,820 |  
|                                                                                                                                                           |  |                  |        |   |                  |   |        |  

See Notes to Consolidated Financial Statements.



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CNB BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                    |  |                                 |         |      |   |         |  
|--------------------------------------------------- |  | ------------------------------- | ------- | ---- | - | ------- | -
|                                                    |  | For the Years EndedDecember 31, |        
|(In thousands, except share and per share data)     |  | 2006                            |         | 2005 |  
|Interest and Dividend Income                        |  |                                 |         |      |   |         |  
|Loans, including fees                               |  | $                               | 2,063   |      | $ | 1,382   |  
|Investment securities, taxable                      |  |                                 | 340     |      |   | 170     |  
|Federal funds sold                                  |  |                                 | 61      |      |   | 59      |  
|                                                    |  |                                 |         |      |   |         |  
|Total Interest and Dividend Income                  |  |                                 | 2,464   |      |   | 1,611   |  
|                                                    |  |                                 |         |      |   |         |  
|Interest Expense                                    |  |                                 |         |      |   |         |  
|Deposits                                            |  |                                 | 1,106   |      |   | 690     |  
|Other borrowings                                    |  |                                 | 9       |      |   |        |  
|                                                    |  |                                 |         |      |   |         |  
|Total Interest Expense                              |  |                                 | 1,115   |      |   | 690     |  
|                                                    |  |                                 |         |      |   |         |  
|Net Interest Income                                 |  |                                 | 1,349   |      |   | 921     |  
|Provision for Loan Losses                           |  |                                 | 72      |      |   | 144     |  
|                                                    |  |                                 |         |      |   |         |  
|Net Interest Income after Provision for Loan Losses |  |                                 | 1,277   |      |   | 777     |  
|                                                    |  |                                 |         |      |   |         |  
|Non-Interest Income                                 |  |                                 |         |      |   |         |  
|Service charges on deposit accounts                 |  |                                 | 15      |      |   | 16      |  
|Other fees and commissions                          |  |                                 | 130     |      |   | 137     |  
|Net realized (losses) on disposition of securities  |  |                                 |        |      |   | (80     | )
|Income from investment in title company             |  |                                 | 25      |      |   | 14      |  
|Mortgage broker fees                                |  |                                 | 53      |      |   | 30      |  
|Other income                                        |  |                                 | 37      |      |   | 28      |  
|                                                    |  |                                 |         |      |   |         |  
|Total Non-Interest Income                           |  |                                 | 260     |      |   | 145     |  
|                                                    |  |                                 |         |      |   |         |  
|Non-Interest Expense                                |  |                                 |         |      |   |         |  
|Personnel                                           |  |                                 | 792     |      |   | 825     |  
|Occupancy and equipment                             |  |                                 | 141     |      |   | 142     |  
|Professional fees                                   |  |                                 | 136     |      |   | 140     |  
|Advertising                                         |  |                                 | 33      |      |   | 35      |  
|Computer services                                   |  |                                 | 109     |      |   | 109     |  
|Other                                               |  |                                 | 226     |      |   | 215     |  
|                                                    |  |                                 |         |      |   |         |  
|Total Non-Interest Expense                          |  |                                 | 1,437   |      |   | 1,466   |  
|                                                    |  |                                 |         |      |   |         |  
|Net Income (Loss)                                   |  | $                               | 100     |      | $ | (544    | )
|                                                    |  |                                 |         |      |   |         |  
|Earnings (loss) per share, basic                    |  | $                               | 0.11    |      | $ | (0.64   | )
|                                                    |  |                                 |         |      |   |         |  
|Earnings (loss) per share, diluted                  |  | $                               | 0.10    |      | $ | (0.64   | )
|                                                    |  |                                 |         |      |   |         |  
|Weighted average shares outstanding, basic          |  |                                 | 938,251 |      |   | 847,429 |  
|                                                    |  |                                 |         |      |   |         |  
|Weighted average shares outstanding, diluted        |  |                                 | 978,083 |      |   | 847,429 |  
|                                                    |  |                                 |         |      |   |         |  

See Notes to Consolidated Financial Statements.



24



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CNB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

For the Years Ended
December 31, 2006 and 2005



|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|---------------------------------------------------------------------------- |  | --------------------- |  | ----------- | -- | ------------------------- | - | ----- | -------------------------- |  | - | ------------------------------------ | - |  | -------------------------- | --- | - | ----- | - | ---- | - |  | - | ----- | -
|(Dollars in thousands)                                                       |  | Shares ofCommon Stock |  | CommonStock |    | AdditionalPaid-in Capital |   |       | RetainedEarnings (Deficit) |  |   | AccumulatedOtherComprehensive (Loss) |   |  | ComprehensiveIncome (Loss) |     |   | Total |  
|BalanceDecember 31, 2005                                                    |  | 564,937               |  | $           | 6  |                           | $ | 5,564 |                            |  | $ | (2,226                               | ) |  | $                          | (46 | ) |       |   |      |   |  | $ | 3,298 |  
|                                                                             |  |                       |  |             |    |                           |  
|Comprehensive income:                                                        |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Net income                                                                   |  |                      |  |             |   |                           |   |      |                            |  |   | 100                                  |   |  |                            |    |   |       | $ | 100  |   |  |   | 100   |  
|Other comprehensive income, unrealized gain on securities available for sale |  |                      |  |             |   |                           |   |      |                            |  |   |                                     |   |  |                            | 19  |   |       |   | 19   |   |  |   | 19    |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Total comprehensive income                                                   |  |                      |  |             |   |                           |   |      |                            |  |   |                                     |   |  |                            |    |   |       | $ | 119  |   |  |   |      |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Issuance of common stock                                                     |  | 650,000               |  |             | 7  |                           |   | 4,023 |                            |  |   |                                     |   |  |                            |    |   |       |   |      |   |  |   | 4,030 |  
|                                                                             |  |                       |  |             |    |                           |  
|Effect of 3-for-2 stock split                                                |  | 282,492               |  |             | 2  |                           |   | (2    | )                          |  |   |                                     |   |  |                            |    |   |       |   |     |   |  |   |      |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|BalanceDecember 31, 2006                                                    |  | 1,497,429             |  | $           | 15 |                           | $ | 9,585 |                            |  | $ | (2,126                               | ) |  | $                          | (27 | ) |       |   |      |   |  | $ | 7,447 |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|BalanceDecember 31, 2004                                                    |  | 564,937               |  | $           | 6  |                           | $ | 5,439 |                            |  | $ | (1,682                               | ) |  | $                          | (70 | ) |       |   |      |   |  | $ | 3,693 |  
|                                                                             |  |                       |  |             |    |                           |  
|Share-based compensation                                                     |  |                      |  |             |   |                           |   | 125   |                            |  |   |                                     |   |  |                            |    |   |       |   |      |   |  |   | 125   |  
|                                                                             |  |                       |  |             |    |                           |  
|Comprehensive (loss):                                                        |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Net loss                                                                     |  |                      |  |             |   |                           |   |      |                            |  |   | (544                                 | ) |  |                            |    |   |       | $ | (544 | ) |  |   | (544  | )
|Other comprehensive income:                                                  |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Unrealized (loss) on securities available for sale                           |  |                      |  |             |   |                           |   |      |                            |  |   |                                     |   |  |                            |     |   |       |   | (56  | ) |  |   |       |  
|Reclassification adjustment                                                  |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   | 80   |   |  |   |       |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Other comprehensive income                                                   |  |                       |  |             |    |                           |   |       |                            |  |   | 24                                   |   |  |                            | 24  |   |       |   | 24   |   |  |   |       |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|Total comprehensive (loss)                                                   |  |                      |  |             |   |                           |   |      |                            |  |   |                                     |   |  |                            |    |   |       | $ | (520 | ) |  |   |      |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  
|BalanceDecember 31, 2005                                                    |  | 564,937               |  | $           | 6  |                           | $ | 5,564 |                            |  | $ | (2,226                               | ) |  | $                          | (46 | ) |       |   |      |   |  | $ | 3,298 |  
|                                                                             |  |                       |  |             |    |                           |   |       |                            |  |   |                                      |   |  |                            |     |   |       |   |      |   |  |   |       |  

See Notes to Consolidated Financial Statements.



