##### 



U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

|    |  |                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the quarterly period ended
September 30, 2003

|     |  |                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------
|[  ] |  | Transition report under Section 13 or 15(d) of the Exchange
Act for the transition period from ___________
to ___________

Commission file number: 000-23991

CNB HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)

|                                 |  |                                                
|-------------------------------- |  | -----------------------------------------------
|Georgia
(State of Incorporation) |  | 58-2362335
(I.R.S. Employer Identification No.)

7855 North Point Parkway
Suite 200
Alpharetta, Georgia 30022-4849
(Address of principal executive offices)

(770) 650-8262
(Issuers telephone number, including area code)

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

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date:

|                              |  |                                
|----------------------------- |  | -------------------------------
|Class                         |  | Outstanding at November 7, 2003
|                              |  |                                
|Common Stock, $1.00 par value |  | 1,122,047                      

Transitional Small Business Disclosure Format:
Yes [  ] No  [X]





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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CNB HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |             |             | 
|------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------- | ----------------- | ---------- | ------------- | ----------- | ------------ | ---------- | ----------- | ----------- | 
|                                                                                                                   |                                                                                             |                   |            | SEPTEMBER 30, |             | DECEMBER 31,
|                                                                                                                   |                                                                                             |                   |            | 2003          |             | 2002        
|                                                                                                                   |                                                                                             |                   |            | (Unaudited)   |             | (Audited)   
|                                                                                                                   |                                                                                             |                   |            |               |             |             
|ASSETS                                                                                                             |                                                                                             |                   |            |               |             |              |            |            
|Cash and due from banks                                                                                            |                                                                                             | $                 | 1,414,215  |               |             | $            | 1,440,482  |            
|Interest bearing deposits in banks                                                                                 |                                                                                             |                   | 303,389    |               |             |              | 576,428    |            
|Investment securities:                                                                                             |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | Securities available-for-sale, at market value                                              |                   |            | 36,462,356    |             |              |            | 19,922,409  |            
|                                                                                                                   | Securities held-to-maturity, estimated fair value of
$6,747,143 and $8,053,746 respectively |                   |            | 6,714,483     |             |              |            | 7,999,765   |            
|                                                                                                                   | Restricted equity securities                                                                |                   |            | 2,140,500     |             |              |            | 1,588,000   |            
|Loans net of allowance for loan losses
of $977,458 and $918,250                                                    |                                                                                             |                   | 90,369,419 |               |             |              | 84,848,269 |            
|Premises and equipment (net)                                                                                       |                                                                                             |                   | 816,330    |               |             |              | 532,542    |            
|Other assets                                                                                                       |                                                                                             |                   | 4,302,775  |               |             |              | 3,684,580  |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | TOTAL ASSETS                                                                                |                   | $          | 142,523,467   |             |              | $          | 120,592,475 |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|LIABILITIES                                                                                                        |                                                                                             |                   |            |               |             |              |            |            
|Deposits:                                                                                                          |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | Non interest-bearing demand                                                                 |                   | $          | 9,623,174     |             |              | $          | 11,279,872  |            
|                                                                                                                   | Interest-bearing demand and money market                                                    |                   |            | 12,075,582    |             |              |            | 12,648,939  |            
|                                                                                                                   | Savings                                                                                     |                   |            | 91,660        |             |              |            | 85,847      |            
|                                                                                                                   | Time deposits of $100,000 or more                                                           |                   |            | 28,920,082    |             |              |            | 20,066,956  |            
|                                                                                                                   | Other time deposits                                                                         |                   |            | 40,853,581    |             |              |            | 40,638,315  |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | Total Deposits                                                                              |                   |            | 91,564,079    |             |              |            | 84,719,929  |            
|Securities sold under repurchase agreements                                                                        |                                                                                             |                   | 3,227,628  |               |             |              | 755,577    |            
|Other borrowed money                                                                                               |                                                                                             |                   | 36,060,000 |               |             |              | 24,569,500 |            
|Other liabilities                                                                                                  |                                                                                             |                   | 1,956,969  |               |             |              | 1,528,021  |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   |                                                                                             | TOTAL LIABILITIES |            |               | 132,808,676 |              |            |             | 111,573,027 | 
|STOCKHOLDERS EQUITY                                                                                               |                                                                                             |                   |            |               |             |              |            |            
|Preferred stock, par value not stated;
10,000,000 shares authorized, no
shares issued and outstanding              |                                                                                             |                   |           |               |             |              |           |            
|Common stock, par value $1.00 per share;
10,000,000 shares authorized; 1,272,500 and
1,235,000 issued respectively |                                                                                             |                   | 1,272,500  |               |             |              | 1,235,000  |            
|Surplus                                                                                                            |                                                                                             |                   | 10,356,067 |               |             |              | 10,009,642 |            
|Accumulated other comprehensive loss                                                                               |                                                                                             |                   | (278,936   | )             |             |              | (13,853    | )          
|Treasury stock                                                                                                     |                                                                                             |                   | (1,206,140 | )             |             |              | (1,255,157 | )          
|Unearned ESOP shares                                                                                               |                                                                                             |                   | (399,998   | )             |             |              | (399,998   | )          
|Accumulated deficit                                                                                                |                                                                                             |                   | (28,702    | )             |             |              | (556,186   | )          
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | TOTAL STOCKHOLDERS EQUITY                                                                  |                   |            | 9,714,791     |             |              |            | 9,019,448   |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            
|                                                                                                                   | TOTAL LIABILITIES AND EQUITY                                                                |                   | $          | 142,523,467   |             |              | $          | 120,592,475 |            
|                                                                                                                   |                                                                                             |                   |            |               |             |              |            |            

See notes to the consolidated financial statements.





