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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

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| | x | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2002
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| | o | Transition report under Section 13 or 15(d) of the Exchange Act for the transition period fromto
| | - | ------------------------------------------------------------------------------------------------

Commission file number:
000-23991

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

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

7855 North Point ParkwaySuite 200Alpharetta, 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 o

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

| | ClassCommon Stock, $1.00 par value |  | Outstanding at November 13, 20021,074,669 | 
| | ---------------------------------- |  | ----------------------------------------- | 

Transitional Small Business Disclosure Format: Yes o No x

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PART I. FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

CNB HOLDINGS, INC.AND SUBSIDIARYCONSOLIDATED BALANCE
SHEETS

|                                                                                                                |  | SEPTEMBER 30,2002 |             | DECEMBER 31,2001 |  
|--------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ---------------- | -
|                                                                                                                |  |                   |             |                  |  
|                                                                                                                |  | (Unaudited)       |             | (Audited)        |  
|                                                                                                                |  |                   |             |                  |  
|                                                                                                                |  |                   |             |                  |  
|ASSETS                                                                                                          |  |                   |             |                  |  
|Cash and due from banks                                                                                         |  | $                 | 3,488,358   |                  | $
|Federal funds sold                                                                                              |  |                   | 2,095,000   |                  |  
|Investment securities:                                                                                          |  |                   |             |                  |  
|Securities available-for-sale, at market value                                                                  |  |                   | 33,405,786  |                  |  
|Restricted equity securities                                                                                    |  |                   | 1,188,000   |                  |  
|Loans net of allowance for loan losses of $734,150 and $708,918                                                 |  |                   | 67,877,916  |                  |  
|Premises and equipment (net)                                                                                    |  |                   | 552,411     |                  |  
|Other assets                                                                                                    |  |                   | 3,489,509   |                  |  
|                                                                                                                |  |                   |             |                  |  
|TOTAL ASSETS                                                                                                    |  | $                 | 112,096,980 |                  | $
|                                                                                                                |  |                   |             |                  |  
|                                                                                                                |  |                   |             |                  |  
|LIABILITIES                                                                                                     |  |                   |             |                  |  
|Deposits:                                                                                                       |  |                   |             |                  |  
|Non interest-bearing demand                                                                                     |  | $                 | 9,473,900   |                  | $
|Interest-bearing demand and money market                                                                        |  |                   | 14,358,899  |                  |  
|Savings                                                                                                         |  |                   | 90,312      |                  |  
|Time deposits of $100,000 or more                                                                               |  |                   | 19,688,158  |                  |  
|Other time deposits                                                                                             |  |                   | 38,249,274  |                  |  
|                                                                                                                |  |                   |             |                  |  
|Total Deposits                                                                                                  |  |                   | 81,860,543  |                  |  
|Securities sold under repurchase agreements                                                                     |  |                   | 692,580     |                  |  
|Other borrowed money                                                                                            |  |                   | 18,569,500  |                  |  
|Other liabilities                                                                                               |  |                   | 1,967,993   |                  |  
|                                                                                                                |  |                   |             |                  |  
|TOTAL LIABILITIES                                                                                               |  |                   | 103,090,616 |                  |  
|                                                                                                                |  |                   |             |                  |  
|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; 1,235,000 issued                                                                  |  |                   | 1,235,000   |                  |  
|Surplus                                                                                                         |  |                   | 10,006,752  |                  |  
|Accumulated other comprehensive income-market valuation reserve on     investment securities available-for-sale |  |                   | 23,590      |                  |  
|Treasury stock                                                                                                  |  |                   | (1,315,442  | )                |  
|Unearned ESOP shares                                                                                            |  |                   | (399,998    | )                |  
|Accumulated deficit                                                                                             |  |                   | (543,538    | )                |  
|                                                                                                                |  |                   |             |                  |  
|TOTAL STOCKHOLDERS EQUITY                                                                                      |  |                   | 9,006,364   |                  |  
|                                                                                                                |  |                   |             |                  |  
|TOTAL LIABILITIES AND EQUITY                                                                                    |  | $                 | 112,096,980 |                  | $
|                                                                                                                |  |                   |             |                  |  

See notes to the consolidated financial statements.