25



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CNB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                            |  |                                 |        |   |      |   |        |  
|------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                            |  | For the Years EndedDecember 31, |       
|(Dollars in thousands)                                                                      |  | 2006                            |        |   | 2005 |  
|Cash Flows From Operating Activities                                                        |  |                                 |        |   |      |   |        |  
|Reconciliation of net income (loss) to net cash provided by (used in) operating activities: |  |                                 |        |   |      |   |        |  
|Net income (loss)                                                                           |  | $                               | 100    |   |      | $ | (544   | )
|Provision for loan losses                                                                   |  |                                 | 72     |   |      |   | 144    |  
|Depreciation and amortization                                                               |  |                                 | 107    |   |      |   | 102    |  
|Net (accretion) amortization of securities                                                  |  |                                 | (9     | ) |      |   | 26     |  
|Realized loss on securities                                                                 |  |                                 |       |   |      |   | 80     |  
|Share-based compensation                                                                    |  |                                 |       |   |      |   | 125    |  
|Changes in:                                                                                 |  |                                 |        |   |      |   |        |  
|Interest receivable                                                                         |  |                                 | (71    | ) |      |   | (53    | )
|Other assets                                                                                |  |                                 | (17    | ) |      |   | (5     | )
|Interest payable                                                                            |  |                                 | 90     |   |      |   | 46     |  
|Other liabilities                                                                           |  |                                 | 3      |   |      |   | (7     | )
|                                                                                            |  |                                 |        |   |      |   |        |  
|Net cash provided by (used in) operating activities                                         |  |                                 | 275    |   |      |   | (86    | )
|                                                                                            |  |                                 |        |   |      |   |        |  
|Cash Flows From Investing Activities                                                        |  |                                 |        |   |      |   |        |  
|Purchase of available-for-sale securities                                                   |  |                                 | (4,090 | ) |      |   | (4,523 | )
|Proceeds from sales, calls and maturities of available-for-sale securities                  |  |                                 | 3,998  |   |      |   | 4,020  |  
|Purchase of property and equipment                                                          |  |                                 | (11    | ) |      |   | (36    | )
|Net increase in loans                                                                       |  |                                 | (6,335 | ) |      |   | (8,721 | )
|                                                                                            |  |                                 |        |   |      |   |        |  
|Net cash (used in) investing activities                                                     |  |                                 | (6,438 | ) |      |   | (9,260 | )
|                                                                                            |  |                                 |        |   |      |   |        |  
|Cash Flows From Financing Activities                                                        |  |                                 |        |   |      |   |        |  
|Net increase in non-interest bearing deposits                                               |  |                                 | 16     |   |      |   | 956    |  
|Net increase in interest bearing deposits                                                   |  |                                 | 4,354  |   |      |   | 10,839 |  
|Issuance of common stock                                                                    |  |                                 | 4,030  |   |      |   |       |  
|                                                                                            |  |                                 |        |   |      |   |        |  
|Net cash provided by financing activities                                                   |  |                                 | 8,400  |   |      |   | 11,795 |  
|                                                                                            |  |                                 |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                                   |  | $                               | 2,237  |   |      | $ | 2,449  |  
|                                                                                            |  |                                
|Cash and Cash Equivalents                                                                   |  |                                 |        |   |      |   |        |  
|Beginning                                                                                   |  |                                 | 3,198  |   |      |   | 749    |  
|                                                                                            |  |                                 |        |   |      |   |        |  
|Ending                                                                                      |  | $                               | 5,435  |   |      | $ | 3,198  |  
|                                                                                            |  |                                 |        |   |      |   |        |  
|Supplemental Disclosures of Cash Flow Information                                           |  |                                 |        |   |      |   |        |  
|Cash payments for interest                                                                  |  | $                               | 1,025  |   |      | $ | 644    |  
|                                                                                            |  |                                 |        |   |      |   |        |  
|Unrealized gain on available for sale securities                                            |  | $                               | 19     |   |      | $ | 24     |  
|                                                                                            |  |                                 |        |   |      |   |        |  

See Notes to Consolidated Financial Statements.



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CNB BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1: Organization and Significant Accounting
Policies

CNB Bancorp, Inc. (the Company or CNB) was organized on November 12, 2001 to serve as a Virginia
bank holding company for Citizens National Bank (the Bank). The Bank was organized as a national bank under the laws of the United States of America to engage in a general banking business serving the community in and around Windsor,
Virginia.

The Bank commenced regular operations on April 29, 2003 and is a member of the Federal Deposit Insurance Corporation. It is
subject to the regulations of the Office of the Comptroller of the Currency and the State Corporation Commission of Virginia. Consequently, it undergoes periodic examinations by these regulatory authorities.

The accounting and reporting policies of the Company and its subsidiary conform to accounting principles generally accepted in the United States of
America and to general practices within the banking industry. The following is a summary of the more significant policies.

Principles
of Consolidation

The consolidated financial statements of CNB Bancorp, Inc. and its subsidiary include the accounts of all companies.
All material intercompany balances and transactions have been eliminated.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of net deferred assets.

Stock Split

All share and per share
information has been adjusted to reflect the 3-for-2 split effected on September 28, 2006.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold.
Generally, federal funds are purchased and sold for one-day periods.

Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at
amortized cost. Securities not classified as held to maturity, including equity securities with readily determinable fair values, are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded
from earnings and reported in other comprehensive income.

Purchase premiums and discounts are recognized in interest income using the
interest method over the terms of the securities. Declines in the fair market value of held to maturity and available for sale securities below their cost that are deemed as other than temporary are reflected in earnings as realized losses. In
estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and
(3) the intent and ability of the Company to retain its investment in the issuer for the period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date
and are determined on the basis of the cost of the specific securities sold using the specific identification method.

Restricted
Securities

The Company has elected to maintain an investment in the capital stock of certain correspondent banks. No ready market
exists for this stock, and it has no quoted market value. The Companys investment in these stocks is recorded at cost.

Restricted
securities included Federal Reserve Bank and Community Bankers Bank stock.



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##### Table of Contents

Loans

The Companys subsidiary bank grants mortgages, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans throughout the Isle of Wight and
Southampton counties of Virginia. The ability of debtors to honor their loan contracts is dependent upon the real estate and general economic conditions of this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances less the allowance for loan
losses. Interest income is accrued on the unpaid principal balance.

The accrual of interest on mortgage and commercial loans is
discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in the process of collection. Personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on non-accrual or
charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for
loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for using the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual
status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a
provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibity of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of
the loans in light of historical experience, once established, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, it is probable that the Companys subsidiary bank will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration
all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan
is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

Loan Fees and Costs

Loan origination and commitment fees and direct loan costs are being recognized as collected and incurred. The use of this method of recognition does not produce results that are materially different from results which would have been
produced if such costs and fees were deferred and amortized as an adjustment of the loan yield over the life of the related loan.

Premises and Equipment

Land is carried at cost. Buildings and equipment are carried at cost less accumulated depreciation
computed using a straight-line method over the estimated useful lives of the assets. Estimated useful lives range from ten to forty years for buildings and from three to ten years for equipment, furniture, and fixtures. Maintenance and repairs are
charged to expense as incurred and major improvements are capitalized.



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##### Table of Contents

Foreclosed Property

Assets acquired through, or in lieu of, loan foreclosure are held for sale. They are initially recorded at the lower of the Banks cost or the assets fair market value at the date of foreclosure, less
estimated selling costs thus establishing a new cost basis. Subsequent to foreclosure, valuations of the assets are periodically performed by management. Adjustments are made to the lower of the carrying amount or fair market value of the assets
less selling costs. Revenue and expenses from operations and valuation changes are included in net expenses from foreclosed assets. The Bank had no foreclosed assets at December 31, 2006 or 2005.