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##### 



CNB HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |           |         |           | 
|---------------------------- | --------------------------------------------------- | ------------------------ | ---------------------- | --------- | ------------- | --------- | ------------- | --------- | ------- | --------- | ------- | --------- | ------- | --------- | ------- | --------- | ------- | --------- | 
|                             |                                                     |                          |                        |           | FOR THE       |           | FOR THE      
|                             |                                                     |                          |                        |           | NINE-MONTH    |           | THREE-MONTH  
|                             |                                                     |                          |                        |           | PERIOD ENDED  |           | PERIOD ENDED 
|                             |                                                     |                          |                        |           | SEPTEMBER 30, |           | SEPTEMBER 30,
|                             |                                                     |                          |                        |           |               |           |              
|                             |                                                     |                          |                        |           | 2003          |           | 2002          |           | 2003    |           | 2002   
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |        
|Interest income:             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Loans and leases, including fees                    |                          | $                      | 4,396,199 |               |           | $             | 3,652,346 |         |           | $       | 1,517,651 |         |           | $       | 1,229,799 |        
|                             | Investment securities:                              |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |           |        
|                             |                                                     | U.S. government agencies |                        |           | 576,060       |           |               |           | 842,742 |           |         |           | 268,809 |           |         |           | 261,175 |          
|                             |                                                     | Other investments        |                        |           | 126,916       |           |               |           | 208,528 |           |         |           | 39,832  |           |         |           | 51,810  |          
|                             | Interest bearing deposits in banks                  |                          |                        | 22,384    |               |           |               | 90,523    |         |           |         | 4,431     |         |           |         | 43,601    |        
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             |                                                     |                          | Total interest income  |           |               | 5,121,559 |               |           |         | 4,794,139 |         |           |         | 1,830,723 |         |           |         | 1,586,385 | 
|Interest expense:            |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Interest bearing demand and money market            |                          |                        | 90,786    |               |           |               | 268,821   |         |           |         | 24,557    |         |           |         | 68,256    |        
|                             | Savings                                             |                          |                        | 433       |               |           |               | 1,438     |         |           |         | 99        |         |           |         | 331       |        
|                             | Time deposits of $100,000 or more                   |                          |                        | 623,768   |               |           |               | 579,822   |         |           |         | 210,044   |         |           |         | 241,065   |        
|                             | Other time deposits                                 |                          |                        | 1,086,404 |               |           |               | 1,363,282 |         |           |         | 355,714   |         |           |         | 415,367   |        
|                             | Other borrowings                                    |                          |                        | 540,545   |               |           |               | 381,270   |         |           |         | 197,355   |         |           |         | 146,076   |        
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             |                                                     |                          | Total interest expense |           |               | 2,341,936 |               |           |         | 2,594,633 |         |           |         | 787,769   |         |           |         | 871,095   | 
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Net interest income                                 |                          |                        | 2,779,623 |               |           |               | 2,199,506 |         |           |         | 1,042,954 |         |           |         | 715,290   |        
|Provision for loan losses    |                                                     |                          | 156,000                |           |               |           | 386,082       |           |         |           | 29,100  |           |         |           | 302,000 |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Net interest income after provision for loan losses |                          |                        | 2,623,623 |               |           |               | 1,813,424 |         |           |         | 1,013,854 |         |           |         | 413,290   |        
|Other income:                |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Service charges on deposit accounts                 |                          |                        | 38,286    |               |           |               | 45,248    |         |           |         | 11,636    |         |           |         | 14,357    |        
|                             | Gains on the sale of loans and leases (net)         |                          |                        | 487,371   |               |           |               | 302,341   |         |           |         | 75,577    |         |           |         | 86,391    |        
|                             | Gains on the sale of securities available for sale  |                          |                        | 451       |               |           |               | 233,857   |         |           |         |          |         |           |         | 233,388   |        
|                             | Other income                                        |                          |                        | 483,901   |               |           |               | 281,760   |         |           |         | 225,327   |         |           |         | 113,253   |        
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Total other income                                  |                          |                        | 1,010,009 |               |           |               | 863,206   |         |           |         | 312,540   |         |           |         | 447,389   |        
|Other expense:               |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             | Salaries and other compensation                     |                          |                        | 1,519,379 |               |           |               | 1,187,210 |         |           |         | 556,473   |         |           |         | 401,642   |        
|                             | Employee benefits                                   |                          |                        | 364,072   |               |           |               | 213,453   |         |           |         | 128,513   |         |           |         | 67,742    |        
|                             | Net occupancy and equipment expense                 |                          |                        | 413,196   |               |           |               | 394,023   |         |           |         | 142,579   |         |           |         | 134,564   |        
|                             | Professional and other outside services             |                          |                        | 274,712   |               |           |               | 280,142   |         |           |         | 97,843    |         |           |         | 90,386    |        
|                             | Other expense                                       |                          |                        | 513,086   |               |           |               | 489,116   |         |           |         | 122,907   |         |           |         | 156,119   |        
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|                             |                                                     |                          | Total other expenses   |           |               | 3,084,445 |               |           |         | 2,563,944 |         |           |         | 1,048,315 |         |           |         | 850,453   | 
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|Net income before income tax |                                                     |                          | 549,187                |           |               |           | 112,686       |           |         |           | 278,079 |           |         |           | 10,226  |          
|Income tax                   |                                                     |                          | 21,704                 |           |               |           |              |           |         |           |        |           |         |           |        |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|Net income                   |                                                     | $                        | 527,483                |           |               | $         | 112,686       |           |         | $         | 278,079 |           |         | $         | 10,226  |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|Basic earnings per share     |                                                     | $                        | 0.49                   |           |               | $         | 0.11          |           |         | $         | 0.26    |           |         | $         | 0.01    |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|Diluted earnings per share   |                                                     | $                        | 0.48                   |           |               | $         | 0.11          |           |         | $         | 0.24    |           |         | $         | 0.01    |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          
|Dividends per share          |                                                     | $                        | 0.00                   |           |               | $         | 0.00          |           |         | $         | 0.00    |           |         | $         | 0.00    |          
|                             |                                                     |                          |                        |           |               |           |               |           |         |           |         |           |         |           |         |          

See notes to the consolidated financial statements.





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##### 



CNB HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |   |          |  
|----------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------- | ------------- | -------- | ------------- | ------- | ---- | -------- | ---- | -------- | ----- | -------- | - | ------- | - | -------- | -
|                                    |                                                                                                            |                                                                                                                                 |          | FOR THE       |          | FOR THE      
|                                    |                                                                                                            |                                                                                                                                 |          | NINE- MONTH   |          | THREE-MONTH  
|                                    |                                                                                                            |                                                                                                                                 |          | PERIOD ENDED  |          | PERIOD ENDED 
|                                    |                                                                                                            |                                                                                                                                 |          | SEPTEMBER 30, |          | SEPTEMBER 30,
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |              
|                                    |                                                                                                            |                                                                                                                                 |          | 2003          |          | 2002          |         | 2003 |          | 2002
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |     
|Net income                          |                                                                                                            | $                                                                                                                               | 527,483  |               |          | $             | 112,686 |      |          | $    | 278,079  |       |          | $ | 10,226  |  
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |  
|Other comprehensive income (loss) : |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |  
|                                    | Unrealized holding gains (losses) on securities
available for sale:                                        |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |   |         
|                                    |                                                                                                            | Unrealized holding gains (losses) arising during
period net of tax of $(140,613), $100,193,
$(168,590) and $43,502 respectively |          |               | (249,979 | )             |         |      | 178,121  |      |          |       | (299,717 | ) |         |   | 77,358   |  
|                                    |                                                                                                            | Reclassification adjustment for gains realized in
net income, net of tax of $162, $84,188,
$-0- and $84,020, respectively       |          |               | (289     | )             |         |      | (149,669 | )    |          |       |         |   |         |   | (149,368 | )
|                                    | Unrealized gains (losses) on cash flow hedges, net
of tax of $(8,334), $-0-, $4,780 and
$-0-, respectively |                                                                                                                                 |          | (14,815       | )        |               |         |     |          |      |          | 8,498 |          |   |         |  |         
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |  
|Other comprehensive income (loss)   |                                                                                                            |                                                                                                                                 | (265,083 | )             |          |               | 28,452  |      |          |      | (291,219 | )     |          |   | (72,010 | )
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |  
|Comprehensive income (loss)         |                                                                                                            | $                                                                                                                               | 262,400  |               |          | $             | 141,138 |      |          | $    | (13,140  | )     |          | $ | (61,784 | )
|                                    |                                                                                                            |                                                                                                                                 |          |               |          |               |         |      |          |      |          |       |          |   |         |  

See notes to the consolidated financial statements.





