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


                                    FORM 10-Q


 X       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---      EXCHANGE ACT OF 1934
         For the quarterly period ended   September 30, 2003
                                        ---------------------

                                       OR

___      TRANSITION  REPORT PURSUANT TO  SECTION 13 or 15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from ________ to ________





                           Commission File No. 0-25988

                          CNB Florida Bancshares, Inc.
                          ----------------------------
             (Exact name of registrant as specified in its charter)


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


9715 Gate Parkway North
Jacksonville, Florida                                               32246
---------------------------------------                       ------------------
(Address of principal executive offices)                         (Zip Code)


Registrant's telephone number, including area code: (904) 997-8484





Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No___


The number of shares of the registrant's  common stock outstanding as of October
31, 2003 was 6,249,740 shares, $0.01 par value per share.


<PAGE>



                          CNB FLORIDA BANCSHARES, INC.
                          FINANCIAL REPORT ON FORM 10-Q




                                TABLE OF CONTENTS


<TABLE>
PART I - FINANCIAL INFORMATION
         Item 1.  Financial Statements (Unaudited)

         <S>                                                                                                      <C>
         Consolidated Statements of Financial Condition ..........................................................3
         Consolidated Statements of Income  ......................................................................4
         Consolidated Statements of Cash Flows ...................................................................6
         Notes to Consolidated Financial Statements ..............................................................7
         Selected Financial Data ................................................................................11

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

         Overview ...............................................................................................12
         Results of Operations ..................................................................................12
         Liquidity and Interest Rate Sensitivity.................................................................18
         Earning Assets..........................................................................................21
         Funding Sources ........................................................................................25
         Capital Resources ......................................................................................25
         Critical Accounting Policies............................................................................26

         Item 3.  Quantitative and Qualitative Disclosure About Market Risk .....................................26

         Item 4.  Controls and Procedures........................................................................27

PART II - OTHER INFORMATION
         Item 1.  Legal Proceedings .............................................................................28

         Item 2.  Changes in Securities and Use of Proceeds......................................................28

         Item 3.  Defaults Upon Senior Securities ...............................................................28

         Item 4.  Submission of Matters to a Vote of Security Holders ...........................................28

         Item 5.  Other Information .............................................................................28

         Item 6.  Exhibits and Reports ..........................................................................28
</TABLE>

                                       2
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
                                                                                                      (Unaudited)
                                                                ASSETS                                September 30,     December 31,
                                                                                                          2003              2002
                                                                                                      ------------      ------------
Cash and cash equivalents:                                                                                      (thousands)

<S>                                                                                                    <C>                <C>
     Cash and due from banks                                                                           $  20,747          $  15,986
     Federal funds sold                                                                                      500              5,400
     Interest-bearing deposits in other banks                                                             10,487             12,215
                                                                                                       ---------          ---------
       Total cash and cash equivalents                                                                    31,734             33,601
Investment securities held to maturity (market value of $29,603)                                          29,693                  -
Investment securities available for sale                                                                  60,895             49,682
Loans:
     Commercial                                                                                          111,234            111,033
     Commercial real estate                                                                              356,839            324,525
     Mortgages (including home equity)                                                                   149,304            132,513
     Consumer                                                                                             31,325             32,199
     Credit card                                                                                               -              1,164
     Tax free                                                                                              5,938              4,351
                                                                                                       ---------          ---------
       Total loans, net of unearned income                                                               654,640            605,785
Less:  Allowance for loan losses                                                                          (7,048)            (6,574)
       Net loans                                                                                         647,592            599,211
                                                                                                       ---------          ---------
Loans held for sale                                                                                        2,734             10,893
Premises and equipment, net                                                                               24,760             25,086
Intangible assets, net                                                                                     5,512              6,056
Other assets                                                                                               7,379              6,145
                                                                                                       ---------          ---------
         TOTAL ASSETS                                                                                  $ 810,299          $ 730,674
                                                                                                       =========          =========
                                         LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
     Non-interest bearing demand                                                                       $  94,720          $  80,065
     Savings, NOW and money market                                                                       288,549            236,284
     Time under $100,000                                                                                 176,861            172,671
     Time $100,000 and over                                                                              167,673            159,616
                                                                                                       ---------          ---------
       Total deposits                                                                                    727,803            648,636
Securities sold under repurchase agreements and federal funds purchased                                   11,476             14,446
Other borrowings                                                                                          11,500             11,000
Other liabilities                                                                                          5,301              5,671
                                                                                                       ---------          ---------
       Total liabilities                                                                                 756,080            679,753
                                                                                                       ---------          ---------
SHAREHOLDERS' EQUITY
Preferred stock; $.01 par value; 500,000 shares authorized,
     no shares issued or outstanding                                                                           -                  -
Common stock; $.01 par value; 10,000,000 shares authorized,
     6,220,490 shares issued and outstanding at September 30, 2003 and
     6,125,500 shares issued and outstanding at December 31, 2002                                             62                 61

Additional paid-in capital                                                                                31,802             30,840
Retained earnings                                                                                         23,193             19,912
Accumulated other comprehensive (loss) income, net of taxes                                                 (838)               108
                                                                                                       ---------          ---------
       Total shareholders' equity                                                                         54,219             50,921
                                                                                                       ---------          ---------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                    $ 810,299          $ 730,674
                                                                                                       =========          =========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       3
<PAGE>

                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
                                                                                                            Three Months Ended
                                                                                                               September 30,
                                                                                                      2003                   2002
                                                                                                   ---------              ----------
                                                                                                                (thousands)
<S>                                                                                                <C>                    <C>
Interest Income
    Interest and fees on loans                                                                     $   10,101             $   10,119
    Interest on investment securities available for sale                                                  509                    552
    Interest on investment securities held to maturity                                                    202                     24
    Interest on federal funds sold                                                                         18                     11
    Interest on interest-bearing deposits                                                                  59                     10
                                                                                                   ----------             ----------
      Total interest income                                                                            10,889                 10,716

Interest Expense
    Interest on deposits                                                                                3,564                  3,733
    Interest on repurchases and federal funds purchased                                                    23                     50
    Interest on other borrowings                                                                          174                    165
                                                                                                   ----------             ----------
      Total interest expense                                                                            3,761                  3,948
                                                                                                   ----------             ----------
        Net interest income                                                                             7,128                  6,768

Provision for Loan Losses                                                                                 325                    600
                                                                                                   ----------             ----------
    Net interest income after provision for loan losses                                                 6,803                  6,168

Non-Interest Income
    Service charges                                                                                       890                    823
    Secondary market mortgage sales                                                                       300                    568
    Other fees and charges                                                                                245                    161
    Securities gains                                                                                       11                      -
                                                                                                   ----------             ----------
      Total non-interest income                                                                         1,446                  1,552

Non-Interest Expense
    Salaries and employee benefits                                                                      2,752                  2,828
    Occupancy and equipment expense                                                                       944                    882
    Other operating expense                                                                             1,784                  1,645
                                                                                                   ----------             ----------
      Total non-interest expense                                                                        5,480                  5,355
                                                                                                   ----------             ----------

Income before income taxes                                                                              2,769                  2,365
    Provision for income taxes                                                                          1,032                    888
                                                                                                   ----------             ----------

NET INCOME                                                                                         $    1,737             $    1,477
                                                                                                   ==========             ==========

Earnings Per Share (Note 3):

    Basic earnings per common share                                                                $     0.28             $     0.24
                                                                                                   ==========             ==========
    Weighted average shares outstanding                                                             6,220,490              6,104,021
                                                                                                   ==========             ==========

    Diluted earnings per common share                                                              $     0.27             $     0.24
                                                                                                   ==========             ==========
    Diluted weighted average shares outstanding                                                     6,399,338              6,213,422
                                                                                                   ==========             ==========

Dividends Per Share                                                                                $     0.06             $     0.05
                                                                                                   ==========             ==========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       4
<PAGE>



                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
<TABLE>
                                                                                                           Nine Months Ended
                                                                                                             September 30,
                                                                                                     2003                    2002
                                                                                                   ---------              ---------
                                                                                                              (thousands)
<S>                                                                                                <C>                    <C>
Interest Income
    Interest and fees on loans                                                                     $   30,251             $   29,019
    Interest on investment securities available for sale                                                1,486                  1,399
    Interest on investment securities held to maturity                                                    202                     95
    Interest on federal funds sold                                                                         87                     54
    Interest on interest-bearing deposits                                                                 305                     15
                                                                                                   ----------             ----------
      Total interest income                                                                            32,331                 30,582

Interest Expense
    Interest on deposits                                                                               11,290                 10,910
    Interest on repurchases and federal funds purchased                                                    79                    158
    Interest on other borrowings                                                                          512                    489
                                                                                                   ----------             ----------
      Total interest expense                                                                           11,881                 11,557
                                                                                                   ----------             ----------
        Net interest income                                                                            20,450                 19,025

Provision for Loan Losses                                                                               1,650                  1,625
                                                                                                   ----------             ----------
    Net interest income after provision for loan losses                                                18,800                 17,400

Non-Interest Income
    Service charges                                                                                     2,657                  2,385
    Secondary market mortgage sales                                                                     1,190                  1,562
    Other fees and charges                                                                                684                    505
    Securities gains                                                                                      406                      4
                                                                                                   ----------             ----------
      Total non-interest income                                                                         4,937                  4,456

Non-Interest Expense
    Salaries and employee benefits                                                                      8,302                  8,354
    Occupancy and equipment expense                                                                     2,727                  2,538
    Other operating expense                                                                             5,285                  4,926
                                                                                                   ----------             ----------
      Total non-interest expense                                                                       16,314                 15,818
                                                                                                   ----------             ----------

Income before income taxes                                                                              7,423                  6,038
    Provision for income taxes                                                                          2,716                  2,233
                                                                                                   ----------             ----------

NET INCOME                                                                                         $    4,707             $    3,805
                                                                                                   ==========             ==========

Earnings Per Share (Note 3):

    Basic earnings per common share                                                                $     0.76             $     0.62
                                                                                                   ==========             ==========
    Weighted average shares outstanding                                                             6,184,962              6,100,368
                                                                                                   ==========             ==========

    Diluted earnings per common share                                                              $     0.74             $     0.61
                                                                                                   ==========             ==========
    Diluted weighted average shares outstanding                                                     6,373,149              6,189,081
                                                                                                   ==========             ==========

Dividends Per Share                                                                                $     0.17             $     0.15
                                                                                                   ==========             ==========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.