Income Taxes

Deferred income tax
assets and liabilities are determined using the balance sheet method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary difference between the book and tax bases of the various balance
sheet assets and liabilities and gives current recognition to changes in tax rates and laws. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.

Earnings per Share

Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential
common shares that may be issued by the Company relate solely to outstanding stock options and warrants, and are determined using the treasury stock method.

Advertising Costs

The Company follows the policy of charging the costs of advertising to expense as
incurred. For the years ended December 31, 2006 and 2005, the Company expensed $33,000 and $35,000, respectively, for advertising costs.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be
included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, such
items, along with net income are components of comprehensive income.

Stock-Based Compensation Plan

The 2003 Stock Incentive Plan was approved by shareholders on August 12, 2003, which authorized 126,255 shares of common stock to be used in the
granting of incentive options to employees and directors, and which Plan was last amended by shareholder vote at a special meeting held November 17, 2005. This is the first stock incentive plan adopted by the Company. An options maximum
term is ten years from the date of grant. Options granted under the plan may be subject to a graded vesting schedule.

Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share-Based Payment. SFAS No. 123R requires the costs resulting from all share-based payments be recognized in the financial statements. Prior to
January 1, 2006, the Company accounted for the stock option plan and warrants under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations.
Stock-based compensation cost of $125,000 is reflected in net income for 2005, resulting from 62,625 options granted under the plan at an exercise price less than the market value of the underlying common stock on the date of grant. The following
table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123R to share-based compensation related to other stock option grants and awards for the year ended
December 31, 2005.



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|                                                                                               |  |      |        |  
|---------------------------------------------------------------------------------------------- |  | ---- | ------ | -
|(Dollars in thousands, except per share data)                                                  |  | 2005 |       
|Net (loss), as reported                                                                        |  | $    | (544   | )
|Total stock-based compensation expense determined under fair value based method for all awards |  |      | (467   | )
|                                                                                               |  |      |        |  
|Pro forma net (loss)                                                                           |  | $    | (1,011 | )
|                                                                                               |  |      |        |  
|Earnings (loss) per share                                                                      |  |      |        |  
|                                                                                               |  |      |        |  
|Basic and dilutedas reported                                                                  |  | $    | (0.64  | )
|Basic and dilutedpro forma                                                                    |  | $    | (1.19  | )
|                                                                                               |  |      |        |  

The incentive stock options granted during 2005 were subject to full vesting on December 14,
2005. The value of each grant was estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions for grants during 2005, no dividend rate, risk-free interest rate of 4.45%, expected life of
10 years, and expected volatility of 10.51%. In connection with the initial offering of the Company, 153,750 warrants were issued to the original directors to purchase common shares at a price of $6.67 per share. The vesting of all outstanding
warrants was accelerated during 2005.

Reclassifications

Certain reclassifications have been made to prior periods to conform to current year presentation.

Recent Accounting Pronouncements

In
September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 expresses the SEC staffs views regarding the process of quantifying financial statement misstatements. SAB 108
expresses the SEC staffs view that a registrants materiality evaluation of an identified unadjusted error should quantify the effects of the error on each financial statement and related financial statement disclosures and that prior
year misstatements should be considered in quantifying misstatements in current year financial statements. SAB 108 also states that correcting prior year financial statements for immaterial errors would not require previously filed reports to be
amended. Such correction may be made the next time the registrant files the prior year financial statements. The cumulative effect of the initial application should be reported in the carrying amounts of assets and liabilities as of the beginning of
that fiscal year and the offsetting adjustment should be made to the opening balance of retained earnings for that year. Registrants should disclose the nature and amount of each individual error being corrected in the cumulative adjustment. The SEC
staff encourages early application of the guidance in SAB 108 for interim periods of the first fiscal year ending after November 15, 2006.The Company does not anticipate application of the guidance will have a material effect on its
financial statements.

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
No. 155, Accounting for Certain Hybrid Financial Instruments  an amendment of FASB Statements No. 133 and 140 (SFAS 155). SFAS 155 permits fair value measurement of any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation. The Statement also clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133. It establishes a requirement to evaluate interests
in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation. SFAS 155 also clarifies that concentrations of credit risk in
the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company does not
expect the implementation of SFAS 155 to have a material impact on its financial statements.

In March 2006, the FASB issued Statement of
Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets  an amendment of FASB Statement No. 140 (SFAS 156). SFAS 156 requires an entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by entering into certain servicing contracts. The Statement also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value,
if practicable. SFAS 156 permits an entity to choose between the amortization and fair value methods for subsequent measurements. At initial adoption, the Statement permits a one-time reclassification of available for sale securities to trading
securities by entities with recognized servicing rights. SFAS 156 also requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures
for all separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company does not anticipate this amendment
will have a material effect on its financial statements.



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In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not require any new
fair value measurements but may change current practice for some entities. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. The Company does
not expect the implementation of SFAS 157 to have a material impact on its financial statements.

In September 2006, the FASB issued
Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158
requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the
changes occur through comprehensive income. The company does not have a defined benefit plan or post retirement plan and therefore, the standard will not have an impact on the companys financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement
No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entitys financial statements in accordance with SFAS 109. The Interpretation prescribes a recognition threshold and measurement
principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return that are not certain to be realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. The
Company does not anticipate that FIN 48 will have a material effect on its financial statements.

In September 2006, the Emerging Issues
Task Force issued EITF 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. This consensus concludes that for a split-dollar life insurance arrangement
within the scope of this Issue, an employer should recognize a liability for future benefits in accordance with FASB Statement No. 106 (if, in substance, a postretirement benefit plan exits) or APB Opinion No. 12 (if the arrangement is, in
substance, an individual deferred compensation contract) based on the substantive agreement with the employee. The consensus is effective for fiscal years beginning after December 15, 2007. The Company does not anticipate that EITF
No. 06-4 will have a material effect on its financial statements when implemented.

In September 2006, The Emerging Issues Task Force
issued EITF 06-5, Accounting for Purchases of Life Insurance- Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4. This consensus concludes that a policyholder should consider
any additional amounts included in the contractual terms of the insurance policy other than the cash surrender value in determining the amount that could be realized under the insurance contract. A consensus also was reached that a policyholder
should determine the amount that could be realized under the life insurance contract assuming the surrender of an individual-life by individual-life policy (or certificate by certificate in a group policy). The consensuses are effective for fiscal
years beginning after December 15, 2006. The Company does not anticipate that EITF No. 06-5 will have a material effect on its financial statements when implemented.

NOTE 2: Securities

The amortized cost and fair value of securities available for sale as of
December 31, 2006 and 2005 are as follows:



|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      
|------------------------------------ |  | ----------------- | ----- | -------------------- | - | ----------------------- |  | - | --------- | - |  | - | -----
|                                     |  | December 31, 2006
|(Dollars in thousands)               |  | AmortizedCost     |       | GrossUnrealizedGains |   | GrossUnrealized(Losses) |  |   | FairValue
|U.S. Government and federal agencies |  | $                 | 6,325 |                      | $ | 3                       |  | $ | (30       | ) |  | $ | 6,298
|Other securities, restricted         |  |                   | 199   |                      |   |                        |  |   |          |   |  |   | 199  
|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      
|                                     |  | $                 | 6,524 |                      | $ | 3                       |  | $ | (30       | ) |  | $ | 6,497
|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      



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|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      
|------------------------------------ |  | ----------------- | ----- | -------------------- | - | ----------------------- |  | - | --------- | - |  | - | -----
|                                     |  | December 31, 2005
|(Dollars in thousands)               |  | AmortizedCost     |       | GrossUnrealizedGains |   | GrossUnrealized(Losses) |  |   | FairValue
|U.S. Government and federal agencies |  | $                 | 6,224 |                      | $ |                        |  | $ | (46       | ) |  | $ | 6,178
|Other securities, restricted         |  |                   | 199   |                      |   |                        |  |   |          |   |  |   | 199  
|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      
|                                     |  | $                 | 6,423 |                      | $ |                        |  | $ | (46       | ) |  | $ | 6,377
|                                     |  |                   |       |                      |   |                         |  |   |           |   |  |   |      