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##### 



CNB HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |             |            |          |        | 
|---------------------------------------------- | --------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | ----------- | ------------- | --------- | ----------- | ---------- | -------- | ------ | 
|                                               |                                                                 |                                                                                   |                                                         |                                           |             | FOR THE      
|                                               |                                                                 |                                                                                   |                                                         |                                           |             | NINE-MONTH   
|                                               |                                                                 |                                                                                   |                                                         |                                           |             | PERIOD ENDED 
|                                               |                                                                 |                                                                                   |                                                         |                                           |             | SEPTEMBER 30,
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |              
|                                               |                                                                 |                                                                                   |                                                         |                                           |             | 2003          |           | 2002       
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|Cash flows from operating activities:          |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               | Net income                                                      |                                                                                   | $                                                       | 527,483                                   |             |               | $         | 112,686     |           
|                                               |                                                                 | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                         |                                           |             |               |           |             |            |         
|                                               |                                                                 |                                                                                   | Net amortization of investment securities               |                                           |             | 329,748       |           |             |            | 159,055  |       
|                                               |                                                                 |                                                                                   | Depreciation and amortization of premises and equipment |                                           |             | 119,990       |           |             |            | 120,961  |       
|                                               |                                                                 |                                                                                   | Gains on the sale of loans and leases                   |                                           |             | (487,371      | )         |             |            | (302,341 | )     
|                                               |                                                                 |                                                                                   | Gains on the sale of securities available for sale      |                                           |             | (451          | )         |             |            | (233,858 | )     
|                                               |                                                                 |                                                                                   | Loss on sale of repossessed assets                      |                                           |             | 22,429        |           |             |            |         |       
|                                               |                                                                 |                                                                                   | Provision for loan losses                               |                                           |             | 156,000       |           |             |            | 386,082  |       
|                                               |                                                                 |                                                                                   | Increase in other assets                                |                                           |             | (154,568      | )         |             |            | (358,962 | )     
|                                               |                                                                 |                                                                                   | Increase in other liabilities                           |                                           |             | 428,948       |           |             |            | 191,748  |       
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               |                                                                 |                                                                                   |                                                         | Net cash provided by operating activities |             |               | 942,208   |             |            |          | 75,371 | 
|Cash flows from investing activities:          |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               | Purchase of bank-owned certificates of deposit                  |                                                                                   |                                                         |                                          |             |               |           | (1,293,000  | )         
|                                               | Maturities of investment securities available-for-sale          |                                                                                   |                                                         | 14,540,401                                |             |               |           | 10,642,397  |           
|                                               | Maturities of investment securities held-to-maturity            |                                                                                   |                                                         | 2,911,956                                 |             |               |           |            |           
|                                               | Purchases of investment securities available-for-sale           |                                                                                   |                                                         | (31,989,882                               | )           |               |           | (33,736,651 | )         
|                                               | Purchases of investment securities held-to-maturity             |                                                                                   |                                                         | 2,003,750                                 | )           |               |           |            |           
|                                               | Purchases of restricted equity securities                       |                                                                                   |                                                         | (552,500                                  | )           |               |           | (550,000    | )         
|                                               | Proceeds from sales of investment securities available-for-sale |                                                                                   |                                                         | 566,270                                   |             |               |           | 22,987,491  |           
|                                               | Proceeds from sale of loans and leases                          |                                                                                   |                                                         | 5,717,978                                 |             |               |           | 4,314,892   |           
|                                               | Loans originated, net of principal repayments                   |                                                                                   |                                                         | (11,588,197                               | )           |               |           | (10,230,914 | )         
|                                               | Purchases of premises and equipment                             |                                                                                   |                                                         | (403,778                                  | )           |               |           | (48,444     | )         
|                                               | Additions to other real estate owned                            |                                                                                   |                                                         | (144,212                                  | )           |               |           |            |           
|                                               | Proceeds from sale of repossessed assets                        |                                                                                   |                                                         | 464,556                                   |             |               |           |            |           
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               |                                                                 | Net cash used in investing activities                                             |                                                         |                                           | (22,481,158 | )             |           |             | (7,914,229 | )       
|Cash flows from financing activities:          |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               | Increase in securities sold under repurchase agreements         |                                                                                   |                                                         | 2,472,051                                 |             |               |           | 8,932       |           
|                                               | Sale of treasury stock                                          |                                                                                   |                                                         | 57,943                                    |             |               |           | 88,785      |           
|                                               | Exercise of stock options                                       |                                                                                   |                                                         | 375,000                                   |             |               |           |            |           
|                                               | Increase in other borrowings                                    |                                                                                   |                                                         | 11,490,500                                |             |               |           | 11,000,000  |           
|                                               | Increase (decrease) in deposits                                 |                                                                                   |                                                         | 6,844,150                                 |             |               |           | (3,611,037  | )         
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|                                               |                                                                 | Net cash provided by financing activities                                         |                                                         |                                           | 21,239,644  |               |           |             | 7,486,680  |         
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|Net decrease in cash and cash equivalents      |                                                                 |                                                                                   | (299,306                                                | )                                         |             |               | (352,178  | )          
|Cash and cash equivalents, beginning of period |                                                                 |                                                                                   | 2,016,910                                               |                                           |             |               | 5,935,536 |            
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            
|Cash and cash equivalents, end of period       |                                                                 | $                                                                                 | 1,717,604                                               |                                           |             | $             | 5,583,358 |            
|                                               |                                                                 |                                                                                   |                                                         |                                           |             |               |           |            

See notes to the consolidated financial statements.





---



##### 



CNB HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2003
(UNAUDITED)

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements for CNB
Holdings, Inc. (the Company) have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions for Form 10-QSB. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the nine and
three month periods ended September 30, 2003 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2003. For
further information, refer to the financial statements and footnotes included
in the Companys consolidated financial statements and footnotes thereto for
the year ended December 31, 2002, included in the Companys Form 10-KSB.

The consolidated financial statements include the account of the Company
and its wholly owned subsidiary, Chattahoochee National Bank (the Bank), with
all significant intercompany accounts and transactions eliminated in
consolidation.

NOTE 2  EARNINGS PER COMMON SHARE

Earnings per share is computed by dividing net income available to common
shareholders by the weighted average number of shares outstanding during the
period, which totaled 1,082,242 and 1,089,786 shares for the nine months and
three months ended September 30, 2003, respectively. The average number of
shares outstanding totaled 1,062,629 and 1,069,259 for the nine months and the
three months ended September 30, 2002, respectively.