                                       5
<PAGE>



                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
                                                                                                             Nine Months Ended
                                                                                                                September 30,
                                                                                                           2003              2002
                                                                                                         --------          ---------
                                                                                                                (thousands)
<S>                                                                                                      <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                               $  4,707          $  3,805
Adjustments to reconcile net income to net cash provided by operating activities:
    Gain on sale of investment securities available for sale                                                 (382)                -
    Gain on called investment securities available for sale                                                   (24)               (4)
    Gain on sale of credit card portfolio                                                                     (55)                -
    Depreciation and amortization                                                                           1,936             1,864
    Provision for loan losses                                                                               1,650             1,625
    Investment securities amortization, net                                                                   457               150
    Loss on sale of premises and equipment                                                                     63                 -
    Changes in assets and liabilities:
       Loans held for sale                                                                                  8,159             3,485
       Other assets                                                                                           431            (1,403)
       Other liabilities                                                                                     (662)              915
                                                                                                         --------          --------
          Net cash provided by operating activities                                                        16,280            10,437
                                                                                                         --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale                                                     (59,177)          (32,483)
Purchases of investment securities held to maturity                                                       (29,850)                -
Proceeds from maturities of securities available for sale                                                  22,107             5,466
Proceeds from sales of securities available for sale                                                       10,382                 -
Proceeds from called securities available for sale                                                         14,000             8,140
Proceeds from called securities held to maturity                                                                -             2,930
Net increase in loans                                                                                     (51,006)          (62,905)
Sale of premises and equipment                                                                                245                 -
Purchases of premises and equipment                                                                        (1,373)             (390)
                                                                                                         --------          --------
          Net cash used in investing activities                                                           (94,672)          (79,242)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits                                                                                   79,166            80,139
Net decrease in securities sold under repurchase agreements
   and federal funds purchased                                                                             (2,970)           (9,134)
Proceeds from other borrowings                                                                                500                 -
Cash dividends                                                                                             (1,052)             (915)
Repurchase of common stock                                                                                      -              (100)
Proceeds from exercise of stock options                                                                       881               104
                                                                                                         --------          --------
          Net cash provided by financing activities                                                        76,525            70,094
                                                                                                         --------          --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                       (1,867)            1,289

CASH AND CASH EQUIVALENTS, beginning of period                                                             33,601            20,677
                                                                                                         --------          --------

CASH AND CASH EQUIVALENTS, end of period                                                                 $ 31,734          $ 21,966
                                                                                                         ========          ========

SUPPLEMENTAL DISCLOSURES:
          Interest paid                                                                                  $ 12,056          $ 12,590
                                                                                                         ========          ========

          Income taxes paid                                                                              $  3,014          $  2,266
                                                                                                         ========          ========
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>



                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2003
                                   (Unaudited)

Note 1. Basis of Presentation and Accounting Policies
The accompanying unaudited financial statements have been prepared in accordance
with the  instructions  to Form 10-Q which do not  require all  information  and
footnotes necessary for a complete  presentation of financial position,  results
of operations and cash flows in conformity with accounting  principles generally
accepted in the United  States of America.  In the opinion of  management,  such
financial  statements  reflect  all  adjustments   (consisting  only  of  normal
recurring adjustments) necessary for a fair statement of the financial position,
results  of  operations  and  cash  flows  for the  interim  periods  presented.
Operating  results  for  the  nine  months  ended  September  30,  2003  are not
necessarily  indicative  of the results that may be expected for the year ending
December  31,  2003.  Management's  discussion  and  analysis  should be read in
conjunction  with the  consolidated  financial  statements.  Certain amounts and
captions  relating  to 2002 have been  reclassified  to conform to current  year
presentation.

Accounting  policies  followed in the presentation of interim  financial results
are  presented  in Note 2 of CNB Florida  Bancshares,  Inc.'s (the  "Company's")
audited  consolidated  financial  statements  included in Form 10-K for the year
ended  December  31,  2002,  which is  available  on the  Company's  web site at
www.cnbnb.com.

Note 2. Consolidation
The consolidated  financial  statements  include the accounts of the Company and
its wholly owned  subsidiary,  CNB National Bank. All  significant  intercompany
accounts and transactions have been eliminated.

Note 3.  Earnings Per Share
Basic  earnings per common  share is  calculated  based on the weighted  average
number of shares of common stock outstanding during the period. Diluted earnings
per common share is calculated based on the weighted average number of shares of
common stock outstanding and common stock equivalents, consisting of outstanding
stock  options that have a dilutive  effect on earnings per share.  Common stock
equivalents  are  determined  using the treasury stock method for diluted shares
outstanding.  The  difference  between  diluted and basic shares  outstanding is
common stock equivalents from stock options outstanding during the periods ended
September 30, 2003 and 2002.

The following table sets forth the computation of earnings per share for the
each of the three and nine month periods ended September 30, 2003 and 2002.

<TABLE>
                                                                     Three Months Ended               Nine Months Ended
                                                               September 30,   September 30,     September 30,    September 30,
                                                                    2003             2002            2003              2002
                                                                ----------       ----------       ----------       ----------
<S>                                                             <C>              <C>              <C>              <C>
Numerator:
   Net income available to common shareholders                  $    1,737       $    1,477       $    4,707       $    3,805
                                                                ==========       ==========       ==========       ==========

Denominator:
   Denominator for basic earnings per common share
      Weighted-average shares                                    6,220,490        6,104,021        6,184,962        6,100,368
 Effect of dilutive securities:
      Common stock options                                         178,848          109,401          188,187           88,713
                                                                ----------       ----------       ----------       ----------
   Dilutive potential common shares                                178,848          109,401          188,187           88,713
                                                                ----------       ----------       ----------       ----------
   Denominator for diluted earnings per common share
      Adjusted weighted average shares                           6,399,338        6,213,422        6,373,149        6,189,081
                                                                ==========       ==========       ==========       ==========

Basic earnings per common share                                 $     0.28       $     0.24       $     0.76       $     0.62
                                                                ==========       ==========       ==========       ==========


Diluted earnings per common share                               $     0.27       $     0.24       $     0.74       $     0.61
                                                                ==========       ==========       ==========       ==========
</TABLE>


Note 4.  Comprehensive Income
Comprehensive  income is defined as the change in equity during a period arising
from  non-owner  transactions  and  events.  The  following  table  details  the
Company's  comprehensive  income for the three and nine months ending  September
30, 2003 and 2002.



                                       7
<PAGE>


<TABLE>
                                                                      Three Months Ended                    Nine Months Ended
                                                                September 30,     September 30,       September 30,    September 30,
                                                                    2003              2002                2003              2002
                                                                -------------     -------------       -------------    -------------

Unrealized (loss) gain recognized in other
comprehensive income (net):
<S>                                                               <C>               <C>                 <C>               <C>
   Available for sale securities                                  $(1,279)          $   385             $(1,581)          $   545
   Interest rate swap designated as cash flow hedge                   131              (450)                 63              (676)
                                                                  -------           -------             -------           -------
   Total unrealized (loss) gain before income taxes                (1,148)              (65)             (1,518)             (131)
   Deferred income taxes                                              425                24                 562                49
                                                                  -------           -------             -------           -------
     Net of deferred income tax                                   $  (723)          $   (41)            $  (956)          $   (82)
                                                                  =======           =======             =======           =======

Amounts reported in net income:
   Securities gains                                               $    11           $     4             $   406           $     4
   Interest rate swap designated as cash flow hedge                   (93)              (74)               (264)             (214)
   Net amortization (accretion)                                       195                59                 457               150
                                                                  -------           -------             -------           -------
   Reclassification adjustment                                        113               (11)                599               (60)
   Deferred income taxes                                              (42)                4                (222)               22
                                                                  -------           -------             -------           -------
     Reclassification adjustment, net of deferred income tax      $    71           $    (7)            $   377           $   (38)
                                                                  =======           =======             =======           =======

Amounts reported in other comprehensive income:
   Net unrealized (loss) gain arising during period, net of tax   $  (652)          $   (48)            $  (579)          $  (120)
   Reclassification adjustment, net of tax                            (71)                7                (377)               38
                                                                  -------           -------             -------           -------
   Unrealized (loss) gain arising during period, net of tax          (723)              (41)               (956)              (82)
   Net income                                                       1,737             1,477               4,707             3,805
                                                                  -------           -------             -------           -------
      Total comprehensive income                                  $ 1,014           $ 1,436             $ 3,751           $ 3,723
                                                                  =======           =======             =======           =======
</TABLE>


Note 5.  Stock-Based Compensation
The Company has  long-term  incentive  plans that  provide  stock-based  awards,
including  stock  options to certain  key  employees.  The  Company  applies the
provisions of Accounting  Principles Board Opinion No. 25,  Accounting for Stock
Issued to Employees,  in accounting for its stock option and award plans and has
adopted the  disclosure-only  option under  Statement  of  Financial  Accounting
Standards,  ("SFAS") No. 123,  Accounting for Stock-Based  Compensation.  If the
Company had adopted the accounting provisions of SFAS 123 and recognized expense
for the fair value of employee  stock  options  granted over the vesting life of
the options,  pro forma  stock-based  compensation  expense (net of tax) for the
three and nine  months  ended  September  30,  2003 would have been  $46,000 and
$158,000,  respectively. Pro forma stock-based compensation expense (net of tax)
for the three and nine months ended  September  30, 2002 would have been $55,000
and $220,000,  respectively.  The following  table outlines pro forma net income
and earnings per share that would have been  reported if the Company had adopted
the fair value  provisions of SFAS 123 (dollars in  thousands,  except per share
data):

<TABLE>
                                                                                 For the Nine Months Ended
                                                              ---------------------------------------------------------------
                                                                        As Reported                       Pro Forma
                                                              -----------------------------     -----------------------------
                                                              September 30,    September 30,    September 30,    September 30,
                                                                  2003             2002             2003             2002
                                                              ------------     ------------     ------------     ------------

<S>                                                            <C>              <C>              <C>              <C>
Net income                                                     $   4,707        $   3,805        $   4,549        $   3,585
Basic earnings per common share                                $    0.76        $    0.62        $    0.74        $    0.59
Diluted earnings per common share                              $    0.74        $    0.61        $    0.71        $    0.58
</TABLE>




                                       8
<PAGE>

<TABLE>
                                                                    For the Three Months Ended
                                                      ---------------------------------------------------------------
                                                           As Reported                        Pro Forma
                                                      -----------------------------     -----------------------------
                                                  September 30,    September 30,       September 30,  September 30,
                                                       2003           2002                 2003          2002
                                                     ------------     ------------     ------------     ------------
<S>                                                  <C>             <C>                  <C>           <C>
Net income  .............................            $1,737          $1,477               $1,691        $1,422
Basic earnings per common share  ........            $ 0.28          $ 0.24               $ 0.27        $ 0.23
Diluted earnings per common share  ......            $ 0.27          $ 0.24               $ 0.26        $ 0.23
</TABLE>

In  determining  the pro forma  disclosures  above,  the fair  value of  options
granted was estimated on the grant date using the  Black-Scholes  option-pricing
model.  The  Black-Scholes  model was  developed  to estimate  the fair value of
traded  options,  which  have  different  characteristics  than  employee  stock
options, and changes to the subjective  assumptions used in the model can result
in materially different fair value estimates.  Options to purchase 91,500 shares
of stock with an  estimated  average fair value of $4.50 per option were granted
during the nine months ended  September  30, 2003.  Options to purchase  112,000
shares with an  estimated  average  fair value of $4.12 per option were  granted
during the nine months ended September 30, 2002. The weighted-average grant date
fair values of options  granted during 2003 and 2002 were based on the following
assumptions:

                                                     2003        2002
                                                     ----        ----
       Risk-free interest rate ............          2.49%       5.13%
       Dividend yield .....................          1.54%       1.88%
       Volatility .........................         37.00%      38.00%
       Expected lives .....................        6 years     6 years

Compensation  expense under the fair  value-based  method is recognized over the
vesting period of the related stock options and is based on the estimated number
of shares  expected  to actually  vest.  Accordingly,  the pro forma  results of
applying SFAS 123 in 2003 and 2002 may not be indicative of future amounts.