The amortized cost and estimated fair value of securities at December 31, 2006, by
contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to prepay obligations with or without call or prepayment penalties.



|                                      |  |                   |       |           |   |      
|------------------------------------- |  | ----------------- | ----- | --------- | - | -----
|                                      |  | December 31, 2006
|(Dollars in thousands)                |  | AmortizedCost     |       | FairValue
|Due in one year or less               |  | $                 | 500   |           | $ | 490  
|Due after one year through five years |  |                   | 3,827 |           |   | 3,807
|Due after five years                  |  |                   | 1,998 |           |   | 2,001
|Other securities, restricted          |  |                   | 199   |           |   | 199  
|                                      |  |                   |       |           |   |      
|                                      |  | $                 | 6,524 |           | $ | 6,497
|                                      |  |                   |       |           |   |      

At December 31, 2006, securities with a carrying value of $1.5 million were pledged to secure
public deposits and for other purposes required or permitted by law. The carrying value of securities pledged at December 31, 2005 was $239,000.

Proceeds from the sales, maturities and the calls of securities available for sale in 2006 and 2005 were $4.0 million and $4.0 million, respectively. There were no realized gains or losses during 2006. During 2005,
the Company realized losses on the disposition of securities of $80,000.

The primary purpose of the investment portfolio is to generate
income and meet liquidity needs of the Company through readily saleable financial instruments. The portfolio is made up of fixed rate bonds, whose prices move inversely with rates. At the end of any accounting period, the investment portfolio has
unrealized gains and losses. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes, and credit risk changes, to see if adjustments are needed. The primary concern in a loss situation is the credit quality of
the business behind the instrument. The primary cause of impairments is the decline in the prices of the bonds as rates have risen. There are eight accounts in the portfolio that have unrealized losses at December 31, 2006. These losses are
relative to the market rates and the timing of purchases and are not a material concern. The Company has the ability and intent to hold these securities to maturity.



|                                     |  |                     |       |                  |                   |     |            |       |                  |       |  |            |     |                  |  |   |       |  |   |     |  
|------------------------------------ |  | ------------------- | ----- | ---------------- | ----------------- | --- | ---------- | ----- | ---------------- | ----- |  | ---------- | --- | ---------------- |  | - | ----- |  | - | --- | -
|                                     |  | December 31, 2006   |      
|                                     |  | Less than 12 months |       |                  | 12 months or more |     |            | Total |                 
|(Dollars in thousands)               |  | Fair Value          |       | UnrealizedLosses |                   |     | Fair Value |       | UnrealizedLosses |       |  | Fair Value |     | UnrealizedLosses | 
|U.S. Government and federal agencies |  | $                   | 2,468 |                  | $                 | (10 | )          |       | $                | 1,230 |  | $          | (20 | )                |  | $ | 3,698 |  | $ | (30 | )
|                                     |  |                     |       |                  |                   |     |            |       |                  |       |  |            |     |                  |  |   |       |  |   |     |  
|                                     | 
|                                     |  | December 31, 2005   |      
|                                     |  | Less than 12 months |       |                  | 12 months or more |     |            | Total |                 
|(Dollars in thousands)               |  | Fair Value          |       | UnrealizedLosses |                   |     | Fair Value |       | UnrealizedLosses |       |  | Fair Value |     | UnrealizedLosses | 
|U.S. Government and federal agencies |  | $                   | 971   |                  | $                 | (1  | )          |       | $                | 2,705 |  | $          | (45 | )                |  | $ | 3,676 |  | $ | (46 | )
|                                     |  |                     |       |                  |                   |     |            |       |                  |       |  |            |     |                  |  |   |       |  |   |     |  



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NOTE 3: Loans

The composition of loans is summarized as follows:



|                                  |  |              |        |      |   |       
|--------------------------------- |  | ------------ | ------ | ---- | - | ------
|                                  |  | December 31,
|(Dollars in thousands)            |  | 2006         |        | 2005
|Loans secured by real estate:     |  |              |        |      |   |       
|Construction                      |  | $            | 1,480  |      | $ | 1,419 
|Secured by 1-4 family residential |  |              | 5,843  |      |   | 3,900 
|Non-farm, non-residential         |  |              | 12,350 |      |   | 10,268
|Agricultural                      |  |              | 80     |      |   | 84    
|Commercial and industrial loans   |  |              | 3,232  |      |   | 2,456 
|Loans to individuals              |  |              | 5,006  |      |   | 3,529 
|                                  |  |              |        |      |   |       
|Total loans                       |  |              | 27,991 |      |   | 21,656
|Less: Allowance for loan losses   |  |              | 347    |      |   | 275   
|                                  |  |              |        |      |   |       
|Net loans                         |  | $            | 27,644 |      | $ | 21,381
|                                  |  |              |        |      |   |       

NOTE 4: Allowance for Loan Losses

Changes in the allowance for loan losses are as follows:



|                                           |  |              |      |   |      |   |      |  
|------------------------------------------ |  | ------------ | ---- | - | ---- | - | ---- | -
|                                           |  | December 31, |     
|(Dollars in thousands)                     |  | 2006         |      |   | 2005 |  
|Balance, beginning                         |  | $            | 275  |   |      | $ | 151  |  
|Provision charged to operating expense     |  |              | 72   |   |      |   | 144  |  
|Loans charged off                          |  |              | (2   | ) |      |   | (20  | )
|Recoveries of loans previously charged off |  |              | 2    |   |      |   |     |  
|                                           |  |              |      |   |      |   |      |  
|Balance, ending                            |  | $            | 347  |   |      | $ | 275  |  
|                                           |  |              |      |   |      |   |      |  
|                                           | 
|                                           |  | December 31, |     
|(Dollars in thousands)                     |  |              | 2006 |   |      |   | 2005 |  
|Non-accrual loans                          |  | $            | 20   |   |      | $ |     |  
|Loans 90 days past-due and still accruing  |  |              | 42   |   |      |   |     |  

There were no impaired loans during the years ended December 31, 2006 and 2005.

NOTE 5: Premises and Equipment

Premises and
equipment as of December 31, 2006 and 2005 consists of the following:



|                                  |  |      |       |      |   |      
|--------------------------------- |  | ---- | ----- | ---- | - | -----
|(Dollars in thousands)            |  | 2006 |       | 2005
|Land                              |  | $    | 301   |      | $ | 301  
|Building                          |  |      | 1,253 |      |   | 1,253
|Furniture, fixtures and equipment |  |      | 313   |      |   | 302  
|Automobile                        |  |      |      |      |   | 19   
|                                  |  |      |       |      |   |      
|                                  |  |      | 1,867 |      |   | 1,875
|Less accumulated depreciation     |  |      | 280   |      |   | 195  
|                                  |  |      |       |      |   |      
|                                  |  | $    | 1,587 |      | $ | 1,680
|                                  |  |      |       |      |   |      

Depreciation expense was $95,000 and $94,000 for the years ended December 31, 2006 and 2005,
respectively.



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NOTE 6: Deposits

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2006 was $6.6 million and $6.4 million at December 31, 2005. At December 31, 2006, the scheduled maturities of
time deposits are as follows:



|                       |  |   |       
|---------------------- |  | - | ------
|(Dollars in thousands)
|2007                   |  | $ | 18,921
|2008                   |  |   | 2,646 
|2009                   |  |   | 1,084 
|2010                   |  |   | 4,471 
|2011                   |  |   | 289   
|                       |  |   |       
|                       |  | $ | 27,411
|                       |  |   |       

Overdrawn deposit accounts totaling $122,000 at December 31, 2006 and $17,000 at
December 31, 2005 were reclassified from deposits to loans.