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

|                                                                    |  | FOR THENINE-MONTHPERIOD ENDEDSEPTEMBER 30, |           | FOR THETHREE-MONTHPERIOD ENDEDSEPTEMBER 30, |  
|------------------------------------------------------------------- |  | ------------------------------------------ | --------- | ------------------------------------------- | -
|                                                                    |  |                                            |           |                                             |  
|                                                                    |  | 2002                                       |           | 2001                                        |  
|                                                                    |  |                                            |           |                                             |  
|Interest income loans and leases, including fees                    |  | $                                          | 3,652,346 |                                             | $
|Bank-owned certificates of deposit                                  |  |                                            | 9,411     |                                             |  
|Investment securities:                                              |  |                                            |           |                                             |  
|U.S. Treasury securities                                            |  |                                            |          |                                             |  
|U.S. government agencies                                            |  |                                            | 842,742   |                                             |  
|Other investments                                                   |  |                                            | 208,528   |                                             |  
|Federal funds sold                                                  |  |                                            | 81,112    |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Total interest income                                               |  |                                            | 4,794,139 |                                             |  
|Interest expense:                                                   |  |                                            |           |                                             |  
|Interest bearing demand and money market                            |  |                                            | 268,821   |                                             |  
|Savings                                                             |  |                                            | 1,438     |                                             |  
|Time deposits of $100,000 or more                                   |  |                                            | 579,822   |                                             |  
|Other time deposits                                                 |  |                                            | 1,363,282 |                                             |  
|Other borrowings                                                    |  |                                            | 381,270   |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Total interest expense                                              |  |                                            | 2,594,633 |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Net interest income                                                 |  |                                            | 2,199,506 |                                             |  
|Provision for possible loan losses                                  |  |                                            | 386,082   |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Net interest income after provision for possible loan        losses |  |                                            | 1,813,424 |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Other income:                                                       |  |                                            |           |                                             |  
|Service charges on deposit accounts                                 |  |                                            | 45,248    |                                             |  
|Gains on the sale of loans and leases (net)                         |  |                                            | 302,341   |                                             |  
|Gains on the sale of securities available for sale                  |  |                                            | 233,857   |                                             |  
|Other income                                                        |  |                                            | 281,760   |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Total other income                                                  |  |                                            | 863,206   |                                             |  
|Other expense:                                                      |  |                                            |           |                                             |  
|Salaries and other compensation                                     |  |                                            | 1,187,210 |                                             |  
|Employee benefits                                                   |  |                                            | 213,453   |                                             |  
|Net occupancy and equipment expense                                 |  |                                            | 394,023   |                                             |  
|Professional and other outside services                             |  |                                            | 280,142   |                                             |  
|Other expense                                                       |  |                                            | 489,116   |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Total other expenses                                                |  |                                            | 2,563,944 |                                             |  
|                                                                    |  |                                            |           |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Net income before income tax                                        |  |                                            | 112,686   |                                             |  
|Income tax                                                          |  |                                            |          |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Net income                                                          |  | $                                          | 112,686   |                                             | $
|                                                                    |  |                                            |           |                                             |  
|                                                                    |  |                                            |           |                                             |  
|Basic and diluted earnings per share                                |  | $                                          | .11       |                                             | $
|                                                                    |  |                                            |           |                                             |  

See notes to the consolidated financial statements.



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

|                                                        |  | FOR THENINE-MONTHPERIOD ENDEDSEPTEMBER 30, |         | FOR THETHREE-MONTHPERIOD ENDEDSEPTEMBER 30, |  
|------------------------------------------------------- |  | ------------------------------------------ | ------- | ------------------------------------------- | -
|                                                        |  |                                            |         |                                             |  
|                                                        |  | 2002                                       |         | 2001                                        |  
|                                                        |  |                                            |         |                                             |  
|Net income                                              |  | $                                          | 112,686 |                                             | $
|Other comprehensive income, before tax:                 |  |                                            |         |                                             |  
|Unrealized holding gains (losses) arising during period |  |                                            | 44,456  |                                             |  
|Income tax benefit (expense)                            |  |                                            | (16,004 | )                                           |  
|                                                        |  |                                            |         |                                             |  
|Comprehensive income (loss)                             |  | $                                          | 141,138 |                                             | $
|                                                        |  |                                            |         |                                             |  

See notes to the consolidated financial statements.