Note 6.  Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 143,
Accounting for Asset  Retirement  Obligations  ("SFAS 143").  SFAS 143 addresses
financial   accounting  and  reporting  for  obligations   associated  with  the
retirement of tangible  long-lived  assets and the associated  asset  retirement
costs.  The Company adopted the provisions of this Statement on January 1, 2003,
which did not have a significant impact on the Company's  consolidated financial
statements.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44
and 64,  Amendments of SFAS 13, and Technical  Corrections as of May 2002 ("SFAS
145").  SFAS  145  rescinds  SFAS 4,  Extinguishments  of Debt  Made to  Satisfy
Sinking-Funds  Requirements.  SFAS  145 also  rescinds  FAS 44,  Accounting  for
Intangible Assets of Motor Carriers and amends FAS 13, Accounting for Leases, to
eliminate an inconsistency  between the required  accounting for  sale-leaseback
transactions and the required  accounting for certain lease  modifications  that
have  economic  effects  that are similar to  sale-leaseback  transactions.  The
provisions  of this  Statement  were  adopted by the Company on January 1, 2003,
which did not have a significant impact on the Company's  consolidated financial
statements.

In  November  2002,  the FASB  issued  FASB  Interpretation  No. 45  Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others,  an  Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FASB  Interpretation  No. 34 ("FIN 45"). FIN 45
elaborates  on the  disclosures  to be made by a  guarantor  in its  interim and
annual financial  statements about its obligations under certain guarantees that
it has issued.  It also clarifies that a guarantor is required to recognize,  at
the inception of a guarantee,  a liability for the fair value of the  obligation
undertaken  in issuing  the  guarantee.  The  initial  recognition  and  initial
measurement  provisions  of FIN 45 are  applicable  on a  prospective  basis  to
guarantees  issued or modified  after  December  31, 2002,  irrespective  of the
guarantor's  fiscal  year-end.  The provisions of this Statement were adopted by
the Company on January 1, 2003,  which did not have a significant  impact on the
Company's consolidated financial statements.


                                       9
<PAGE>


In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable-Interest Entities - an Interpretation of ARB No. 51 ("FIN 46"). FIN 46
addresses consolidation by business enterprises of variable interest entities,
which have one or both of the following characteristics: (1) the equity
investment at risk is not sufficient to permit the entity to finance its
activities without additional subordinated financial support from other parties,
which is provided through other interests that will absorb some or all of the
expected losses of the entity and (2) the equity investors lack one or more of
the following essential characteristics of a controlling financial interest:

     o   The direct or indirect  ability to make  decisions  about the  entity's
         activities through voting rights or similar rights

     o   The  obligation  to absorb  the  expected  losses of the entity if they
         occur, which makes it possible for the entity to finance its activities

     o   The right to receive  the  expected  residual  returns of the entity if
         they occur,  which is the  compensation  for the risk of absorbing  the
         expected losses.

This  Interpretation  applies  immediately to variable interest entities created
after January 31, 2003, and to variable interest entities in which an enterprise
obtains an  interest  after that date.  It applies in the first  fiscal  year or
interim period beginning after June 15, 2003, to variable  interest  entities in
which an enterprise  holds a variable  interest that it acquired before February
1,  2003.  The  adoption  of FIN 46 did not  have a  significant  impact  on the
Company's consolidated financial statements.

In April  2003,  the  FASB  issued  SFAS  149,  Amendment  of  Statement  133 on
Derivative  Instruments and Hedging Activities ("SFAS 149"). SFAS 149 amends and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging  activities  under FASB  Statement No. 133,  Accounting  for  Derivative
Instruments and Hedging Activities.  SFAS 149 is effective for contracts entered
into or modified  after June 30,  2003,  except as stated  below and for hedging
relationships  designated  after June 30, 2003. The provisions of this Statement
that relate to Statement 133 Implementation  Issues that have been effective for
fiscal quarters that began prior to June 15, 2003, should continue to be applied
in accordance with their respective effective dates. In addition, the provisions
of SFAS 149 which relate to forward purchases or sales of when-issued securities
or other  securities  that do not yet exist,  should be applied to both existing
contracts  and new contracts  entered into after June 30, 2003.  The adoption of
SFAS 149 did not have a material impact on the Company's  consolidated financial
statements.

In May  2003,  the FASB  issued  SFAS  150,  Accounting  for  Certain  Financial
Instruments  with  Characteristics  of Both Liabilities and Equity ("SFAS 150").
This  Statement  establishes  standards for  classification  and  measurement of
certain  financial  instruments  with  characteristics  of both  liabilities and
equity.  SFAS 150  requires  that  financial  instruments  within  its  scope be
classified  as a  liability  (or an  asset in some  circumstances).  SFAS 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise  is  effective  at the  beginning  of the  first  interim  period
beginning  after June 15, 2003. The adoption of SFAS 150 did not have a material
impact on the Company's consolidated financial statements.

In October  2003,  the FASB issued FASB Staff  Position No. FIN 46-6,  Effective
Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities.
This Staff Position defers the effective date for applying the provisions of FIN
46 for  interests  held by public  entities  in  variable  interest  entities or
potential  variable  interest  entities  created  before  February  1,  2003 and
non-registered investment companies. This adoption of this Staff Position is not
expected  to have a  material  impact on the  Company's  consolidated  financial
statements.


                                       10
<PAGE>


                   CNB FLORIDA BANCSHARES, INC. AND SUBSIDIARY
                             Selected Financial Data





<TABLE>
                                                                                                         Nine Months Ended
                                                                                                            September 30,
Dollars in thousands except per share information.                                                   2003                  2002
====================================================================================================================================
SUMMARY OF OPERATIONS:

<S>                                                                                              <C>                   <C>
Total interest income                                                                            $    32,331           $    30,582
Total interest expense                                                                               (11,881)              (11,557)
                                                                                                 -----------           -----------
Net interest income                                                                                   20,450                19,025
Provision for loan losses                                                                             (1,650)               (1,625)
                                                                                                 -----------           -----------
Net interest income after provision for loan losses                                                   18,800                17,400
Non-interest income                                                                                    4,937                 4,456
Non-interest expense                                                                                 (16,314)              (15,818)
                                                                                                 -----------           -----------
Income before taxes                                                                                    7,423                 6,038
Income taxes                                                                                          (2,716)               (2,233)
                                                                                                 -----------           -----------
Net income                                                                                       $     4,707           $     3,805
                                                                                                 -----------           -----------

====================================================================================================================================
PER COMMON SHARE:
Basic earnings                                                                                   $      0.76           $      0.62
Diluted earnings                                                                                        0.74                  0.61
Book value                                                                                              8.72                  8.12
Dividends declared                                                                                      0.18                  0.15
Actual shares outstanding                                                                          6,220,490             6,106,703
Weighted average shares outstanding                                                                6,184,962             6,100,368
Diluted weighted average shares outstanding                                                        6,373,149             6,189,081

====================================================================================================================================
KEY RATIOS:
Return on average assets                                                                                0.81%                 0.79%
Return on average shareholders' equity                                                                 11.90                 10.54
Dividend payout                                                                                        23.68                 24.19
Efficiency ratio                                                                                       64.26                 67.37
Total risk-based capital ratio                                                                          8.81                  8.69
Average shareholders' equity to average assets                                                          6.80                  7.49
Tier 1 leverage                                                                                         7.72                  6.42

====================================================================================================================================
FINANCIAL CONDITION AT PERIOD-END:
Assets                                                                                           $   810,299           $   686,860
Loans                                                                                                654,640               573,767
Deposits                                                                                             727,803               613,030
Shareholders' equity                                                                                  54,219                49,587

====================================================================================================================================
</TABLE>



                                       11
<PAGE>



           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

OVERVIEW

     The following  analysis reviews  important  factors affecting the financial
condition  and results of  operations  of CNB Florida  Bancshares,  Inc. for the
three  and nine  months  ended  September  30,  2003 and  2002.  This  financial
information  should  be read in  conjunction  with  the  unaudited  consolidated
financial  statements of CNB Florida  Bancshares,  Inc. ("the  Company") and its
wholly owned  subsidiary,  CNB National Bank ("the Bank"),  included in "Item 1.
Financial  Statements" above and the audited  consolidated  financial statements
included in the Company's  Form 10-K for the year ended  December 31, 2002.  The
Company makes its Securities and Exchange  Commission  filings  available on its
website at www.cnbnb.com.  The analysis contains forward-looking statements with
respect  to  financial  and  business  matters,  which are  subject to risks and
uncertainties   that  may  change  over  a  period  of  time.  These  risks  and
uncertainties  include  but are not  limited  to changes  in the  interest  rate
environment that may reduce margins,  general economic or business conditions in
the Company's  markets that lead to a deterioration in credit quality or reduced
loan demand,  legislative or regulatory  changes and  competitors of the Company
that may have greater financial  resources and develop products or services that
enable such  competitors to compete more  successfully  than the Company.  Other
factors  that may  cause  actual  results  to  differ  from the  forward-looking
statements include customer acceptance of new products and services,  changes in
customer  spending and saving habits and the Company's success in managing costs
associated with expansion.  Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. Actual
results could be  significantly  different from the  forward-looking  statements
contained herein. The Company has no foreign operations;  accordingly, there are
no assets or liabilities attributable to foreign operations.


RESULTS OF OPERATIONS

     The Company's  earnings for the three month period ended September 30, 2003
were $1.7 million,  or $0.27 per diluted  share,  compared to $1.5  million,  or
$0.24 per diluted share, in the third quarter of 2002. For the nine months ended
September  30,  2003,  net income was $4.7  million or $0.74 per diluted  share,
compared to $3.8  million,  or $0.61 per diluted share for the  comparable  2002
period.  Total assets increased to $810.3 million at September 30, 2003 compared
to $730.7 million at December 31, 2002 and $686.9 million at September 30, 2002.
Total  outstanding  loans and  deposits  rose 14% and 19% to $654.6  million and
$727.8  million,  respectively,  at September  30, 2003 from $573.8  million and
$613.0 million, respectively, at September 30, 2002.