NOTE 7: Earnings per Share

At December 31, 2006, the weighted average number of shares outstanding for calculating basic and diluted earnings per share was 938,251 and 978,083,
respectively. Basic and diluted earnings per share was $0.11 and $0.10, respectively, for the year ended December 31, 2006. Stock options outstanding of 5,851 shares were considered anti-dilutive and, therefore, were not considered in the
calculation of diluted earnings per share.

At December 31, 2005, the weighted average number of shares outstanding for calculating
basic and diluted earnings (loss) per share was 847,429. Basic and diluted earnings (loss) per share was $(0.64) for the year ended December 31, 2005. Stock options outstanding of 86,027 shares and warrants outstanding of 135,750 shares were
considered anti-dilutive and, therefore, had no impact.

NOTE 8: Warrants and Stock Options

In connection with the initial offering of the Company, 153,750 warrants were issued to the original directors to purchase common shares at an exercise
price of $6.67 per share. All of the remaining warrants are held by the organizing directors of the Company and fully vested during 2005.



|                                     |  |         |  |                              |      |                         |   |        |  |                              |  |   |     
|------------------------------------ |  | ------- |  | ---------------------------- | ---- | ----------------------- | - | ------ |  | ---------------------------- |  | - | ----
|                                     |  | 2006    |  | 2005                        
|                                     |  | Shares  |  | WeightedAverageExercisePrice |      | AggregateIntrinsicValue |   | Shares |  | WeightedAverageExercisePrice
|Outstanding at the beginning of year |  | 135,750 |  | $                            | 6.67 |                         |   |        |  | 135,750                      |  | $ | 6.67
|Granted                              |  |        |  |                              |     |                         |   |        |  |                             |  |   |    
|Exercised                            |  |        |  |                              |     |                         |   |        |  |                             |  |   |    
|Forfeited                            |  |        |  |                              |     |                         |   |        |  |                             |  |   |    
|                                     |  |         |  |                              |      |                         |   |        |  |                              |  |   |     
|Outstanding at end of year           |  | 135,750 |  | $                            | 6.67 |                         | $ |       |  | 135,750                      |  | $ | 6.67
|                                     |  |         |  |                              |      |                         |   |        |  |                              |  |   |     
|Options exercisable at end of year   |  | 135,750 |  | $                            | 6.67 |                         | $ |       |  | 135,750                      |  | $ | 6.67
|                                     |  |         |  |                              |      |                         |   |        |  |                              |  |   |     

The aggregate intrinsic value represents the total pre-tax intrinsic value (the amount by which
the current market value of the underlying stock exceeds the exercise price) that would have been received by the holders had they exercised their warrants on December 31, 2006.



|               |  |                                     |  |                                                    
|-------------- |  | ----------------------------------- |  | ---------------------------------------------------
|               |  | Warrants Outstanding andExercisable
|Exercise Price |  | Number                              |  | Weighted AverageRemainingContractualLife (in years)
|$ 6.67         |  | 135,750                             |  | 6.0                                                



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The Company sponsors a stock option plan, which allows employees and directors to increase their personal
financial interest in the Company. This plan provides the ability to grant equity-based incentives in the form of either incentive or nonqualified options. The plan authorizes the issuance of up to 126,255 shares of common stock, subject to
adjustment for certain recapitalizations.



|                                                               |  |        |  |                              |      |                         |   |        |  |                              |  |   |     
|-------------------------------------------------------------- |  | ------ |  | ---------------------------- | ---- | ----------------------- | - | ------ |  | ---------------------------- |  | - | ----
|                                                               |  | 2006   |  | 2005                        
|                                                               |  | Shares |  | WeightedAverageExercisePrice |      | AggregateIntrinsicValue |   | Shares |  | WeightedAverageExercisePrice
|Outstanding at the beginning of year                           |  | 86,027 |  | $                            | 7.21 |                         |   |        |  | 1,500                        |  | $ | 8.33
|Granted                                                        |  |       |  |                              |     |                         |   |        |  | 84,527                       |  |   | 7.06
|Exercised                                                      |  |       |  |                              |     |                         |   |        |  |                             |  |   |    
|Forfeited                                                      |  |       |  |                              |     |                         |   |        |  |                             |  |   |    
|                                                               |  |        |  |                              |      |                         |   |        |  |                              |  |   |     
|Outstanding at end of year                                     |  | 86,027 |  | $                            | 7.21 |                         | $ |       |  | 86,027                       |  | $ | 7.21
|                                                               |  |        |  |                              |      |                         |   |        |  |                              |  |   |     
|Options exercisable at end of year                             |  | 86,027 |  | $                            | 7.21 |                         | $ |       |  | 86,027                       |  | $ | 7.21
|                                                               |  |        |  |                              |      |                         |   |        |  |                              |  |   |     
|Weighted average fair value of options granted during the year |  |        |  | $                            |     |                         |   |        |  |                              |  | $ | 4.07

The following table summarizes options outstanding at December 31, 2006.



|               |  |                                     |  |                                                      |  |                                |     
|-------------- |  | ----------------------------------- |  | ---------------------------------------------------- |  | ------------------------------ | ----
|               |  | Options Outstanding and Exercisable
|Exercise Price |  | Number                              |  | Weighted AverageRemaining ContractualLife (in years) |  | Weighted AverageExercise Price
|$6.67          |  | 62,625                              |  | 9.0                                                  |  | $                              | 6.67
|8.33           |  | 1,500                               |  | 7.5                                                  |  |                                | 8.33
|8.67           |  | 21,902                              |  | 9.0                                                  |  |                                | 8.67
|               |  |                                     |  |                                                      |  |                                |     
|$7.21          |  | 86,027                              |  | 9.0                                                  |  | $                              | 7.21
|               |  |                                     |  |                                                      |  |                                |     

NOTE 9: Income Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2006 and 2005 are presented below:



|                                      |  |      |      |   |      |   |      |  
|------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|(Dollars in thousands)                |  | 2006 |      |   | 2005 |  
|Deferred tax assets                   |  |      |      |   |      |   |      |  
|Pre-opening expenses                  |  | $    | 44   |   |      | $ | 77   |  
|Allowance for loan losses             |  |      | 107  |   |      |   | 82   |  
|Net operating loss                    |  |      | 559  |   |      |   | 598  |  
|Stock options                         |  |      | 43   |   |      |   | 43   |  
|Other                                 |  |      | 2    |   |      |   | 1    |  
|                                      |  |      |      |   |      |   |      |  
|Deferred tax assets                   |  |      | 755  |   |      |   | 801  |  
|Deferred tax liabilities              |  |      |      |   |      |   |      |  
|Fixed assets, net                     |  |      | (22  | ) |      |   | (34  | )
|                                      |  |      |      |   |      |   |      |  
|Less: Valuation allowance             |  |      | (733 | ) |      |   | (767 | )
|                                      |  |      |      |   |      |   |      |  
|Net deferred tax assets (liabilities) |  | $    |     |   |      | $ |     |  
|                                      |  |      |      |   |      |   |      |  



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The provision for income taxes charged to operations for the period ended December 31, 2006 and
2005, consists of the following:



|                               |  |      |     |   |      |   |      |  
|------------------------------ |  | ---- | --- | - | ---- | - | ---- | -
|(Dollars in thousands)         |  | 2006 |     |   | 2005 |  
|Current tax expense            |  | $    |    |   |      | $ |     |  
|Deferred tax expense (benefit) |  |      | 34  |   |      |   | (180 | )
|Change in valuation allowance  |  |      | (34 | ) |      |   | 180  |  
|                               |  |      |     |   |      |   |      |  
|                               |  | $    |    |   |      | $ |     |  
|                               |  |      |     |   |      |   |      |  

Under the provisions of the Internal Revenue Code, the Company has approximately $1,645,000 of net
operating loss carryforwards which can be offset against future taxable income. The carryforwards expire through December 31, 2025. The full realization of the tax benefits associated with the carryforwards depends predominately upon the
recognition of ordinary income during the carryforward period.