---



##### 



Presented below is a summary of the components used to calculate basic and
diluted earnings per common share.

|                            |                                                                                                                                 |  |                   |           |      |  |   |           | 
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | ---- |  | - | --------- | 
|                            |                                                                                                                                 |  | Nine Months Ended
|                            |                                                                                                                                 |  | September 30,    
|                            |                                                                                                                                 |  |                  
|                            |                                                                                                                                 |  | 2003              |           | 2002
|                            |                                                                                                                                 |  |                   |           |     
|Basic Earnings Per Share:   |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Weighted average common shares outstanding                                                                                      |  |                   | 1,082,242 |      |  |   | 1,062,629 | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Net income                                                                                                                      |  | $                 | 527,483   |      |  | $ | 112,686   | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Basic earnings per share                                                                                                        |  | $                 | 0.49      |      |  | $ | 0.11      | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|Diluted Earnings Per Share: |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Weighted average common shares outstanding                                                                                      |  |                   | 1,082,242 |      |  |   | 1,062,629 | 
|                            | Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the year |  |                   | 13,298    |      |  |   |          | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Total weighted average common shares and
common stock equivalents outstanding                                                   |  |                   | 1,095,540 |      |  |   | 1,062,629 | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Net income                                                                                                                      |  | $                 | 527,483   |      |  | $ | 112,686   | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          
|                            | Diluted earnings per share                                                                                                      |  | $                 | 0.48      |      |  | $ | 0.11      | 
|                            |                                                                                                                                 |  |                   |           |      |  |   |          

|                            |                                                                                                                                 |  |                    |           |      |  |   |           | 
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ---- |  | - | --------- | 
|                            |                                                                                                                                 |  | Three Months Ended
|                            |                                                                                                                                 |  | September 30,     
|                            |                                                                                                                                 |  |                   
|                            |                                                                                                                                 |  | 2003               |           | 2002
|                            |                                                                                                                                 |  |                    |           |     
|Basic Earnings Per Share:   |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Weighted average common shares outstanding                                                                                      |  |                    | 1,089,786 |      |  |   | 1,069,259 | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Net income                                                                                                                      |  | $                  | 278,079   |      |  | $ | 10,226    | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Basic earnings per share                                                                                                        |  | $                  | 0.26      |      |  | $ | 0.01      | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|Diluted Earnings Per Share: |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Weighted average common shares outstanding                                                                                      |  |                    | 1,089,786 |      |  |   | 1,069,259 | 
|                            | Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market prices for the year |  |                    | 49,923    |      |  |   |          | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Total weighted average common shares and
common stock equivalents outstanding                                                   |  |                    | 1,139,709 |      |  |   | 1,069,259 | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Net income                                                                                                                      |  | $                  | 278,079   |      |  | $ | 10,226    | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          
|                            | Diluted earnings per share                                                                                                      |  | $                  | 0.24      |      |  | $ | 0.01      | 
|                            |                                                                                                                                 |  |                    |           |      |  |   |          





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##### 



NOTE 3  STOCK COMPENSATION PLANS

At September 30, 2003, the Company has stock-based employee compensation plans.
The Company accounts for those plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying stock on the date of
grant. The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation.

|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |      | 
|--------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------------- | ---- | ------------- | - | ------- | ---- | ---- | - | ------- | ---- |  | - | ------ | ---- | 
|                                                                                                                |                       |   | FOR THE       |      | FOR THE      
|                                                                                                                |                       |   | NINE-MONTH    |      | THREE-MONTH  
|                                                                                                                |                       |   | PERIOD ENDED  |      | PERIOD ENDED 
|                                                                                                                |                       |   | SEPTEMBER 30, |      | SEPTEMBER 30,
|                                                                                                                |                       |   |               |      |              
|                                                                                                                |                       |   | 2003          |      | 2002          |   | 2003    |      | 2002
|                                                                                                                |                       |   |               |      |               |   |         |      |     
|Net income, as reported                                                                                         |                       | $ | 527,483       |      |               | $ | 112,686 |      |      | $ | 278,079 |      |  | $ | 10,226 |     
|Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards |                       |   | (54,201       | )    |               |   | (4,720  | )    |      |   | (51,263 | )    |  |   |       |     
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|Pro forma net income                                                                                            |                       | $ | 473,282       |      |               | $ | 107,966 |      |      | $ | 226,816 |      |  | $ | 10,226 |     
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|Earnings per share:                                                                                             |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|                                                                                                                | Basic  as reported   |   | $             | 0.49 |               |   | $       | 0.11 |      |   | $       | 0.26 |  |   | $      | 0.01 | 
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|                                                                                                                | Basic  pro forma     |   | $             | 0.44 |               |   | $       | 0.10 |      |   | $       | 0.21 |  |   | $      | 0.01 | 
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|                                                                                                                | Diluted  as reported |   | $             | 0.48 |               |   | $       | 0.11 |      |   | $       | 0.24 |  |   | $      | 0.01 | 
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     
|                                                                                                                | Diluted  pro forma   |   | $             | 0.43 |               |   | $       | 0.10 |      |   | $       | 0.20 |  |   | $      | 0.01 | 
|                                                                                                                |                       |   |               |      |               |   |         |      |      |   |         |      |  |   |        |     

NOTE 4  LOANS AND LEASES RECEIVABLE

Major classifications of loans and leases are as follows in thousands
(000):

|                                           |  |                    |        |                   |  |   |        | 
|------------------------------------------ |  | ------------------ | ------ | ----------------- |  | - | ------ | 
|                                           |  | SEPTEMBER 30, 2003 |        | DECEMBER 31, 2002
|                                           |  |                    |        |                  
|Commercial Loans                           |  | $                  | 27,099 |                   |  | $ | 28,937 | 
|Real Estate  construction                 |  |                    | 49,575 |                   |  |   | 27,644 | 
|Real Estate  mortgage                     |  |                    | 11,256 |                   |  |   | 23,788 | 
|Leasing financing                          |  |                    | 1,518  |                   |  |   | 2,922  | 
|Installment Loans                          |  |                    | 2,075  |                   |  |   | 2,627  | 
|                                           |  |                    |        |                   |  |   |        | 
|Total Loans                                |  |                    | 91,523 |                   |  |   | 85,918 | 
|Less: Deferred loan fees and costs         |  |                    | 177    |                   |  |   | 152    | 
|Less: Allowance for loans and lease losses |  |                    | 977    |                   |  |   | 918    | 
|                                           |  |                    |        |                   |  |   |        | 
|Loans and leases receivable, net           |  | $                  | 90,369 |                   |  | $ | 84,848 | 
|                                           |  |                    |        |                   |  |   |        | 