Net Interest Income

     Net interest  income is the single  largest  source of revenue for the Bank
and  consists of interest and net loan fee income  generated by earning  assets,
less  interest  expense  paid on interest  bearing  liabilities.  The  Company's
primary objective is to manage its assets and liabilities to provide the largest
possible  amount  of income  while  balancing  interest  rate,  credit  quality,
liquidity and capital risks.  Net interest income was $20.5 million for the nine
month  period  ended  September  30,  2003,  compared  to $19.0  million for the
comparable period in 2002, an increase of 7%. Interest income increased 2% while
interest  expense  decreased 5% for the 2003 third quarter over  comparable 2002
amounts.  The  increase  in  net  interest  income  reflects  growth  in  loans,
investments and non-interest  bearing  deposits,  which were partially offset by
growth in time deposits and declining rates and spreads.

     Total average earning assets  increased  $135.4  million,  or 23% to $725.8
million in 2003,  compared to $590.5 million in 2002. The increase was primarily
due to  growth  in the  average  balance  of  loans  and  investment  securities
available  for sale to $619.7  million and $56.9  million at September  30, 2003
from $540.5 million and $42.5 million for the same period in 2002, respectively.
Increases in time,  money market and other interest bearing  deposits,  were the
main  contributors  in the $114.9  million,  or 22%  growth in average  interest
bearing liabilities.

     Net interest  margin was 3.79% in the third  quarter 2003 compared to 4.30%
in the third quarter 2002 and 3.76% in the second  quarter  2003.  Total earning
asset yields for the first nine months in 2003  decreased to 5.96% from 6.92% in
2002 and rates on interest-bearing  liabilities  decreased to 2.53% in 2003 from
3.01% in 2002. The decline in net interest margin reflects spread  tightening as
a result of declining loan yields and an increase in lower yielding,  short-term
investments.  The Company continues to maintain an asset sensitive position with
respect to net interest income.  Maintaining this profile will allow the Company
to take  advantage  of a rising  rate  environment.


                                       12
<PAGE>

Tables 1 and 2 provide the Company's  average volume of interest  earning assets
and interest  bearing  liabilities for the nine and three months ended September
30, 2003 and 2002, respectively.

            Table 1: Year to Date Average Balances - Yields and Rates


<TABLE>
                                                  Nine Months Ended                      Nine Months Ended
                                                  September 30, 2003                     September 30, 2002
                                       -----------------------------------      ---------------------------------
                                                      Interest                               Interest
                                        Average      Income or    Average        Average    Income or    Average
                                        Balance       Expense       Rate         Balance     Expense       Rate
                                       ----------    ----------   --------      ---------   ---------    --------
                                                                   (dollars in thousands)
ASSETS:
<S>                                    <C>           <C>             <C>        <C>         <C>             <C>
  Federal funds sold                   $   10,634    $       87      1.09%      $   4,337   $      54       1.66%
  Investment securities
    available for sale                     56,894         1,486      3.49          42,500       1,399       4.40
  Investment securities
    held to maturity                        5,351           202      5.05           2,113          95       6.01
  Loans (1)                               619,712        30,251      6.53         540,500      29,019       7.18
  Interest bearing deposits                33,231           305      1.23           1,021          15       1.96
                                       ----------    ----------   --------      ---------   ---------    --------

TOTAL EARNING ASSETS                      725,822        32,331      5.96         590,471      30,582       6.92
  All other assets                         52,288                                  54,372
                                       ----------                               ---------

TOTAL ASSETS                           $  778,110                               $ 644,843
                                       ==========                               =========

LIABILITIES AND
  SHAREHOLDERS' EQUITY:
  NOW and money markets                $  233,882    $    2,691      1.54%      $ 186,829   $   2,504       1.79%
  Savings                                  24,065            80      0.44          21,795         122       0.75
  Time deposits                           347,005         8,519      3.28         280,672       8,284       3.95
  Repurchases and federal
     funds purchased                       12,135            79      0.87          13,964         158       1.51
 Short term borrowings                      1,115            23      2.76               -           -          -
 Other borrowings (2)                      10,000           489      6.54          10,000         489       6.54
                                       ----------     ---------   --------      ---------   ---------    --------
TOTAL INTEREST BEARING
  LIABILITIES                             628,202        11,881      2.53         513,260      11,557       3.01
  Demand deposits                          90,970                                  78,181
  Other liabilities                         6,032                                  5,117
  Shareholders' equity                     52,906                                  48,285
                                       ----------                               ---------

TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY                 $  778,110                               $ 644,843
                                       ==========                               =========

                                                                  --------                              --------
INTEREST SPREAD (3)                                                  3.43%                                  3.91%
                                                                  ========                               ========

                                                     ----------                             ---------
NET INTEREST INCOME                                  $   20,450                             $  19,025
                                                     ==========                             =========

NET INTEREST MARGIN (4)                                              3.77%                                  4.31%
                                                                  ========                               =========

------------
<FN>
(1)  Interest  income on average loans includes loan fee recognition of $396,000
     and $380,000 in 2003 and 2002, respectively.
(2)  Interest  expense  and  average  rate  amounts  include  the  impact of the
     Company's $10 million pay-fixed interest rate swap that is accounted for as
     a cash flow hedge of other borrowings.
(3)  Represents the average rate earned minus average rate paid.
 (4)  Represents net interest income divided by total earning assets.
</FN>
</TABLE>


                                       13
<PAGE>

    Table 1a: Analysis of Year to Date Changes in Interest Income and Expense


<TABLE>
                                                      NET CHANGE SEPTEMBER 30,            NET CHANGE SEPTEMBER 30,
                                                     2002-2003 ATTRIBUTABLE TO:          2001-2002 ATTRIBUTABLE TO:
                                                     --------------------------          --------------------------
                                                                            Net                                      Net
                                                 Volume (1)    Rate (2)     Change     Volume (1)    Rate (2)       Change
                                                 ----------    --------     ------     ----------    --------       ------
                                                                                (thousands)
INTEREST INCOME:
<S>                                               <C>          <C>          <C>          <C>          <C>          <C>
   Federal funds sold                             $    78      $   (45)     $    33      $    34      $   (74)     $   (40)
   Investment securities available for sale           474         (387)          87          457         (497)         (40)
   Investment securities held to maturity             146          (39)         107         (208)          (2)        (210)
   Loans                                            4,254       (3,022)       1,232        6,378       (5,708)         670
   Interest bearing deposits                          472         (182)         290           16           (9)           7
                                                  -------      -------      -------      -------      -------      -------
      Total                                         5,424       (3,675)       1,749        6,677       (6,290)         387
                                                  -------      -------      -------      -------      -------      -------


INTEREST EXPENSE:
   NOW and money markets                              630         (443)         187        1,004       (1,518)        (514)
   Savings                                             13          (55)         (42)          31          (67)         (36)
   Time deposits                                    1,960       (1,725)         235        2,560       (4,538)      (1,978)
   Repurchases and federal funds
     purchased                                        (21)         (58)         (79)          (9)        (313)        (322)
   Short term borrowings                               23            -           23            -            -            -
   Other borrowings                                     -            -            -         (726)          73         (653)
                                                  -------      -------      -------      -------      -------      -------
      Total                                         2,605       (2,281)         324        2,860       (6,363)      (3,503)
                                                  -------      -------      -------      -------      -------      -------
 Net interest income                              $ 2,819      $(1,394)     $ 1,425      $ 3,817      $    73      $ 3,890
                                                  =======      =======      =======      =======      =======      =======


-----------
<FN>
(1)  The volume variance reflects the change in the average balance  outstanding
     multiplied by the actual average rate during the prior period.
(2)  The rate variance reflects the change in the actual average rate multiplied
     by the average balance  outstanding during the prior period.  Changes which
     are not solely due to volume  changes  or solely due to rate  changes  have
     been attributed to rate changes.
</FN>
</TABLE>












                                       14
<PAGE>




             Table 2: Quarterly Average Balances - Yields and Rates


<TABLE>
                                                Three Months Ended                     Three Months Ended
                                                 September 30, 2003                     September 30, 2002
                                       ----------------------------------     -----------------------------------
                                                      Interest                              Interest
                                        Average      Income or    Average      Average     Income or      Average
                                        Balance       Expense       Rate       Balance      Expense         Rate
                                       ----------    ----------    ------     ---------    ----------      ------
                                                                       (dollars in thousands)
ASSETS:
<S>                                    <C>           <C>            <C>       <C>          <C>              <C>
  Federal funds sold                   $    7,745    $       18     0.92%     $   2,572    $       11       1.70%
  Investment securities
    available for sale                     63,960           509     3.16         51,388           552       4.26
  Investment securities
    held to maturity                       15,878           202     5.05          1,620            24       5.88
  Loans (1)                               635,170        10,101     6.31        566,236        10,119       7.09
  Interest bearing deposits                23,443            59     1.00          1,942            10       2.04
                                       ----------    ----------    ------     ---------    ----------      ------

TOTAL EARNING ASSETS                      746,196        10,889     5.79        623,758        10,716       6.82
  All other assets                         50,356                                53,927
                                       ----------                             ---------

TOTAL ASSETS                           $  796,552                             $ 677,685
                                       ==========                             =========

LIABILITIES AND
  SHAREHOLDERS' EQUITY:
  NOW and money markets                $  247,017    $      849     1.36%     $ 200,605    $      924       1.83%
  Savings                                  24,926            22     0.35         22,323            42       0.75
  Time deposits                           346,420         2,693     3.08        297,245         2,767       3.69
  Repurchases and federal
     funds purchased                       12,428            23     0.73         12,803            50       1.55
 Short term borrowings                      1,342             9     2.66              -             -          -
 Other borrowings (2)                      10,000           165     6.55         10,000           165       6.55
                                       ----------    ----------    ------     ---------    ----------      ------
TOTAL INTEREST BEARING
  LIABILITIES                             642,133         3,761     2.32        542,976         3,948       2.88
  Demand deposits                          94,566                                80,029
  Other liabilities                         5,991                                 5,389
  Shareholders' equity                     53,862                                49,291
                                       ----------                             ---------

TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY                 $  796,552                             $ 677,685
                                       ==========                             =========

                                                                   ------                                  ------
INTEREST SPREAD (3)                                                 3.47%                                   3.94%
                                                                   ======                                  ======

                                                     ----------                            ----------
NET INTEREST INCOME                                  $    7,128                            $    6,768
                                                     ==========                            ==========