NOTE 10: Employee Benefit Plans

The Company has a 401(k) Profit Sharing Plan covering employees who are at least 18 years of age. Employees may contribute compensation subject to certain
limits based on federal tax laws. The Bank makes discretionary matching contributions equal to 50 percent of an employees compensation contributed to the Plan, up to 12 percent of the employees compensation. Employer contributions vest
to the employee over a five-year period.

For the years ended December 31, 2006 and 2005, expense incurred related to this retirement
plan was $28,000 and $23,000, respectively.

NOTE 11: Related Party Transactions

Loans to directors and officers totaled $1,355,000 and $2,969,000 at December 31, 2006 and 2005, respectively. New advances and repayments equaled
$259,000 and $1,873,000 during 2006, respectively.

NOTE 12: Regulatory Requirements and Restrictions

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Companys and Banks financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Companys and the Banks
assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other
factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation
to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (as set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1
capital (as defined) to average assets (as defined). Management believes, as of December 31, 2006 and 2005, that the Company and the Bank meets all capital adequacy requirements to which they are subject. As of December 31, 2006, the most
recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Banks category. The Companys and
Banks actual capital amounts (in thousands) and ratios as of December 31, 2006 and 2005 are also presented in the table.



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|                                         |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|---------------------------------------- |  | ------ | ----- | ----- | ------------------------- | - | ------ | --------------------------------------------------------------------- | ----- |  | ---- | ------ |  | ----- | ----- |  | ----- | -
|                                         |  | Actual |       |       | MinimumCapitalRequirement |   |        | Minimum To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |      
|(Dollars in thousands)                   |  | Amount |       | Ratio |                           |   | Amount |                                                                       | Ratio |  |      | Amount |  | Ratio |      
|As of December 31, 2006:                 |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Total Capital ( to Risk-Weighted Assets) |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 7,821 |       | 26.03                     | % |        | $                                                                     | 2,404 |  | 8.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 7,394 |       | 24.60                     | % |        | $                                                                     | 2,404 |  | 8.00 | %      |  | $     | 3,005 |  | 10.00 | %
|Tier 1 Capital (to Risk-Weighted Assets) |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 7,474 |       | 24.87                     | % |        | $                                                                     | 1,202 |  | 4.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 7,047 |       | 23.45                     | % |        | $                                                                     | 1,202 |  | 4.00 | %      |  | $     | 1,803 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 7,474 |       | 19.11                     | % |        | $                                                                     | 1,564 |  | 4.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 7,047 |       | 18.02                     | % |        | $                                                                     | 1,564 |  | 4.00 | %      |  | $     | 1,955 |  | 5.00  | %
|                                         |  |        |       |       |                           |  
|As of December 31, 2005:                 |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Total Capital ( to Risk-Weighted Assets) |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 3,619 |       | 14.91                     | % |        | $                                                                     | 1,941 |  | 8.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 3,570 |       | 14.71                     | % |        | $                                                                     | 1,941 |  | 8.00 | %      |  | $     | 2,427 |  | 10.00 | %
|Tier 1 Capital (to Risk-Weighted Assets) |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 3,344 |       | 13.78                     | % |        | $                                                                     | 971   |  | 4.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 3,295 |       | 13.58                     | % |        | $                                                                     | 971   |  | 4.00 | %      |  | $     | 1,456 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  |        |       |       |                           |   |        |                                                                       |       |  |      |        |  |       |       |  |       |  
|Consolidated                             |  | $      | 3,344 |       | 10.30                     | % |        | $                                                                     | 1,299 |  | 4.00 | %      |  |       | N/A   |  | N/A   |  
|Bank                                     |  | $      | 3,295 |       | 10.15                     | % |        | $                                                                     | 1,299 |  | 4.00 | %      |  | $     | 1,624 |  | 5.00  | %

NOTE 13: Financial Instruments with Off-Balance-Sheet Risk and Credit Risk

The Company is a party to credit related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to extend credit and commercial lines of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the
consolidated balance sheets. The Companys exposure to credit loss is represented by the contractual amount of these commitments. The same credit policies are used in making commitments as for on-balance-sheet instruments.

As of December 31, 2006 and 2005, reserves of $50,000 were required as deposits with Community Bankers Bank.

Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not
be drawn upon to the total extent to which the Company is committed. At December 31, 2006 and 2005, the Company had unfunded commitments under lines of credit of $3.3 million and $3.2 million, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income-producing commercial
properties. At December 31, 2006 and 2005, the Company did not have any commitments to extend credit.

Commercial and standby letters
of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of
credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those
commitments, if deemed necessary. At December 31, 2006, the Bank did not have any commercial or standby letters of credit. At December, 31, 2005, the Bank had commercial or standby letters of credit of $86,000.



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The Company did not have deposits in financial institutions in excess of amounts insured by the Federal
Deposit Insurance Corporation (FDIC) at December 31, 2006 and 2005.

NOTE 14: Fair Value of Financial Instruments and Interest Rate Risk

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is
practicable to estimate that value:

Cash and Short-Term Investments.For those short-term instruments, the carrying amount is a
reasonable estimate of fair value.

Securities.For securities, excluding restricted securities, fair values are based on quoted
market prices or dealer quotes. The carrying value of restricted securities approximates fair value based on the redemption provision of each issuer.

Loans.For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values of other loans were estimated using discounted
cash flow analyses, using interest rates currently being offered.

Accrued Interest.The carrying amounts of accrued interest
approximate fair values.

Deposits.The fair value of demand deposits, savings accounts, and certain money market deposits is the
amount payable on demand at the reporting date. For all other deposits, the fair value is determined using the discounted cash flow method. The discount rate was equal to the rate currently offered on similar products.

Unused Portions of Lines of Credit.The fair value of unused loan commitments is estimated considering the remaining terms of the agreement and the
difference between the current levels of interest rate and the committed rate. The fair value of the unused portions of lines of credit is deemed immaterial.

The estimated fair values, and related carrying amounts, of the Companys financial instruments are as follows:



|                                |  |                |        |                      |   |                |  |                     |        |  |   |       
|------------------------------- |  | -------------- | ------ | -------------------- | - | -------------- |  | ------------------- | ------ |  | - | ------
|                                |  | December 31,  
|                                |  | 2006           |        | 2005                
|(Dollars in thousands)          |  | CarryingAmount |        | Estimated Fair Value |   | CarryingAmount |  | EstimatedFair Value
|Financial assets:               |  |                |        |                      |   |                |  |                     |        |  |   |       
|Cash and short-term investments |  | $              | 5,435  |                      | $ | 5,435          |  | $                   | 3,198  |  | $ | 3,198 
|Securities                      |  |                | 6,497  |                      |   | 6,497          |  |                     | 6,377  |  |   | 6,377 
|Loans, net                      |  |                | 27,644 |                      |   | 27,660         |  |                     | 21,381 |  |   | 20,897
|Accrued interest receivable     |  |                | 218    |                      |   | 218            |  |                     | 147    |  |   | 147   
|Financial liabilities:          |  |                |        |                      |   |                |  |                     |        |  |   |       
|Non-interest bearing deposits   |  |                | 3,037  |                      |   | 3,037          |  |                     | 3,021  |  |   | 3,021 
|Interest bearing deposits       |  |                | 30,753 |                      |   | 30,864         |  |                     | 26,399 |  |   | 26,582
|Accrued interest payable        |  |                | 171    |                      |   | 171            |  |                     | 81     |  |   | 81    

The Company assumes interest rate risk (the risk that general interest rate levels will change) as
a result of its normal operations. As a result, the fair values of the Companys financial instruments will change when interest rate levels change, and that change may be either favorable or unfavorable to the Company. Management attempts to
match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling
rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rate and maturities of
assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Companys overall interest rate risk.