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##### 



NOTE 5  ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income-market valuation reserve on investment
securities available-for-sale and cash flow hedges is as follows:

|                                    |  |            |          |        |  |           |         |   |  |   |          |  
|----------------------------------- |  | ---------- | -------- | ------ |  | --------- | ------- | - |  | - | -------- | -
|                                    |  |            |          |        |  | Cash Flow |         |   |  |  
|                                    |  | Securities |          | Hedges |  | Total    
|                                    |  |            |          |        |  |          
|Beginning balance  January 1, 2003 |  | $          | 10,360   |        |  | $         | (24,213 | ) |  | $ | (13,853  | )
|Current  period change             |  |            | (250,268 | )      |  |           | (14,815 | ) |  |   | (265,083 | )
|                                    |  |            |          |        |  |           |         |   |  |   |          |  
|Ending balance  September 30, 2003 |  | $          | (239,908 | )      |  | $         | (39,028 | ) |  | $ | (278,936 | )
|                                    |  |            |          |        |  |           |         |   |  |   |          |  

NOTE 6  NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS AFFECTING FUTURE PERIODS

There are no recent accounting pronouncements that have had, or are expected to
have, a material effect on the Companys financial statements.

NOTE 7  MERGER AGREEMENT WITH FIRST CAPITAL BANCORP, INC.

On September 24, 2003, the Company and First Capital Bancorp, Inc., a bank
holding company based in Norcross, Georgia, entered into an Agreement and Plan
of Merger whereby First Capital will merge with and into the Company. First
Capitals shareholders will receive shares of Company common stock for each
share of First Capital common stock they own, resulting in an expected issuance
of approximately 2.8 million shares of Company common stock on a fully diluted
basis. The merger is subject to various terms and conditions, including
shareholder and regulatory approvals and is expected to close by the end of the
second quarter of 2004. The merger will be accounted for as a purchase.





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##### 



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements made in this Report, including matters discussed
under the caption Managements Discussion and Analysis of Financial Condition
and Results of Operations, as well as oral statements made by the Company or
its officers, directors or employees, may constitute forward-looking statements
within the meaning of the federal securities laws. Such forward-looking
statements are based on managements beliefs, current expectations, estimates
and projections about the financial services industry, the economy and about
CNB Holdings, Inc. (the Company) and its wholly-owned subsidiary,
Chattahoochee National Bank (the Bank) in general. The words expect,
anticipate, intend, plan, believe, seek, estimate and similar
expressions are intended to identify such forward-looking statements; however,
this Report also contains other forward-looking statements. Such
forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to differ materially from
any results expressed or implied by such forward-looking statements. Such
factors include, without limitation, (i) increased competition with other
financial institutions, (ii) lack of sustained growth in the economy in Fulton
County, Georgia, (iii) the inability of the Bank to maintain regulatory capital
standards, (iv) changes in the legislative and regulatory environment, (v) the
current military action in Iraq and the continuing war on terrorism, as well as
actions taken or to be taken by the United States or other governments as a
result of further acts of terrorism, (vi) deposit levels, (vii) loan demand and
collateral values, (viii) securities portfolio values and (ix) the failure of
assumptions underlying the establishment of reserves for loan losses.
Additionally, rapid increases or decreases in interest rates could
significantly harm the Banks non-interest income, which is the difference
between the interest income earned on its interest-earning assets (such as
loans), and the interest expense paid on its interest-bearing liabilities (such
as deposits). Because the Bank is cumulatively asset sensitive (its assets
reprice sooner that its liabilities) within the next six months, continued
decreases in interest rates could result in reduced earnings. Furthermore,
certain of the statements made in this Report relating to the expected merger
of First Capital Bancorp, Inc. with the Company are forward-looking statements
and are subject to such risks as the inability of the Company to raise the
additional capital necessary to consummate the merger as may be required by
applicable regulatory authorities. Many of the risks, warranties and factors
discussed in this paragraph are beyond the Companys ability to control or
predict, and readers are cautioned not to put undue reliance on such
forward-looking statements. The Company disclaims any obligation to update or
revise any forward-looking statements contained in this Report, whether as a
result of new information, future events or otherwise.





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##### 



ITEM  2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FINANCIAL CONDITION

Management continuously monitors the financial condition of the Bank in
order to protect depositors, increase retained earnings and protect current and
future earnings. Further discussion of significant items affecting the Banks
financial condition are discussed in detail below.

Total assets increased from $120,592,475 on December 31, 2002 to
$142,523,467 on September 30, 2003, an increase of $21,930,992. This increase
was due to an increase in loans of $5,521,150, an increase in $16,608,965 in
securities available for sale, a decrease in securities held to maturity of
$1,285,282, and an decrease of $273,039 in interest bearing deposits in banks.
This growth was primarily funded by a $6,844,150 increase in total deposits, a
$2,472,051 increase in securities sold under repurchase agreements and a
$11,490,500 increase in other borrowings.

The $6,844,150 increase in deposits came from an increase of $8,853,126 in
time deposits of $100,000 or more, an increase of other time deposits of
$215,266, an decrease of $1,656,698 in non interest-bearing demand deposits and
a decrease of $573,357 in interest-bearing demand deposits. Most of the
increase in deposits was brokered deposits, which the Bank believes are less
expensive to obtain than competing for deposits in the highly competitive
Metropolitan Atlanta market.

On
September 24, 2003, the Company and First Capital Bancorp, Inc., a
bank holding company based in Norcross, Georgia, entered into an
Agreement and Plan of Merger whereby First Capital will merge with
and into the Company. Prior to the signing of the merger agreement,
 the Company entered into certain contracts with various data processing
service providers to convert to another data processing system. Both First
Capital and the Company are currently evaluating whether to
convert to the new data processing system. As of October 31, 2003, the Company
has capitalized approximately $317,000 of costs related to the conversion. If
the Company decides not to convert to the new data processing system, these
costs plus and additional estimated cost of $240,000 to cancel these contracts
would be expensed in the period in which the decision is made.

Allowance for Loan Losses

The allowance for loan losses as of September 30, 2003 was $977,458
compared to $918,250 as of December 31, 2002. The allowance for loan losses, as
a percentage of total gross loans, for September 30, 2003 remained at 1.07%,
the same level as of December 31, 2002. The provision during the third quarter
of 2003 was the result of risks inherent in the loan portfolio. During the
second and third quarters of 2003, a review of the Banks loan portfolio by an
independent firm was conducted. The purpose of this review was to assess the
risk in the loan portfolio and to determine the adequacy of the allowance for
loan losses. The review included analyses of historical performance, the level
of non-conforming and rated loans, loan volume and activity, review of loan
files and consideration of economic conditions and other pertinent information.
Upon completion and review by the Banks Board of Directors and management,
the Bank approved the firms report. The Bank will continue engaging, on a
biannual basis, an independent firm to review the Banks loan portfolio. In
addition to the independent reviews, the Banks primary regulator, the OCC,
also conducts an annual examination of the loan portfolio. Upon completion,
the OCC presents its report of findings to the Banks Board of Directors and
management. Information provided from the above two independent sources,
together with information provided by the management and other information
known to the Banks Board of Directors, are utilized by the Board of Directors
to monitor, on a quarterly basis, the loan portfolio. Specifically, the Banks
Board of Directors attempts to identify risks inherent in the loan portfolio
(e.g., problem loans, potential problem loans and loans to be charged off),
assess the overall quality and collectibility of the loan portfolio, and
determine amounts of the allowance for loan losses and the provision for loan
losses to be reported based on the results of their review.