NET INTEREST MARGIN (4)                                             3.79%                                   4.30%
                                                                   ======                                  ======

---------------
<FN>
(1)  Interest  income on average loans includes loan fee recognition of $114,000
     and $146,000 in 2003 and 2002, respectively.
(2)  Interest  expense  and  average  rate  amounts  include  the  impact of the
     Company's $10 million pay-fixed interest rate swap that is accounted for as
     a cash flow hedge of other borrowings.
(3)  Represents the average rate earned minus average rate paid.
(4)  Represents net interest income divided by total earning assets.
</FN>
</TABLE>

                                       15
<PAGE>



     Table 2a: Analysis of Quarterly Changes in Interest Income and Expense


<TABLE>
                                                                NET CHANGE SEPTEMBER 30,               NET CHANGE SEPTEMBER 30,
                                                               2002-2003 ATTRIBUTABLE TO:             2001-2002 ATTRIBUTABLE TO:
                                                               --------------------------             --------------------------
                                                                                      Net                                    Net
                                                          Volume (1)    Rate (2)     Change      Volume (1)   Rate (2)      Change
                                                          ---------    ----------   ---------    ----------   ---------    ---------
                                                                                         (thousands)
INTEREST INCOME:
<S>                                                        <C>          <C>          <C>          <C>          <C>          <C>
   Federal funds sold                                      $    22      $   (15)     $     7      $   (43)     $   (12)     $   (55)
   Investment securities available for sale                    135         (178)         (43)         252         (160)          92
   Investment securities held to maturity                      211          (33)         178          (66)           -          (66)
   Loans                                                     1,232       (1,250)         (18)       1,688       (1,471)         217
   Interest bearing deposits                                   111          (62)          49           13           (9)           4
                                                           --------     --------     --------     --------     --------     --------
      Total                                                  1,711       (1,538)         173        1,844       (1,652)         192
                                                           --------     --------     --------     --------     --------     --------


INTEREST EXPENSE:
   NOW and money markets                                       214         (289)         (75)         253         (407)        (154)
   Savings                                                       5          (25)         (20)           7          (14)          (7)
   Time deposits                                               457         (531)         (74)         596       (1,497)        (901)
   Repurchases and federal funds
     purchased                                                  (2)         (25)         (27)         (13)         (58)         (71)
   Short term borrowings                                         9            -            9         (210)           -         (210)
   Other borrowings                                              -            -            -           64           35           99
                                                           --------     --------     --------     --------     --------     --------

      Total                                                    683         (870)        (187)         697       (1,941)      (1,244)
                                                           --------     --------     --------     --------     --------     --------
Net interest income                                        $ 1,028      $  (668)     $   360      $ 1,147      $   289      $ 1,436
                                                           ========     ========     ========     ========     ========     ========

-----------
<FN>
(1)  The volume variance reflects the change in the average balance  outstanding
     multiplied by the actual average rate during the prior period.
(2)  The rate variance reflects the change in the actual average rate multiplied
     by the average balance  outstanding during the prior period.  Changes which
     are not solely due to volume  changes  or solely due to rate  changes  have
     been attributed to rate changes.
</FN>
</TABLE>


Non-Interest Income

     Non-interest income for the three months ended September 30, 2003 decreased
$106,000,  or 7% compared to the  comparable  period in 2002.  The  decrease was
primarily  attributed to the lower level of secondary market mortgage income due
to a temporary  reduction in loan production staff resulting from organizational
changes within the mortgage function and a decline in mortgage production volume
resulting  from a general  increase in mortgage  rates during the third quarter.
Non-interest  income for the nine months  ended  September  30,  2003  increased
$481,000,  or 11%,  compared to the nine months ended  September  30, 2002.  The
increase was attributed to a $382,000 gain on the sale of investment  securities
during the 2003 second quarter.  The securities sold were short dated,  callable
agency debt  instruments  with premiums  resulting from continued  interest rate
declines and were sold as a partial hedge of the continued  margin  compression.
Other  changes  in  non-interest  income  for the three and nine  month  periods
include   increases  in  deposit   service  charges  of  $67,000  and  $272,000,
respectively,  and a  $55,000  gain on the  sale of the  Company's  credit  card
portfolio  during the third  quarter of 2003.  These  increases  were  partially
offset by declines in secondary  market  mortgage  fees of $268,000 and $372,000
for three and nine month periods ended September 30, 2003 compared to comparable
periods in 2002. Other fee income,  which includes credit card fees, credit life
insurance  income,  safe  deposit box fees,  discount  brokerage  fees and other
miscellaneous fees,  increased $84,000 and $179,000 for the three and nine month
periods ended September 30, 2003 compared to the corresponding 2002 periods.

     Non-interest  income,  annualized,  as a percentage  of average  assets was
0.85% for the nine months ended  September  30, 2003,  compared to 0.92% for the
comparable period in 2002.



                                       16
<PAGE>

Non-Interest Expense

     Non-interest  expense was $5.5 million and $16.3  million for the three and
nine month periods  ended  September 30, 2003 compared to $5.4 million and $15.8
million for the respective 2002 periods, an increase of 2% and 3%, respectively.
This  increase is primarily  attributable  to nominal  increases  in  occupancy,
equipment and data processing  expenses.  Annualized,  non-interest expense as a
percentage  of  average  assets  was 2.8% for the  first  nine  months  of 2003,
compared  to 3.3% for the  2002  comparable  period,  reflecting  the  Company's
continued focus on overhead expense  management.  Salaries and employee benefits
decreased  $52,000 or 1% to $8.3 million for the nine months ended September 30,
2003,  compared to $8.4 million for the same period in 2002.  As a percentage of
average assets annualized, salaries and employee benefits decreased to 1.4% from
1.7%,  for the  first  nine  months  of 2003  and  2002,  respectively.  Average
full-time  equivalent  employees  increased by nine from  September  30, 2002 to
September 30, 2003.

     Occupancy expense (including premises,  furniture,  fixtures and equipment)
increased  in the three and nine  month  periods of 2003 by  $62,000,  or 7% and
$189,000, or 7%, respectively, over the comparable periods in 2002. The increase
is primarily  attributable to an increase in property  taxes,  building and data
processing  depreciation  expenses and the opening of one branch in Gainesville.
These  expenses  are  expected to increase  as the Company  adds one  additional
branch over the remainder of 2003. During the third quarter,  the Company opened
its third Alachua  County branch in the Magnolia  Parke section of  Gainesville.
The  Company  also  anticipates  opening  its new Glen St.  Mary branch in Baker
County during the fourth quarter of this year.

     Other  operating  expenses  increased  $359,000,  or 7%, in the first  nine
months of 2003 compared to the same period in 2002. The following  table details
the areas of  significance  in other  operating  expenses.  The increase in data
processing fees is due to higher core processing expenses associated with higher
transaction   volumes  and  costs   associated   with   information   technology
enhancements implemented during the year. Loan expenses increased as a result of
the increase in non-performing loans in the fourth quarter of 2002. The increase
in other  expenses was due to a $63,000 loss on the sale of certain  excess bank
real estate during the second quarter.

                       Table 3: Other Operating Expenses

                                                 Nine Months Ended
                                                     September 30,
                                             2003                    2002
                                         ------------             -----------
                                                     (thousands)
Data processing                            $1,111                  $  990
Communications                                591                     572
Legal and professional                        579                     544
Postage and delivery                          557                     532
Amortization of intangible assets             545                     561
Advertising and promotion                     391                     361
Supplies                                      294                     320
Regulatory fees                               203                     177
Loan expenses                                 201                     130
Administrative                                110                     124
Other general operating                        90                      79
Education expense                              82                      96
Insurance and bonding                          77                      56
Directors fees                                 73                      65
Dues and subscriptions                         70                      70
Other                                         311                     249
                                           ------                  ------
Total other operating expenses             $5,285                  $4,926
                                           ======                  ======

Income Taxes

     The Company's income tax expense in interim reporting periods is determined
by estimating the combined federal and state effective tax rate for the year and
applying such rate to interim pre-tax  income.  The Company's  estimated  annual
effective tax rate for 2003 is approximately 36.5%.



                                       17
<PAGE>


LIQUIDITY AND INTEREST RATE SENSITIVITY

     Liquidity  is defined as the  ability  of the  Company to meet  anticipated
demands  for  funds  under  credit  commitments  and  deposit  withdrawals  at a
reasonable cost on a timely basis.  Management  measures the Company's liquidity
position by giving consideration to both on-and off-balance sheet sources of and
demands  for funds on a daily and weekly  basis.  These funds can be obtained by
converting  assets to cash or by attracting new deposits.  Average liquid assets
(cash and amounts  due from banks,  interest  bearing  deposits in other  banks,
federal funds sold and investment  securities available for sale) totaled $125.8
million and  represented  18% of average  total  deposits  during the first nine
months of 2003,  compared to $65.1 million and 11% for 2002.  Average loans were
89% and 95% of average  deposits for the nine-month  periods ended September 30,
2003 and 2002, respectively.

     In addition to core  deposit  growth,  sources of funds  available  to meet
liquidity  demands include cash received  through ordinary  business  activities
such as the  collection  of interest  and fees,  federal  funds  sold,  loan and
investment  maturities  and lines for the purchase of federal  funds by the Bank
from its principal correspondent banks. The Bank is also a member of the Federal
Home Loan Bank and has access to short-term  and long-term  funds.  In addition,
the Company entered into a line of credit with one of its correspondent banks in
April 2001.  The  agreement was amended in October 2001 to reflect the following
structures:  (1) a $3 million revolving line of credit maturing on June 30, 2004
with interest floating quarterly at 3-month Libor plus 145 basis points; and (2)
a $10  million  term  loan  maturing  October  3, 2006  with  interest  floating
quarterly at 3-month Libor plus 170 basis points. Semi-annual principal payments
of  approximately  $714,000  begin in 2004.  The Company also entered into a $10
million  pay-fixed  interest rate swap with the same bank.  The fixed rate under
the interest  rate swap is 6.45% and the variable rate is based on 3-month Libor
plus 170 basis points.  The swap matures October 3, 2006 and has been designated
as a cash flow hedge of the variable  interest  payments on the $10 million term
loan noted in (2) above.  The fair value of the interest  rate swap at September
30, 2003 was approximately ($628,000). There was $1.5 million outstanding on the
$3 million line of credit on September 30, 2003.  The term loan,  line of credit
and interest rate swap are all collateralized by 100% of the common stock of the
Bank.