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NOTE 15: Other Expenses

The Company had the following other expenses as of the dates indicated.



|                              |  |                                  |     |      |   |    
|----------------------------- |  | -------------------------------- | --- | ---- | - | ---
|                              |  | For the years ended December 31,
|(Dollars in thousands)        |  | 2006                             |     | 2005
|ATM expense                   |  | $                                | 44  |      | $ | 37 
|Insurance                     |  |                                  | 24  |      |   | 23 
|Correspondent service charges |  |                                  | 8   |      |   | 14 
|Regulatory assessments        |  |                                  | 19  |      |   | 20 
|Supplies and stationary       |  |                                  | 18  |      |   | 15 
|Taxes                         |  |                                  | 11  |      |   | 7  
|Other                         |  |                                  | 102 |      |   | 99 
|                              |  |                                  |     |      |   |    
|Total Other                   |  | $                                | 226 |      | $ | 215
|                              |  |                                  |     |      |   |    



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NOTE 16: Parent Company Condensed Financial Information

Financial information for the parent company is as follows (dollars in thousands):



|                                                                                       |  |                                  |        |   |      |   |       |  
|-------------------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ---- | - | ----- | -
|                                                                                       |  | December 31,                     |       
|Balance Sheet                                                                          |  | 2006                             |        |   | 2005 |  
|Assets                                                                                 |  |                                  |        |   |      |   |       |  
|Cash                                                                                   |  | $                                | 444    |   |      | $ | 57    |  
|Investments in subsidiary                                                              |  |                                  | 7,020  |   |      |   | 3,249 |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Total Assets                                                                           |  | $                                | 7,464  |   |      | $ | 3,306 |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Liabilities and shareholders equity                                                   |  |                                  |        |   |      |   |       |  
|Other liabilities                                                                      |  | $                                | 17     |   |      | $ | 8     |  
|Shareholders equity                                                                   |  |                                  | 7,447  |   |      |   | 3,298 |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Total liabilities and shareholders equity                                             |  | $                                | 7,464  |   |      | $ | 3,306 |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|                                                                                       | 
|                                                                                       |  | For the years ended December 31, |       
|Statement of Operations                                                                |  | 2006                             |        |   | 2005 |  
|Equity in undistributed earnings (loss) of subsidiary                                  |  | $                                | 152    |   |      | $ | (339  | )
|Other income                                                                           |  |                                  |       |   |      |   | 1     |  
|Other expenses                                                                         |  |                                  | (52    | ) |      |   | (206  | )
|                                                                                       |  |                                  |        |   |      |   |       |  
|Net income (loss)                                                                      |  | $                                | 100    |   |      | $ | (544  | )
|                                                                                       |  |                                  |        |   |      |   |       |  
|                                                                                       | 
|                                                                                       |  | For the year ended December 31,  |       
|Statement of Cash Flows                                                                |  | 2006                             |        |   | 2005 |  
|Operating activities:                                                                  |  |                                  |        |   |      |   |       |  
|Net income (loss)                                                                      |  | $                                | 100    |   |      | $ | (544  | )
|Adjustments to reconcile net income (loss) to net cash (used in) operating activities: |  |                                  |        |   |      |   |       |  
|Equity in undistributed (earnings) loss of subsidiary                                  |  |                                  | (152   | ) |      |   | 339   |  
|Stock-based compensation                                                               |  |                                  |       |   |      |   | 125   |  
|Increase (decrease) in other liabilities                                               |  |                                  | 9      |   |      |   | (4    | )
|                                                                                       |  |                                  |        |   |      |   |       |  
|Net cash (used in) operating activities                                                |  |                                  | (43    | ) |      |   | (84   | )
|                                                                                       |  |                                  |        |   |      |   |       |  
|Investing activities:                                                                  |  |                                  |        |   |      |   |       |  
|Investment in subsidiary                                                               |  |                                  | (3,600 | ) |      |   |      |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Net cash (used in) investing activities                                                |  |                                  | (3,600 | ) |      |   |      |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Financing activities:                                                                  |  |                                  |        |   |      |   |       |  
|Issuance of common stock                                                               |  |                                  | 4,030  |   |      |   |      |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Net cash provided by financing activities                                              |  |                                  | 4,030  |   |      |   |      |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Net increase (decrease) in cash                                                        |  |                                  | 387    |   |      |   | (84   | )
|                                                                                       |  |                                 
|Cash at beginning of year                                                              |  |                                  | 57     |   |      |   | 141   |  
|                                                                                       |  |                                  |        |   |      |   |       |  
|Cash at end of year                                                                    |  | $                                | 444    |   |      | $ | 57    |  
|                                                                                       |  |                                  |        |   |      |   |       |  

NOTE 17: Stock Offering

During November 2006, the Company issued 650,000 shares of its common stock in a rights offering and public offering. Net proceeds totaled $4.0 million and will be used by the Company for general corporate purposes,
including future growth and expansion, and to increase the Companys legal lending limit.



40



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##### Table of Contents

LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

CNB Bancorp, Inc.

Windsor, Virginia

We have audited the accompanying consolidated balance
sheets of CNB Bancorp, Inc. and subsidiary as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in shareholders equity and cash flows for the years then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of CNB Bancorp, Inc. and subsidiary as of December 31, 2006 and 2005 and the results of their operations and their cash flows for the years
then ended, in conformity with U.S. generally accepted accounting principles.

LOGO

Winchester, Virginia

March 26, 2007



41



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##### Table of Contents

|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

As of the end of the
period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including
its consolidated subsidiary) that is required to be included in our periodic filings with the Securities and Exchange Commission. There have been no significant changes in our internal controls or, to managements knowledge, in other factors
that could significantly affect those internal controls subsequent to the date we carried out our evaluation, and there has been no corrective actions with respect to significant deficiencies or material weaknesses.



|ITEM 8B. | OTHER INFORMATION
|-------- | -----------------

None.

PART III



|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|------- | -------------------------------------------------------------------------------------------------------------------------------------

The information with respect to the Directors of the Company is contained on pages 2 through 6 of the 2007 Proxy Statement under the caption,
Election of Directors, and is incorporated herein by reference. The information regarding the Section 16(a) reporting requirements of the Directors and Executive Officers is contained on page 10 of the 2007 Proxy Statement under the
caption, Section 16(a) Beneficial Ownership Reporting Compliance, and is incorporated herein by reference. The information concerning Executive Officers of the Corporation is contained on pages 6 through 8 of the 2007 Proxy Statement
under the caption, Executive Officers, and is incorporated herein by reference.



|ITEM 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information contained
on pages 6 through 8 of the 2007 Proxy Statement under the caption, Executive Officers, and is incorporated herein by reference. The information regarding Director compensation contained on page 8 of the 2007 Proxy Statement under the
caption, Director Compensation, is incorporated herein by reference.



|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

The information contained on pages 9 and 10 of the 2007 Proxy Statement under the caption, Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters, is incorporated herein by reference.



|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------

The information contained on page 10 of the 2007 Proxy Statement under the caption, Relationships and Related Transactions, is incorporated herein by reference.



42



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##### Table of Contents

|ITEM 13. | EXHIBITS
|-------- | --------



|(a) | Exhibits
|--- | --------



|              |  |                                                                                                                                           
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit                                                                                                                                   
|3.1           |  | Articles of Incorporation.(1)                                                                                                             
|              | 
|3.2           |  | Bylaws.(1)                                                                                                                                
|              | 
|3.3           |  | Amended and Restated Bylaws.(3)                                                                                                           
|              | 
|4.1           |  | See Articles of Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.                                                     
|              | 
|10.1          |  | Lease Agreement by and between Windsor Office Group and Citizens National Bank (in organization) dated June 1, 2001 (temporary office).(1)
|              | 
|10.2          |  | Form of Escrow Agreement by and between CNB Bancorp, Inc. and Community Bankers Bank.(1)                                                 
|              | 
|10.3          |  | Form of Employment Agreement by and among Citizens National Bank (in organization), CNB Bancorp, Inc. and Douglas A. Chesson.(1)          
|              | 
|10.4          |  | Form of CNB Bancorp, Inc. Organizing Director Warrant Agreement.(1)                                                                       
|              | 
|10.5          |  | Operating Agreement of CNB Bancorp, LLC.(1)                                                                                               
|              | 
|10.6          |  | Form of Organizing Director Contribution Agreement.(1)                                                                                    
|              | 
|10.7          |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Jerry R. Bryant(2)                                        
|              | 
|10.8          |  | CNB Bancorp, Inc.2003 Stock Incentive Plan(2)                                                                                             
|              | 
|10.9          |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Elizabeth T. Beale(2)                                     
|              | 
|10.10         |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Judy D. Brown(2)                                          
|              | 
|10.11         |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Oliver D. Creekmore(3)                                    
|              | 
|10.12         |  | Amendment to CNB Bancorp, Inc. 2003 Stock Incentive Plan(4)                                                                               
|              | 
|14.1          |  | Code of Ethics(2)                                                                                                                         
|              | 
|21.1          |  | Subsidiaries of CNB Bancorp, Inc.(2)                                                                                                      
|              | 
|24.1          |  | Power of Attorney (appears on the signature pages to this Annual Report on Form 10-KSB).                                                  
|              | 
|31.1          |  | Certification of Chief Executive Officer                                                                                                  
|              | 
|31.2          |  | Certification of Chief Financial Officer                                                                                                  
|              | 
|32.1          |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                   