Management considers the allowance for loan losses to be adequate and
sufficient; however, there can be no assurance that charge-offs in future
periods will not exceed the allowance for loan losses or that additional
provisions of the allowance will not be required.





---



##### 



Liquidity and Sources of Capital

Liquidity is the Companys ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
September 30, 2003 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $1,717,604,
representing 1.21% of total assets. Securities amounted to $45,317,339,
representing 31.80% of total assets; these securities provide a secondary
source of liquidity since they can be converted into cash in a timely manner.
The increase from $19,922,409 to $36,462,356 in available-for-sale securities
represents the Bank attempting to fully leverage its capital and maximize the
earning asset capacity using available credit lines. The Companys deposit base
and borrowing capabilities are additional sources of liquidity. For the
nine-month period ended September 30, 2003, total deposits increased
$6,844,150. Additionally, the Company has offered secure repurchase accounts to
its customers that total $3,227,628. The Companys management closely monitors
and maintains appropriate levels of interest earning assets and interest
bearing liabilities so that maturities of assets are such that adequate funds
are provided to meet customer withdrawals and loan demand.

During 2003, the Company reissued 8,219 shares of its common stock which
were purchased by the Banks 401k Plan. Participants in the plan purchased the
common stock for $57,943. Additionally, 37,500 stock options were exercised
totaling $375,000.

Management is committed to maintaining capital at a level sufficient to
protect depositors, provide for reasonable growth, and fully comply with all
regulatory requirements. Managements strategy to achieve this goal is to
retain sufficient earnings while providing a reasonable return on equity.
Federal banking regulations establish certain capital adequacy standards that
banks are required to maintain.

The table below illustrates the Companys regulatory capital ratios at the
date indicated:

|               |                                |  |                    |       |             |  |            |     |  
|-------------- | ------------------------------ |  | ------------------ | ----- | ----------- |  | ---------- | --- | -
|               |                                |  |                    |       |             |  | MINIMUM   
|               |                                |  |                    |       |             |  | REGULATORY
|               |                                |  | SEPTEMBER 30, 2003 |       | REQUIREMENT
|               |                                |  |                    |       |            
|Tier 1 Capital |                                |  | 10.05              | %     |             |  | 4.0        | %  
|Tier 2 Capital |                                |  | 0.91               |       |             |  |           |    
|               |                                |  |                    |       |             |  |            |    
|               | Total risk-based capital ratio |  |                    | 10.96 | %           |  |            | 8.0 | %
|               |                                |  |                    |       |             |  |            |    
|Leverage ratio |                                |  | 7.73               | %     |             |  | 3.0        | %  
|               |                                |  |                    |       |             |  |            |    

As
described above, on September 24, 2003, the Company and First Capital Bancorp, Inc. entered into an Agreement and Plan
of Merger whereby First Capital will merge with and into the Company. Under
the Merger Agreement, First Capitals shareholders will receive shares of
Company common stock for each share of First Capital common stock they own,
resulting in an expected issuance of approximately 2.8 million shares of
Company common stock on a fully diluted basis. The merger will be accounted
for as a purchase. The merger cannot be completed unless both companies obtain
the approval of applicable bank regulatory authorities, including the Federal
Reserve. Based on preliminary discussions with the Federal Reserve and
managements expectations regarding growth of the combined company following
the merger, management believes that the Company will need to enhance its
capital position prior to receiving the regulatory approvals necessary to
complete the merger. In order to enhance its capital, the Company expects to
commence a stock offering to First Capital and Company shareholders on a pro
rata basis during the first quarter of 2004. The merger is expected to close
by the end of the second quarter of 2004.

Other than the pending merger, management is not aware of any trends,
demands, commitments, events or uncertainties that will result, or are
reasonably likely to result, in the Companys liquidity increasing or
increasing in any material way.

RESULTS OF OPERATIONS

Nine-Month Period Ended September 30, 2003

Net income for the nine-month period ended September 30, 2003 amounted to
$527,483, or $0.49 basic earnings per share and $0.48 diluted earnings per
share compared to net income of $112,686 or $0.11 basic and diluted earnings
per share for the same nine-month period in 2002. The following is a brief
discussion of the more significant components of net income during this period:





---



##### 





| | a. |  | Net interest income represents the difference between interest
received on interest earning assets and interest paid on interest
bearing liabilities. The following presents, in a tabular form, the
main components of interest earning assets and interest bearing
liabilities.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30, 2003

|                                            |       |         |            |             |             |          |           |            |           |  |      |      |      |  
|------------------------------------------- | ----- | ------- | ---------- | ----------- | ----------- | -------- | --------- | ---------- | --------- |  | ---- | ---- | ---- | -
|Interest                                    |       |         |            |             |             | Interest |           | Annualized
|Earning Assets/                             |       | Average |            | Income/     |             | Yield/  
|Bearing Liabilities                         |       | Balance |            | Cost        |             | Cost    
|                                            |       |         |            |             |             |         
|Interest-bearing deposits in banks          |       | $       | 2,395,496  |             |             | $        | 22,384    |            |           |  | 1.25 | %   
|Securities                                  |       |         | 32,026,991 |             |             |          | 702,976   |            |           |  | 2.93 | %   
|Loans                                       |       |         | 87,741,939 |             |             |          | 4,396,199 |            |           |  | 6.68 | %   
|                                            |       |         |            |             |             |          |           |            |           |  |      |     
|                                            |       | Total   |            | $           | 122,164,426 |          |           | $          | 5,121,559 |  |      |      | 5.59 | %
|                                            |       |         |            |             |             |          |           |            |           |  |      |     
|Deposits                                    |       | $       | 79,780,434 |             |             | $        | 1,801,391 |            |           |  | 3.01 | %   
|Securities sold under repurchase agreements |       |         | 1,478,598  |             |             |          | 11,459    |            |           |  | 1.03 | %   
|Other borrowings                            |       |         | 23,519,361 |             |             |          | 529,086   |            |           |  | 3.00 | %   
|                                            |       |         |            |             |             |          |           |            |           |  |      |     
|                                            | Total |         | $          | 104,778,393 |             |          | $         | 2,341,936  |           |  |      | 2.98 | %   
|                                            |       |         |            |             |             |          |           |            |           |  |      |     
|Net interest income                         |       |         |            |             |             | $        | 2,779,623 |            |           |  | 2.61 | %   
|                                            |       |         |            |             |             |          |           |            |           |  |      |     
|Net yield on earning assets                 |       |         |            |             |             |          |           |            |           |  | 3.03 | %   
|                                            |       |         |            |             |             |          |           |            |           |  |      |     