     In connection with the term loan and line of credit agreement,  the Company
is required to maintain compliance with certain covenants and restrictions.  The
following  financial covenants are to be maintained on a quarterly basis and are
calculated at the Bank-level:

o    Interest coverage ratio of greater than or equal to 2.00x through September
     30, 2003.
o    Debt  service  coverage  ratio of  greater  than or equal to 0.85x  through
     September 30, 2002; 1.00x from October 1, 2002 through  September 30, 2003;
     1.25x from  October 1, 2003  through  September  30,  2004;  and 1.50x from
     October 1, 2004 through maturity.
o    Ratio of non-performing  assets to total loans plus other real estate owned
     and repossessed assets of less than or equal to 1.25%.
o    Maintenance  of tier 1 and total risk based  capital  ratios  that meet the
     benchmarks for consideration as a "well-capitalized" institution (currently
     6% and 10%, respectively). Also, maintenance of a leverage capital ratio of
     at least 6%.

         In addition, the Company is subject to the following restrictions:

o    No additional debt is permitted without consent of the lender.
o    No increases in  dividends  paid by the Company to its common  shareholders
     are permitted without consent of the lender.

     Failure to  maintain  any of these  covenants  would  place the  Company in
default of the line of credit  agreement.  In such a case,  absent  any  waivers
obtained from the lender,  all amounts  payable could be accelerated  and become


                                       18
<PAGE>

due  immediately.  As of September 30, 2003, the Company was in compliance  with
all covenants.

     Interest rate sensitivity refers to the responsiveness of  interest-earning
assets and interest-bearing liabilities to changes in market interest rates. The
rate  sensitive   position,   or  gap,  is  the  difference  in  the  volume  of
rate-sensitive assets and liabilities, at a given time interval,  including both
floating  rate  instruments  and  instruments  that  are  approaching  maturity.
Management  generally  attempts  to  maintain a balance  between  rate-sensitive
assets and  liabilities  as the exposure  period is  lengthened  to minimize the
overall interest rate risk to the Company.

     The Company's  liquidity position increased during the first nine months of
2003 as  compared  to the first  nine  months of 2002 as average  loan  balances
increased $79.2 million while deposit growth  increased  $128.4 million.  Excess
funds were deployed in investment  securities,  interest  bearing  deposits with
banks and  federal  funds  sold.  The  Company  continues  to  maintain an asset
sensitive  position with respect to net interest income.  The Company  currently
anticipates  that market  interest  rates will remain at current low levels into
2004 with increases then expected to be slow and protracted.

     The Company's  gap and liquidity  positions are reviewed on a regular basis
by management to determine whether or not changes in policies and procedures are
necessary to achieve financial goals.  This analysis includes  assumptions about
balance  sheet growth and related mix as well as pricing and  maturity  profile.
Included in the review is an internal  analysis  of the  possible  impact on net
interest income due to market changes in interest rates.  Based on this internal
analysis,  at September  30, 2003, a gradual  increase in interest  rates of 200
basis  points  would  have  increased  net  interest  income  over  the  ensuing
twelve-month  period by 6.57% as compared to a projection  under stable rates. A
gradual  decrease  in interest  rates of 200 basis  points over this same period
would have  decreased net interest  income by 5.47% as compared to a stable rate
environment.  At  September  30, 2003,  the Bank's net economic  value ratio was
8.93% and 9.43%,  assuming a gradual  increase  or  decrease,  respectively,  in
interest  rates of 200 basis  points over a 12-month  period.  The net  economic
value ratio is the market value of equity  divided by the market value of assets
and measures the Bank's capitalization, talking into account balance sheet gains
and losses. The net economic value ratio, however, does not place a value on the
Company's core deposit relationships.  The computations of interest rate risk do
not necessarily  include certain actions that management may undertake to manage
this risk in response to anticipated changes in interest rates.

     Table 4, "Rate  Sensitivity  Analysis",  presents rate sensitive assets and
liabilities,  separating  the assets  and  liabilities  into fixed and  variable
interest rate categories.  The estimated fair value of each instrument  category
is also shown in the table.  While these fair  values are based on  management's
judgment of the most appropriate  factors,  there is no assurance that, were the
Company  to have  disposed  of such  instruments  at  September  30,  2003,  the
estimated fair values would  necessarily  have been achieved at that date, since
market values may differ depending on various circumstances.







                                       19
<PAGE>

<TABLE>

Table 4: Rate Sensitivity Analysis
September 30, 2003

(dollars in thousands)                                                                                                      Fair
                                      1 Year      2 Years     3 Years     4 Years     5 Years     Beyond      TOTAL         Value
                                     ---------   ---------   ---------   ---------   ---------   ---------   ---------    ---------
INTEREST-EARNING ASSETS:
------------------------
<S>                                  <C>         <C>         <C>         <C>         <C>         <C>         <C>          <C>
Gross Loans
     Fixed rate loans                $ 127,846   $  57,041   $  42,885   $  48,982   $  50,886   $ 124,357   $ 451,997    $ 460,974
       Average interest rate              6.24%       6.78%       6.83%       6.87%       6.43%       6.07%       6.41%

     Variable rate loans                56,034      25,344      25,284       9,539      11,178      75,264     202,643      207,057
       Average interest rate              4.43%       4.64%       4.76%       5.94%       6.04%       6.84%       5.55%

Investment securities (1)
     Fixed rate investments              4,023           -           -       5,510           -      78,311      87,844       87,026
       Average interest rate              1.22%                               2.15%                   4.34%       4.06%

     Variable rate investments               -           -           -           -           -         344         344          353
       Average interest rate                                                                          4.06%       4.06%

Federal funds sold                         500           -           -           -           -           -         500          500
       Average interest rate              0.90%                                                                   0.90%

Other earning assets (2)                13,606           -           -           -           -           -      13,606       13,606
       Average interest rate              1.87%                                                                   1.87%
                                     ---------   ---------   ---------   ---------   ---------   ---------   ---------    ---------

Total interest-earning assets        $ 202,009   $  82,385   $  68,169   $  64,031   $  62,064   $ 278,276   $ 756,934    $ 769,516
       Average interest rate              5.33%       6.12%       6.06%       6.33%       6.36%       5.79%       5.82%
                                     =========   =========   =========   =========   =========   =========   =========    =========

INTEREST-BEARING LIABILITIES:
-----------------------------

NOW                                  $  66,764   $       -   $       -   $       -   $       -   $  65,914   $ 132,678    $ 132,678
       Average interest rate              1.50%                                                       0.21%       0.86%

Money market                           125,917           -           -           -           -       4,553     130,470      130,470
       Average interest rate              1.97%                                                       1.08%       1.94%

Savings                                      -           -           -           -           -      25,401      25,401       25,401
       Average interest rate                                                                          0.35%       0.35%

CD's under $100,000                    114,712      36,222      19,031       6,343         553           -     176,861      178,467
       Average interest rate              2.38%       3.77%       3.89%       3.76%       4.08%                   2.88%

CD's $100,000 and over                 116,355      30,323      11,553       7,746       1,696           -     167,673      169,536
       Average interest rate              2.77%       3.75%       3.87%       4.20%       4.72%                   3.11%

Securities sold under
   repurchase agreements and
   federal funds purchased              11,476           -           -           -           -           -      11,476       11,476
       Average interest rate              0.72%                                                                   0.72%

Short-term borrowings                    1,500           -           -           -           -           -       1,500        1,500
       Average interest rate              2.58%                                                                   2.58%

Other borrowings  (3)                      714       1,428       7,858           -           -           -      10,000       10,000
       Average interest rate              3.64%       3.64%       3.64%                                           3.64%
                                     ---------   ---------   ---------   ---------   ---------   ---------   ---------    ---------

Total interest-bearing liabilities   $ 437,438   $  67,973   $  38,442   $  14,089   $   2,249   $  95,868   $ 656,059    $ 659,528
       Average interest rate              2.19%       3.76%       3.83%       4.00%       4.56%       0.29%       2.22%
                                     =========   =========   =========   =========   =========   =========   =========    =========

-------------
<FN>
(1)  Securities  available for sale are shown at their amortized cost, excluding
     market value adjustment for net unrealized losses of ($719,000).
(2)  Represents  interest  bearing  deposits  with Banks,  Federal  Reserve Bank
     Stock, Federal Home Loan Bank Stock and other marketable equity securities.
(3)  Other  borrowings  consists  of a term loan  maturing  October 3, 2006 that
     bears interest at 3-month Libor plus 170 basis points. The variable rate is
     reset quarterly.  The variable interest payments on the term loan are being
     hedged  through an interest rate swap.  Under the interest  rate swap,  the
     Company pays a fixed rate of interest of 6.45% and receives a floating rate
     of interest of 3-month Libor plus 170 basis points. Other terms of the swap
     mirror those of the term debt.
</FN>
</TABLE>

                                       20
<PAGE>

     Core  deposits,  which  represent all deposits  other than time deposits in
excess of  $100,000,  were 77% of total  deposits  at  September  30,  2003,  up
slightly from 75% at December 31, 2002.  The Bank closely  monitors its reliance
on time  deposits in excess of $100,000,  which are  generally  considered  less
stable and less  reliable  than core  deposits.  Table 5, below,  sets forth the
amounts of time  deposits  with  balances of $100,000 or more that mature within
indicated  periods.  The Bank  does  not,  nor has it ever,  solicited  brokered
deposits. Essentially all of the time deposits with balances of $100,000 or more
are from customers in the Bank's primary markets.

             Table 5: Maturity of Time Deposits of $100,000 or More
                               September 30, 2003
                             (dollars in thousands)

                                                       Amount
                                                       ------
Three months or less                                 $  33,600
Three through six months                                29,265
Six through twelve months                               53,490
Over twelve months                                      51,318
                                                     ---------
      Total                                          $ 167,673
                                                     =========

EARNING ASSETS

Loans

     Lending  activities  are the Company's  single  largest  source of revenue.
Although  management is continually  evaluating  alternative sources of revenue,
lending  is  the  major  segment  of  the  Company's  business  and  is  key  to
profitability.  For the first nine  months of 2003,  average  loans were  $619.7
million and were 89% of average deposits, compared to $540.5 million and 95% for
the same period in 2002.  During the third  quarter  2003,  the Company sold its
credit  card  portfolio  to another  financial  institution.  The  Company  sold
accounts  with  an  outstanding  balance  of  $976,000  for  proceeds,   net  of
transaction  costs,  of  $1,031,000.  In addition to the sale,  the Company also
entered  into a credit  card  marketing  arrangement  with  the  same  financial
institution.  Under the marketing agreement,  the Company will offer credit card
products issued through the other financial institution.  The cards will display
the CNB logo and the Company will receive a fee for each account  opened,  along
with a share of  interchange  income.  The card balances will be retained by the
other institution. The following table reflects the composition of the Company's
loan portfolio as of September 30, 2003 compared to December 31, 2002.