---

|(1) | Incorporated herein by reference to exhibit of same number in the Companys Registration Statement
on Form SB-2, as amended.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated herein by reference to exhibit of same number in the Companys annual report on Form
10-KSB filed March 25, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated herein by reference to exhibit of same number in the Companys Form 8-K filed
November 23, 2005.
|--- | -------------------------------------------------------------------------------------------------------------

|(4) | Incorporated herein by reference to Exhibit A in the Companys Definitive Proxy Statement filed
October 21, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The
information contained on page 11 of the 2007 Proxy Statement under the caption, Principal Accountant Fees and Services, is incorporated herein by reference.



43



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##### Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.

CNB BANCORP, INC.



|                                    |  |                        
|----------------------------------- |  | -----------------------
|By:                                 |  | /s/ Oliver D. Creekmore
|Oliver D. Creekmore                
|President & Chief Executive Officer
|Date:                               |  | March 29, 2007         

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on the signature page to this Report constitutes and appoints Robert E.
Spencer, Jr. as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this
Report, and to file the same, with all exhibits hereto, and other documents in connection herewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agent, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent, or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                                            |  |                                                                             |  |               
|------------------------------------------- |  | --------------------------------------------------------------------------- |  | --------------
|Signature                                   |  | Title                                                                       |  | Date          
|                                            |  |                                                                            
|/s/ Oliver D. Creekmore Oliver D. Creekmore |  | Director, President & Chief Executive Officer (principal executive officer) |  | March 15, 2007
|                                            |  |                                                                            
|/s/ D. C. Bowman D. C. Bowman               |  | Director                                                                    |  | March 15, 2007
|                                            |  |                                                                            
|/s/ Judy D. Brown Judy D. Brown             |  | Director                                                                    |  | March 15, 2007
|                                            |  |                                                                            
|/s/ Allen E. Brown Allen E. Brown           |  | Director                                                                    |  | March 15, 2007
|                                            |  |                                                                            
|\/s/ Brenton D. Burgess Brenton D. Burgess  |  | Director                                                                    |  | March 15, 2007



44



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##### Table of Contents

|                                              |  |          |  |               
|--------------------------------------------- |  | -------- |  | --------------
|Signature                                     |  | Title    |  | Date          
|                                              |  |         
|/s/ Clem E. Dalton Clem E.
Dalton             |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Harold F. Demsko Harold F.
Demsko         |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Tommy J. Duncan Tommy J.
Duncan           |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ William E. Goodwin William E.
Goodwin     |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Anna M. Nash Anna M.
Nash                 |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Susan W. OConnell Susan W.
OConnell     |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Marcia C. Patterson Marcia C.
Patterson   |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Gerald D. Scheimberg Gerald D.
Scheimberg |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ William L. Shelton William L.
Shelton     |  | Director |  | March 15, 2007
|                                              |  |         
|/s/ Michael G. Smith Michael G.
Smith         |  | Director |  | March 15, 2007



45



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##### Table of Contents

|                                                  |  |                                                                      |  |               
|------------------------------------------------- |  | -------------------------------------------------------------------- |  | --------------
|Signature                                         |  | Title                                                                |  | Date          
|                                                  |  |                                                                     
|/s/ Robert E. Spencer, Jr. Robert E.
Spencer, Jr. |  | Director                                                             |  | March 15, 2007
|                                                  |  |                                                                     
|/s/ G. Stewart Tyler G. Stewart
Tyler             |  | Director                                                             |  | March 15, 2007
|                                                  |  |                                                                     
|/s/ Gene E. Worrell Gene E.
Worrell               |  | Director                                                             |  | March 15, 2007
|                                                  |  |                                                                     
|/s/ Lester A. Younkins Lester A.
Younkins         |  | Director                                                             |  | March 15, 2007
|                                                  |  |                                                                     
|/s/ Elizabeth T. Beale Elizabeth T.
Beale         |  | Chief Financial Officer (principal accounting and financial officer) |  | March 15, 2007



46



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##### Table of Contents

EXHIBIT INDEX



|               |  |                                                                                                                                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                               
|3.1            |  | Articles of Incorporation.(1)                                                                                                             
|               | 
|3.2            |  | Bylaws.(1)                                                                                                                                
|               | 
|3.3            |  | Amended and Restated Bylaws.(3)                                                                                                           
|               | 
|4.1            |  | See Articles of Incorporation at Exhibit 3.1 hereto and Bylaws at Exhibit 3.2 hereto.                                                     
|               | 
|10.1           |  | Lease Agreement by and between Windsor Office Group and Citizens National Bank (in organization) dated June 1, 2001 (temporary office).(1)
|               | 
|10.2           |  | Form of Escrow Agreement by and between CNB Bancorp, Inc. and Community Bankers Bank.(1)                                                 
|               | 
|10.3           |  | Form of Employment Agreement by and among Citizens National Bank (in organization), CNB Bancorp, Inc. and Douglas A. Chesson.(1)          
|               | 
|10.4           |  | Form of CNB Bancorp, Inc. Organizing Director Warrant Agreement.(1)                                                                       
|               | 
|10.5           |  | Operating Agreement of CNB Bancorp, LLC.(1)                                                                                               
|               | 
|10.6           |  | Form of Organizing Director Contribution Agreement.(1)                                                                                    
|               | 
|10.7           |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Jerry R. Bryant(2)                                        
|               | 
|10.8           |  | CNB Bancorp, Inc.2003 Stock Incentive Plan(2)                                                                                             
|               | 
|10.9           |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Elizabeth T. Beale(2)                                     
|               | 
|10.10          |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Judy D. Brown(2)                                          
|               | 
|10.11          |  | Employment Agreement by and among Citizens National Bank, CNB Bancorp, Inc. and Oliver D. Creekmore(3)                                    
|               | 
|10.12          |  | Amendment to CNB Bancorp, Inc. 2003 Stock Incentive Plan(4)                                                                               
|               | 
|14.1           |  | Code of Ethics(2)                                                                                                                         
|               | 
|21.1           |  | Subsidiaries of the Company(2)                                                                                                            
|               | 
|24.1           |  | Power of Attorney (appears on the signature pages to this Annual Report on Form 10-KSB).                                                  
|               | 
|31.1           |  | Certification of Chief Executive Officer                                                                                                  
|               | 
|31.2           |  | Certification of Chief Financial Officer                                                                                                  
|               | 
|32.1           |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                   

---

|(1) | Incorporated herein by reference to exhibit of same number in the Companys Registration Statement
on Form SB-2, as amended.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated herein by reference to exhibit of same number in the Companys annual report on Form
10-KSB filed March 25, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated herein by reference to exhibit of same number in the Companys Form 8-K filed
November 23, 2005.
|--- | -------------------------------------------------------------------------------------------------------------

|(4) | Incorporated herein by reference to Exhibit A in the Companys Definitive Proxy Statement filed
October 21, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------



47