September 30, 2002

|                                            |       |         |            |            |  |          |           |            |  |  |      |      |  
|------------------------------------------- | ----- | ------- | ---------- | ---------- |  | -------- | --------- | ---------- |  |  | ---- | ---- | -
|Interest                                    |       |         |            |            |  | Interest |           | Annualized
|Earning Assets/                             |       | Average |            | Income/    |  | Yield/  
|Bearing Liabilities                         |       | Balance |            | Cost       |  | Cost    
|                                            |       |         |            |            |  |         
|Interest-bearing deposits in banks          |       | $       | 6,993,376  |            |  | $        | 90,523    |            |  |  | 1.73 | %   
|Securities                                  |       |         | 27,929,446 |            |  |          | 1,051,270 |            |  |  | 5.02 | %   
|Loans                                       |       |         | 63,659,181 |            |  |          | 3,652,346 |            |  |  | 7.65 | %   
|                                            |       |         |            |            |  |          |           |            |  |  |      |     
|                                            | Total |         | $          | 98,582,003 |  |          | $         | 4,794,139  |  |  |      | 6.48 | %
|                                            |       |         |            |            |  |          |           |            |  |  |      |     
|Deposits                                    |       | $       | 71,232,574 |            |  | $        | 2,213,363 |            |  |  | 4.14 | %   
|Securities sold under repurchase agreements |       |         | 968,998    |            |  |          | 12,445    |            |  |  | 1.71 | %   
|Other borrowings                            |       |         | 11,221,531 |            |  |          | 368,825   |            |  |  | 4.38 | %   
|                                            |       |         |            |            |  |          |           |            |  |  |      |     
|                                            | Total |         | $          | 83,423,103 |  |          | $         | 2,594,633  |  |  |      | 4.15 | %
|                                            |       |         |            |            |  |          |           |            |  |  |      |     
|Net interest income                         |       |         |            |            |  | $        | 2,199,506 |            |  |  | 2.33 | %   
|                                            |       |         |            |            |  |          |           |            |  |  |      |     
|Net yield on earning assets                 |       |         |            |            |  |          |           |            |  |  | 2.97 | %   
|                                            |       |         |            |            |  |          |           |            |  |  |      |     



| | b. |  | Total other income for the nine-month period ended September
30, 2003 amounted to $1,010,009 compared to $863,206 for 2002. On an
annualized basis, this represents 0.94% of total assets compared to
1.03% of total assets for the same period in 2002. The Bank sold
loans totaling $5,717,978 without recourse compared with $4,314,892
in 2002. The profit from these sales was $487,371 or 48.25% of total
other income compared with $302,341 and 35.03% for 2002. The service
charge on deposit accounts is relatively low, at $38,286 or
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### 





| |    |  | 3.79% of total other income compared with $45,248 or 5.24% for 2002.
Most of the Banks deposit customers maintain balances at levels
that prevent service charges. Additionally, available-for-sale
securities were sold for a net gain of $451 compared with $233,857
for the same period in 2002. Of the $483,901 miscellaneous other
income or 47.91% of total other income, $280,309 or 57.93% of
miscellaneous other income consists of mortgage origination and fee
income from mortgage loans, which are not added to the Banks loan
portfolio. For 2002, of the $281,760 of miscellaneous other income
or 32.64% of total other income, $169,663 or 60.22% related to
mortgage origination activity. An additional $120,590, or 24.92% of
miscellaneous other income, consisted of income from Bank owned life
insurance. In 2002, $103,129 or 36.60% of miscellaneous other income
came from Bank owned life insurance.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | c. |  | Operating expenses for the nine-month period ended September
30, 2003 amounted to $3,084,445 compared to $2,563,944 for 2002, the
largest expense being related to salaries and employee benefits and
professional and outside services. The largest component of the
increase resulted from additional bonus incentive accruals and
incentives paid to employees who achieved production goals. Accruals
for officer and director pension plans increased from $5,176 in 2002
to $117,952 in 2003. Bonus accruals increased from $45,000 in 2002 to
$157,500 in 2003. Incentives increased from $204,271 in 2002 to
$236,452 in 2003. In addition, operating expenses increased as a
result of loan servicing, deposit servicing and general overhead that
routinely occurs in a growing financial institution. On an annualized
basis, operating expenses represent 2.89% of total assets in 2003
compared to 3.04% in 2002.    
|
| | d. |  | The Company has recorded $21,704 for income taxes during the
first nine months of 2003 compared with no provision for income taxes
during the same period of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Three-Month Period Ended September 30, 2003

Net income for the three-month period ended September 30, 2003 amounted to
$278,079, or $0.26 basic earnings per share and $0.24 diluted earnings per
share compared to $10,226, or $0.01 basic and diluted earnings per share for
the same three-month period ended September 30, 2002. The following is a brief
discussion of the more significant components of net income during this period:



| | a. |  | Net interest income represents the difference between interest
received on interest earning assets and interest paid on interest
bearing liabilities. The following presents, in a tabular form, the
main components of interest earning assets and interest bearing
liabilities.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30, 2003

|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|------------------------------------------- |  | ------- | ----------- | ------- |  | -------- | --------- | ---------- |  |  | ---- | -
|Interest                                    |  |         |             |         |  | Interest |           | Annualized
|Earning Assets/                             |  | Average |             | Income/ |  | Yield/  
|Bearing Liabilities                         |  | Balance |             | Cost    |  | Cost    
|                                            |  |         |             |         |  |         
|Interest-bearing deposits in banks          |  | $       | 1,627,368   |         |  | $        | 4,431     |            |  |  | 1.09 | %
|Securities                                  |  |         | 42,332,197  |         |  |          | 308,641   |            |  |  | 2.92 | %
|Loans                                       |  |         | 89,362,437  |         |  |          | 1,517,651 |            |  |  | 6.79 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Total                                       |  | $       | 133,322,002 |         |  | $        | 1,830,723 |            |  |  | 5.49 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Deposits                                    |  | $       | 83,347,264  |         |  | $        | 590,414   |            |  |  | 2.83 | %
|Securities sold under repurchase agreements |  |         | 1,552,276   |         |  |          | 2,792     |            |  |  | 0.72 | %
|Other borrowings                            |  |         | 30,259,476  |         |  |          | 194,563   |            |  |  | 2.57 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Total                                       |  | $       | 115,159,016 |         |  | $        | 787,769   |            |  |  | 2.74 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Net interest income                         |  |         |             |         |  | $        | 1,042,954 |            |  |  | 2.75 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Net yield on earning assets                 |  |         |             |         |  |          |           |            |  |  | 3.13 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  