                       Table 6: Loan Portfolio Composition

                                            September 30,      December 31,
                                                2003              2002
                                            ------------       -----------
                                                      (thousands)
Commercial                                   $ 111,234           $ 111,033
Commercial real estate                         356,839             324,525
Mortgages (including home equity)              149,304             132,513
Consumer                                        31,325              32,199
Credit card                                          -               1,164
Tax free                                         5,938               4,351
                                             ---------           ---------
Total loans, net of unearned income            654,640             605,785
Less: allowance for loan losses                 (7,048)             (6,574)
                                             ---------           ---------

Net loans                                    $ 647,592           $ 599,211
                                             =========           =========

     Loan  concentrations are considered to exist where there are amounts loaned
to multiple  borrowers engaged in similar activities which collectively would be
similarly  impacted by economic or other  conditions  and when the total of such
amounts  exceeds 25% of total capital.  Due to the lack of diversified  industry
and the relative  proximity of markets served, the Company has concentrations of
loans from the North Florida  region as well as the types of loans  funded.  The
Bank's four  largest  concentration  categories  are:  Land  Development  ($34.5
million),  Professional ($32.4 million),  Commercial Real Estate ($29.2 million)
and Commercial Construction ($25.8 million).

                                       21
<PAGE>


Loan Quality

     The  allowance  for loan loss is  established  through a provision for loan
loss charged to expense.  Loans are charged  against the allowance for loan loss
when management  believes that the  collectibility of the principal is unlikely.
The  allowance  for loan  loss is an amount  that  management  believes  will be
adequate  to absorb  inherent  losses on  existing  loans that are  probable  of
becoming  uncollectible based on evaluations of the collectibility of the loans.
The evaluations take into consideration such objective factors as changes in the
nature and volume of the loan  portfolio and  historical  loss  experience.  The
evaluation also considers certain  subjective  factors such as overall portfolio
quality,  review of specific problem loans and current economic  conditions that
may affect the  borrowers'  ability to pay. The level of the  allowance for loan
loss is also impacted by increases and decreases in loans  outstanding,  because
either more or less allowance is required as the amount of the Company's  credit
exposure  changes.  To the extent  actual loan  losses  differ  materially  from
management's   estimate  of  these  subjective   factors,   loan  growth/run-off
accelerates  or the mix of loan types  changes,  the level of the  provision for
loan loss, and related allowance, can and will fluctuate.

     The  allowance  for loan losses on September  30, 2003,  was 1.08% of total
loans,  compared to 1.09% at December 31, 2002 and 1.05% at September  30, 2002.
Table 7: "Allocation of Allowance for Loan Losses",  set forth below,  indicates
the specific reserves allocated by loan type.

                Table 7: Allocation of Allowance for Loan Losses

<TABLE>
                                                  September 30,                 December 31,
                                                      2003                         2002
                                              ------------------------    --------------------------
                                                         Percent of                    Percent of
                                                         Loans in Each                 Loans in Each
                                                         Category to                   Category to
                                              Amount     Total Loans       Amount      Total Loans
                                             --------   -------------     --------   ---------------
                                                            (dollars in thousands)
<S>                                           <C>           <C>            <C>             <C>
Commercial                                    $2,235        17.0 %         $1,991          18.3%
Commercial real estate                         3,358        54.5            3,180          53.6
Mortgages (including home equity)                663        22.8              495          21.9
Consumer                                         753         4.8              802           5.3
Credit card                                        -           -              106           0.2
Tax free                                           -         0.9                -           0.7
Unallocated                                       39           -                -             -
                                              ------       -----           ------         -----
Total                                         $7,048       100.0%          $6,574         100.0%
                                              ======       =====           ======         =====
</TABLE>

     Non-performing  assets consist of non-accrual loans, loans past due 90 days
or more and still accruing interest,  other real estate owned and repossessions.
Non-performing  assets  decreased  47% from December 31, 2002 to $4.3 million at
September  30,  2003.  Non-performing  assets as a  percentage  of total  assets
decreased  to 0.53% on September  30, 2003 from 1.11% on December 31, 2002.  The
decline was primarily the result of the  placement of a single  commercial  real
estate loan back into performing  status during the third quarter 2003. The loan
was placed back on  performing  status due to  favorable  resolution  of certain
outstanding issues and an adequate demonstration of repayment.

                         Table 8: Non-Performing Assets
                                              September 30,       December 31,
                                                  2003               2002
                                                 ------             -------
                                                   (dollars in thousands)
Non-accrual loans                                $3,876             $5,611
Past due loans 90 days or
   more and still accruing                          236              2,439
Other real estate owned
   and repossessions                                161                 24
                                                 ------             ------
Total non-performing assets                      $4,273             $8,074
                                                 ======             ======

Percent of total assets                           0.53%              1.11%



                                       22
<PAGE>


                 Table 9: Activity in Allowance for Loan Losses
<TABLE>
                                                                        September 30,
                                                                 2003                  2002
                                                              ----------            ----------
                                                                   (dollars in thousands)

<S>                                                           <C>                   <C>
Balance at beginning of year                                  $    6,574            $    5,205
Loans charged-off:
  Commercial                                                       (731)                 (545)
  Commercial real estate                                            (99)                  (33)
  Mortgage (including home equity)                                 (41)                   (68)
  Consumer                                                         (338)                 (230)
  Credit card                                                       (47)                  (84)
  Tax free                                                             -                    -
                                                              ----------            ----------
      Total loans charged-off                                     (1,256)                 (960)
Recoveries on loans previously charged-off:
  Commercial                                                          23                    34
  Commercial real estate                                               -                    32
  Mortgage (including home equity)                                     1                    29
  Consumer                                                            50                    75
  Credit card                                                          6                     5
  Tax free                                                             -                    -
                                                              ----------            ----------
      Total loan recoveries                                           80                   175
                                                               ---------            ----------
        Net loans charged-off                                     (1,176)                 (785)
                                                              ----------            ----------

Provision for loan losses charged to expense                       1,650                 1,625
                                                              ----------            ----------
Ending balance                                                $    7,048            $    6,045
                                                              ==========            ==========

Total loans outstanding                                       $  654,640            $  573,767
Average loans outstanding                                     $  619,712            $  540,500
Allowance for loan losses to loans outstanding                     1.08%                 1.05%
Net charge-offs to average loans outstanding, annualized           0.25%                 0.19%
</TABLE>

Investment Portfolio

     The Company uses its securities  portfolio to assist in maintaining  proper
interest rate sensitivity in the balance sheet, to provide  securities to pledge
as  collateral  for public  funds and  repurchase  agreements  and to provide an
alternative  investment  for  available  funds.  The  total  recorded  value  of
securities  was $90.6  million at September  30,  2003,  an increase of 82% from
$49.7  million at the end of 2002.  The increase was primarily the result of the
Company's desire to invest a portion of its excess  liquidity into  longer-dated
investments  in order to take  advantage of higher yields on funds that were not
expected to be immediately deployed into loans.

     Securities are classified as either held-to-maturity or available-for-sale.
At September 30, 2003 investment  securities  available-for-sale  made up 67% of
the  total   investment   portfolio  of  $90.6   million.   Securities   in  the
available-for-sale portfolio are recorded at fair value on the balance sheet and
unrealized gains and losses  associated with these securities are recorded,  net
of deferred income tax, as accumulated other  comprehensive  income (loss). Also
included in other comprehensive income (loss) are accumulated net gains (losses)
on cash flow hedges.  At September  30, 2003,  accumulated  other  comprehensive
income (loss), net of tax, was ($838,000),  compared to $108,000 at December 31,
2002. Of this amount,  ($451,000) of unrealized  losses,  net of deferred income
tax,  were  related  to  the  securities  available  for  sale  portfolio  while
($387,000) of unrealized  losses,  net of deferred  income tax, were  associated
with cash flow hedges.

     The Company invests  primarily in direct  obligations of the United States,
obligations  guaranteed  as to principal  and interest by the United  States and
obligations  of agencies  of the United  States  government.  In  addition,  the
Company enters into federal funds transactions with its principal  correspondent
banks.  The Federal Reserve Bank and FHLB also require equity  investments to be
maintained by the Company.

     The following  tables set forth the maturity  distribution and the weighted
average yields of the Company's investment portfolio.


                                       23
<PAGE>


          Table 10: Maturity Distribution of Investment Securities (1)
                               September 30, 2003

<TABLE>
(dollars in thousands)                            Held to Maturity                    Available for Sale
-------------------------------------------------------------------------------------------------------------
                                            Amortized        Estimated          Amortized         Estimated
                                              Cost          Market Value          Cost           Market Value
                                            ---------       ------------        ---------        ------------
<S>                                          <C>              <C>                <C>               <C>
U.S. Treasury:
   One year or less                          $     -          $      -           $ 4,023           $ 4,027
                                             -------           -------           -------           -------
Total U.S. Treasury                                -                 -             4,023             4,027

 U.S. Government Agencies
 and Corporations (2):
   Over one through five years                     -                 -            13,010            12,939
   Over five through ten years                 7,500             7,479             2,500             2,522
   Over ten years                             17,500            17,436            10,000             9,481
                                             -------           -------           -------           -------
Total U.S. Government Agencies
 and Corporations                             25,000            24,915            25,510            24,942

Obligations of State and Political
 Subdivisions:
   Over five through ten years                     -                 -               609               639
   Over ten years                                  -                 -             1,562             1,579
                                             -------           -------           -------           -------
Total Obligations of State and
 Political Subdivisions                            -                 -             2,171             2,218

Mortgage-Backed Securities (3):
   Over one through five years                     -                 -             1,448             1,466
   Over five through ten years                 4,693             4,688            17,008            16,852
   Over ten years                                  -                 -             8,335             8,271
                                             -------           -------           -------           -------
Total Mortgage-Backed Securities               4,693             4,688            26,791            26,589

Other Securities:
   Over ten years (4)                              -                 -             3,119             3,119
                                             -------           -------           -------           -------
Total Other Securities                             -                 -             3,119             3,119
                                             =======           =======           =======           =======
Total Securities                             $29,693           $29,603           $61,614           $60,895
                                             =======           =======           =======           =======


-----------
<FN>
(1)  All securities,  excluding Obligations of State and Political Subdivisions,
     are taxable.
(2)  Includes  securities  that may be callable  prior to their stated  maturity
     date.
(3)  Represents  investments in mortgage-backed  securities which are subject to
     early repayment.
(4)  Represents  investment  in Federal  Reserve Bank and Federal Home Loan Bank
     stock and other marketable equity securities.
</FN>
</TABLE>

             Table 11: Weighted Average Yield by Range of Maturities
<TABLE>
                                              September                 December               September
                                                30, 2003                 31,2002                30, 2002


<S>                                              <C>                       <C>                    <C>
One Year or Less                                 1.22%                     2.41%                  2.44%
More than One through Five Years                 2.15%                     4.87%                  5.23%
More than Five through Ten Years                 3.87%                     4.48%                  4.99%
More than Ten Years (1)                          4.84%                     4.46%                  4.58%

----------
<FN>

(1)  Includes adjustable rate  mortgage-backed  securities which are repriceable
     within one year.
</FN>
</TABLE>

Other Earning Assets

     Temporary investment needs are created in the day-to-day liquidity movement
of the Bank and are satisfied by selling excess funds overnight (Fed Funds Sold)
to  larger,  well  capitalized  banking  institutions.  If  these  funds  become


                                       24
<PAGE>

excessive,  management  determines what portion, if any, of the liquidity may be
rolled into longer term investments as securities.


FUNDING SOURCES

Deposits

     The Bank does not rely on  purchased  or  brokered  deposits as a source of
funds.  Instead,  competing  for  deposits  within its market area serves as the
Bank's  fundamental tool in providing a source of funds to be invested primarily
in loans.  The following  table sets forth certain  deposit  categories  for the
periods ended September 30, 2003 and December 31, 2002.

                            Table 12: Total Deposits

                                                    September 30,   December 31,
                                                        2003            2002
                                                      --------       ----------
                                                              (thousands)
Non-interest bearing:
        Demand checking                                $ 94,720         $ 80,065
Interest bearing:
        NOW checking                                    132,678          118,619
        Money market checking                           130,470           95,354
        Savings                                          25,401           22,311
        Certificates of deposit                         344,534          332,287
                                                       --------         --------

Total deposits                                         $727,803         $648,636
                                                       ========         ========


CAPITAL RESOURCES

     Shareholders'  equity at September 30, 2003 was $54.2 million,  as compared
to $50.9  million at  December  31,  2002.  During  the first,  second and third
quarters of 2003, the Board of Directors declared  quarterly  dividends of $0.06
per  share,  an  increase  of 20% from the  fourth  quarter  2002  dividend.  At
September  30, 2003,  the  Company's  common stock had a book value of $8.72 per
share compared to $8.31 per share at December 31, 2002.

     The  Company  is  subject  to  various  regulatory   capital   requirements
administered by the federal banking agencies. Under capital adequacy guidelines,
the Company must meet  specific  capital  guidelines  that involve  quantitative
measures of its assets,  liabilities,  and  certain  off-balance  sheet items as
calculated  under   regulatory   accounting   practices.   Capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
component, risk weightings and other factors.

     Quantitative  measures as defined by regulation  and  established to ensure
capital  adequacy  require  the Bank to maintain  minimum  amounts and ratios of
Total and Tier 1 capital to  risk-weighted  assets and Tier 1 capital to average
assets.  If such  minimum  amounts  and ratios are met,  the Bank is  considered
"adequately  capitalized."  If a bank exceeds the  requirements  of  "adequately
capitalized" and meets even more stringent minimum  standards,  it is considered
to be "well  capitalized."  As of September  30, 2003,  the Bank met all capital
adequacy requirements to which it is subject.

     At  September  30,  2003 and 2002,  the  Company's  Tier 1  capital,  Total
risk-based capital and Tier 1 leverage ratios were are as follows:


                                       25
<PAGE>





                            Table 13: Capital Ratios

<TABLE>
                                                  September 30,             Well-Capitalized       Regulatory
                                            2003              2002            Requirements          Minimums
                                        ------------       ------------       ------------          --------
<S>                                         <C>                <C>                 <C>                <C>
Risk Based Capital Ratios:
     Tier 1 Capital Ratio                   7.7%               7.6%                6.0%               4.0%

     Total Capital to
       Risk-Weighted Assets                 8.8%               8.7%               10.0%               8.0%

Tier 1 Leverage Ratio                       6.3%               6.4%                5.0%               4.0%
</TABLE>


CRITICAL ACCOUNTING POLICIES

     A  critical  accounting  policy is one that is both very  important  to the
portrayal of the Company's  financial  condition and requires  management's most
difficult,  subjective or complex  judgments.  The circumstances that make these
judgments  difficult,  subjective  or  complex  have to do with the need to make
estimates about the effect of matters that are inherently uncertain. The Company
considers the  establishment  and maintenance of the allowance for loan loss and
the accounting for its core deposit  intangible asset to be critical  accounting
policies.

     The  allowance  for loan loss is  established  through a provision for loan
loss charged to expense.  Loans are charged  against the allowance for loan loss
when management  believes that the  collectibility of the principal is unlikely.
The allowance is an amount that  management  believes will be adequate to absorb
inherent  losses  on  existing  loans  that may  become  uncollectible  based on
evaluations  of the  collectibility  of the  loans.  The  evaluations  take into
consideration  such objective factors as changes in the nature and volume of the
loan portfolio and historical  loss  experience.  The evaluation  also considers
certain subjective factors such as overall portfolio quality, review of specific
problem loans and current  economic  conditions  that may affect the  borrowers'
ability to pay.  The level of the  allowance  for loan loss is also  impacted by
increases  and  decreases  in loans  outstanding,  because  either  more or less
allowance is required as the amount of the Company's credit exposure changes. To
the extent actual loan losses differ  materially from  management's  estimate of
these subjective  factors,  loan  growth/run-off  accelerates or the mix of loan
types changes,  the level of the provision for loan loss, and related allowance,
can and will fluctuate.

     The  accounting  for the Company's  core deposit  intangible  asset is also
subject to significant  estimates about future  results.  In connection with the
acquisition of the Lake City and Live Oak branches of Republic Bank in 2001, the
Company  recorded a core deposit  intangible of approximately  $6,000,000.  This
intangible asset is being amortized on a straight-line  basis over its estimated
useful  life of 10 years.  The life of this  asset  was  based on the  estimated
future period of benefit to the Company of the depositor relationships acquired.
To the extent that the deposit  accounts  acquired leave the Company faster than
anticipated,  the amount of the core deposit  intangible  that is amortized each
period could increase  significantly,  thus shortening its useful life.  Through
September  30, 2003,  the  performance  of the depositor  relationships  did not
differ materially from expectations.

            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     In 1997 the  Securities  and  Exchange  Commission  adopted  amendments  to
Regulation S-K, Regulation S-X, and various forms to clarify and expand existing
requirements  for  disclosures  about  derivatives  and market risks inherent in
derivatives  and other financial  instruments.  As noted below, at September 30,
2003, the Company was a party to a single interest rate derivative contract. The
Company also holds other financial instruments, which include investments, loans
and deposit  liabilities.  The release  requires  quantitative  and  qualitative
disclosures  about market risk. See the section  titled  "Liquidity and Interest
Rate Sensitivity" for further discussion on the Company's management of interest
rate risk.

     The Company's sole derivative  contract is a $10 million notional  interest
rate swap that was entered into as a hedge of interest rate risk inherent in the
Company's $10 million term loan.  Under the terms of the swap,  the Company will
receive a variable rate of interest equal to 90-day Libor plus 170 basis points,
reset  quarterly.  The Company will pay a fixed rate of interest  equal to 6.45%


                                       26
<PAGE>

for the life of the  contract.  All cash  flows  are  computed  based on the $10
million  notional amount and are settled  quarterly on a net basis. The contract
matures October 3, 2006 and the notional amount will be reduced by $714,286 on a
semi-annual  basis beginning April 2004. The fair value of the swap at September
30, 2003, including interest accruals, was approximately ($628,000). The swap is
being accounted for as a cash flow hedge of the variable interest payments under
the $10 million term debt.

     Non-derivative  financial instruments that have market risk are included in
Table 3: "Rate Sensitivity  Analysis".  These instruments are shown by maturity,
separated by fixed and variable interest rates. The estimated fair value of each
instrument  category is also shown in the table.  While these  estimates of fair
value are based on management's judgment of the most appropriate factors,  there
is no assurance that,  were the Company to have disposed of such  instruments at
September  30,  2003,  the  estimated  fair values would  necessarily  have been
achieved  at that date,  since  market  values may differ  depending  on various
circumstances.  The  estimated  fair  values at  September  30,  2003  would not
necessarily be considered to apply at subsequent dates.

                             CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     As required by Rule 13a-15 under the  Securities  Exchange Act of 1934 (the
"Exchange Act"), as of the end of the period covered by this report, the Company
carried out an  evaluation of the  effectiveness  of the design and operation of
the Company's  disclosure  controls and procedures.  This evaluation was carried
out under the  supervision  and with the  participation  of the Company's  Chief
Financial Officer and Chief Executive Officer.  Based upon that evaluation,  the
Company's  Chief Financial  Officer and Chief  Executive  Officer have concluded
that the Company's  disclosure controls and procedures are effective in alerting
them to material  information  regarding the Company's  financial  statement and
disclosure  obligation  in order  to allow  the  Company  to meet its  reporting
requirements under the Exchange Act in a timely manner.

Changes in Internal Control

     There have been no changes in internal  controls or in other  factors  that
could  significantly  affect  these  controls  subsequent  to the  date of their
evaluation,   including  any  corrective  actions  with  regard  to  significant
deficiencies and material weaknesses.





                                       27
<PAGE>



                                     PART II
                                OTHER INFORMATION

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

Item 2.  Changes in Securities and Use of Proceeds - Not applicable.

Item 3.  Defaults Upon Senior Securities - Not applicable.

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

Item 5.  Other Information - Not applicable.

Item 6.  Exhibits and Reports -

(a)      Exhibits:

         3i    Articles  of  Incorporation  of  CNB  Florida  Bancshares,   Inc.
               (Exhibit 3(i) to the Company's Annual Report on Form 10-Q/A filed
               with the  Commission  on May 21, 2003 is hereby  incorporated  by
               reference.)
         3ii   By-Laws of CNB Florida  Bancshares,  Inc.  (Exhibit  3(ii) to the
               Company's  Annual Report on Form 10-Q/A filed with the Commission
               on May 21, 2003 is hereby incorporated by reference.)
         31(a) Chief Executive Officer certification  pursuant to Section 302 of
               the Sarbanes-Oxley Act of 2002.
         31(b) Chief Financial Officer certification  pursuant to Section 302 of
               the Sarbanes-Oxley Act of 2002.
         32(a) Chief Executive Officer certification  pursuant to Section 906 of
               the Sarbanes-Oxley Act of 2002.
         32(b) Chief Financial Officer certification  pursuant to Section 906 of
               the Sarbanes-Oxley Act of 2002.

(a)      Reports on Form 8-K:

         On  July 24, 2003, the Company  filed a  Form 8-K to  report  its  2003
         second quarter results.





                                       28
<PAGE>


                                   SIGNATURES



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

                                                CNB Florida Bancshares, Inc.
                                                     (Registrant)


                                              By:    /s/ G. Thomas Frankland
                                                     ---------------------------
                                                     G. Thomas Frankland
                                                     Executive Vice President
                                                     and Chief Financial Officer

                                              Date:  November 12, 2003





                                       29