---



##### 



September 30, 2002

|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|------------------------------------------- |  | ------- | ----------- | ------- |  | -------- | --------- | ---------- |  |  | ---- | -
|Interest                                    |  |         |             |         |  | Interest |           | Annualized
|Earning Assets/                             |  | Average |             | Income/ |  | Yield/  
|Bearing Liabilities                         |  | Balance |             | Cost    |  | Cost    
|                                            |  |         |             |         |  |         
|Interest-bearing deposits in banks          |  | $       | 9,952,243   |         |  | $        | 43,601    |            |  |  | 1.75 | %
|Securities                                  |  |         | 28,153,362  |         |  |          | 312,985   |            |  |  | 4.45 | %
|Loans                                       |  |         | 63,043,542  |         |  |          | 1,229,799 |            |  |  | 7.80 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Total                                       |  | $       | 101,149,147 |         |  | $        | 1,586,385 |            |  |  | 6.27 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Deposits                                    |  | $       | 73,223,458  |         |  | $        | 725,019   |            |  |  | 3.96 | %
|Securities sold under repurchase agreements |  |         | 1,054,294   |         |  |          | 4,177     |            |  |  | 1.58 | %
|Other borrowings                            |  |         | 12,984,949  |         |  |          | 141,899   |            |  |  | 4.37 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Total                                       |  | $       | 87,262,701  |         |  | $        | 871,095   |            |  |  | 3.99 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Net interest income                         |  |         |             |         |  | $        | 715,290   |            |  |  | 2.28 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  
|Net yield on earning assets                 |  |         |             |         |  |          |           |            |  |  | 2.83 | %
|                                            |  |         |             |         |  |          |           |            |  |  |      |  



| | b. |  | Total other income for three-month period ended September
30, 2003 amounted to $312,540 compared with $447,389 for 2002. On
an annualized basis, this represents 0.88% of total assets
compared with 1.59% for 2002. The Bank sold loans and leases
totaling $1,003,750 without recourse in 2003 compared to
$1,437,410 in 2002. The profit in 2003 from these sales was
$75,577 or 24.18% of total other income compared with $86,391 or
19.31% for 2002. The service charge on deposit accounts was
$11,636 or 3.72% of total other income compared with $14,357 or
3.21% for 2002. Most of our deposit customers maintain balances at
levels that prevent service charges. Miscellaneous other income
was $225,327 or 72.10% of total other income compared to $113,253
or 25.31% of total other income for 2002. We received a one-time
commercial third party loan origination fee for $94,050, which is
41.74% of miscellaneous other income. We received no such fee
income in the same period of 2002. The remainder of miscellaneous
other income is related to mortgage origination activities and
income from bank owned life insurance.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | c. |  | Operating expenses for the three-month period ended September
30, 2003 amounted to $1,048,315 compared to $850,453 in 2002, with
the largest expense being related to salaries and employee benefits
and professional and outside services. Accruals for officer and
director pension plans increased from $1,725 in 2002 to $47,119 in
2003. Bonus accruals increased from $15,000 in 2002 to $52,500 in
2003. In addition, operating expenses increased as a result of loan
servicing, deposit servicing and general overhead that routinely
occurs in a growing financial institution. On an annualized basis
during the respective quarters, operating expenses represent 2.94% of
total assets in 2003 compared with 3.03% of total assets in 2002.                                                                                                                                                                                                                                                                                                                                                                                           





---



##### 



PART II. OTHER INFORMATION

Item 3. Controls and Procedures

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures (as such term is defined in
13a-15e and 15d-15e under the Securities and Exchange Act) as of the
end of the period covered by this report. Based on this evaluation, our Chief
Executive and Chief Financial Officer concluded that our disclosure controls
and procedures are effective for gathering, analyzing and disclosing the
information that we are required to disclose in the reports we file under the
Securities Exchange Act of 1934, within the time periods specified in the SECs
rules and forms. Our Chief Executive Officer and Chief Financial Officer also
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to our company required to be
included in our periodic SEC filings. In connection with the new rules, we are
in the process of further reviewing and documenting our disclosure controls and
procedures, including our internal controls and procedures for financial
reporting, and may from time to time make changes designed to enhance their
effectiveness and to ensure that our systems evolve with our business.

There have been no changes in our internal control over financial
reporting that occurred during the period covered by this report identified in connection with this evaluation that has materially
affected, or is reasonably likely to materially affect our internal control
over financial reporting.

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



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

|            |  |                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                              
|10.1        |  | Third Amendment to Employment Agreement by and among CNB
Holdings, Inc., Chattahoochee National Bank and H. N. Padget, Jr., dated
September 16, 2003.                                                                                                        
|            |  |                                                                                                                                                                                                                                                              
|10.2        |  | Second Amendment to Employment Agreement by and among CNB
Holdings, Inc., Chattahoochee National Bank and Steven G. Deaton, dated
September 16, 2003.                                                                                                        
|            |  |                                                                                                                                                                                                                                                              
|10.3        |  | First Amendment to Employment Agreement by and among CNB
Holdings, Inc., Chattahoochee National Bank and Danny F. Dukes, dated
September 18, 2003.                                                                                                           
|            |  |                                                                                                                                                                                                                                                              
|31.1        |  | Certification by H.N. Padget, Jr.,
President and Chief Executive Officer of CNB Holdings,
Inc. pursuant to Section 302 of the Sarbanes Oxley Act of
2002 (15 U.S.C. 7241) (Rule 13a-14(a) Certification)                                                     
|            |  |                                                                                                                                                                                                                                                              
|31.2        |  | Certification by Danny F. Dukes, Chief
Financial Officer of CNB Holdings, Inc. pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7241) (Rule 13a-14(a) Certification)                                                                     
|            |  |                                                                                                                                                                                                                                                              
|32.1        |  | Certification by H.N. Padget, Jr.,
President and Chief Executive Officer of CNB Holdings,
Inc. and Danny F. Dukes, Chief Financial Officer, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350), (Section 1350 Certification).



|(b) |  | Reports on Form 8-K                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On September 26, 2003, the Company filed a report on Form 8-K, under Items
5 and 7, a press release regarding its proposed merger with First Capital
Bancorp, Inc.                                                             
|   
|    |  | In addition, on October 23, 2003, the Company filed a report on Form 8-K
which furnished (not filed), under Items 7 and 12, a press release
regarding the results of the Companys operations during the third quarter
of 2003.





---



##### 



SIGNATURES

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

|                        |     |  |                                                                                                             
|----------------------- | --- |  | ------------------------------------------------------------------------------------------------------------
|Date: November 12, 2003 | By: |  | /s/ H. N. Padget, Jr.
H. N. Padget, Jr., President and Chief
Executive Officer
(principal executive officer)



|                        |     |  |                                                                                                                               
|----------------------- | --- |  | ------------------------------------------------------------------------------------------------------------------------------
|Date: November 12, 2003 | By: |  | /s/ Danny F. Dukes
Danny F. Dukes, Senior Vice President,
Chief Financial Officer
(principal financial and accounting officer)