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

|                                                                                                |  | FOR THENINE-MONTHPERIOD ENDEDSEPTEMBER 30, |            
|----------------------------------------------------------------------------------------------- |  | ------------------------------------------ | -----------
|                                                                                                |  |                                            |            
|                                                                                                |  | 2002                                       |            
|                                                                                                |  |                                            |            
|Cash flows from operating activities:                                                           |  |                                            |            
|Net income (loss)                                                                               |  | $                                          | 112,686    
|Adjustments to reconcile net income (loss) to net cash provided by operating        activities: |  |                                            |            
|Net amortization of investment securities                                                       |  |                                            | 159,055    
|Depreciation and amortization of premises and equipment                                         |  |                                            | 120,961    
|Gains on the sale of loans and leases                                                           |  |                                            | (302,341   
|Gains on the sale of securities available for sale                                              |  |                                            | (233,858   
|Provision for loan losses                                                                       |  |                                            | 386,082    
|Increase (decrease) in other assets                                                             |  |                                            | (358,962   
|Increase in other liabilities                                                                   |  |                                            | 191,748    
|                                                                                                |  |                                            |            
|Net cash provided by operating activities                                                       |  |                                            | 75,371     
|                                                                                                |  |                                            |            
|Cash flows from investing activities:                                                           |  |                                            |            
|Maturities of investment securities available-for-sale                                          |  |                                            | 10,642,397 
|Purchases of investment securities available-for-sale                                           |  |                                            | (35,029,651
|Purchases of restricted equity securities                                                       |  |                                            | (550,000   
|Proceeds from sales of investment securities available-for-sale                                 |  |                                            | 22,987,491 
|Proceeds from sale of loans and leases                                                          |  |                                            | 4,314,892  
|Loans originated, net of principal repayments                                                   |  |                                            | (10,230,914
|Purchases of premises and equipment                                                             |  |                                            | (48,444    
|                                                                                                |  |                                            |            
|Net cash used in investing activities                                                           |  |                                            | (7,914,229 
|                                                                                                |  |                                            |            
|Cash flows from financing activities:                                                           |  |                                            |            
|Increase (decrease) in securities sold under repurchase agreements                              |  |                                            | 8,932      
|Sale of treasury stock                                                                          |  |                                            | 88,785     
|Increase in other borrowings                                                                    |  |                                            | 11,000,000 
|Increase (decrease) in deposits                                                                 |  |                                            | (3,611,037 
|                                                                                                |  |                                            |            
|Net cash provided by financing activities                                                       |  |                                            | 7,486,680  
|                                                                                                |  |                                            |            
|                                                                                                |  |                                            |            
|Net increase (decrease) in cash and cash equivalents                                            |  |                                            | (352,178   
|Cash and cash equivalents, beginning of period                                                  |  |                                            | 5,935,536  
|                                                                                                |  |                                            |            
|                                                                                                |  |                                            |            
|Cash and cash equivalents, end of period                                                        |  | $                                          | 5,583,358  
|                                                                                                |  |                                            |            

See notes to the consolidated financial statements.



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CNB HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE NINE MONTHSENDED
SEPTEMBER 30, 2002(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, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002.
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, 2001, 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 or available to common shareholders by the weighted average number of share outstanding during the period, which totaled 1,069,259 shares for the nine and three months ended September 30, 2002. There were no
potentially dilutive common shares at September 30, 2002.

NOTE 3  LOANS AND LEASES RECEIVABLE

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

|                                           |  | SEPTEMBER 30,2002 |        | DECEMBER 31,2001 |  
|------------------------------------------ |  | ----------------- | ------ | ---------------- | -
|                                           |  |                   |        |                  |  
|Commercial Loans                           |  | $                 | 23,456 |                  | $
|Real Estate  construction                 |  |                   | 28,676 |                  |  
|Real Estate  mortgage                     |  |                   | 7,584  |                  |  
|Leasing financing                          |  |                   | 3,024  |                  |  
|Installment Loans                          |  |                   | 5,987  |                  |  
|                                           |  |                   |        |                  |  
|Total Loans                                |  |                   | 68,727 |                  |  
|Less: Deferred loan fees and costs         |  |                   | 115    |                  |  
|Less: Allowance for loans and lease losses |  |                   | 734    |                  |  
|                                           |  |                   |        |                  |  
|Loans and leases receivable, net           |  | $                 | 67,878 |                  | $
|                                           |  |                   |        |                  |  

NOTE 4  ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income market valuation reserve on investment
securities available-for-sale is as follows

|Beginning balance - January 1, 2002 |  | $ | (4,862 | )
|----------------------------------- |  | - | ------ | -
|Current - period change             |  |   | 28,452 |  
|                                    |  |   |       
|Ending balance - September 30, 2002 |  | $ | 23,590 |  
|                                    |  |   |       



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NOTE 5  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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements made in this Report and in documents
incorporated by reference herein, including matters discussed under the caption Managements Discussion and Analysis of Financial Condition and Results of Operations, 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 Securities Exchange Act of 1934, as amended (the Exchange Act), as amended. 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 in addition to historical information. 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 and (iv) changes in the legislative and regulatory environment. 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. Many of the forgoing factors 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.
|------- | --------------------------------------------------------------------------------------

The Company
was incorporated in Georgia on November 5, 1997 to become a bank holding company and to own and control all of the outstanding shares of the Bank. In a private offering and a separate public offering conducted during 1998, the Company sold and
issued an aggregate of 1,235,000 shares of common stock, par value $1.00 per share (the Common Stock), at $10.00 per share. Proceeds from these stock offerings amounted to an aggregate of $11,103,625, net of selling expenses and
repayment of the organizers expense. The Company purchased 100% of the Banks common stock by injecting approximately $9.6 million into the Banks capital accounts immediately prior to the Banks opening on July 27,
1998.

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 $104,261,410 on December 31, 2001 to $112,096,980 on September 30, 2002, an increase of $7,835,570. This increase was due to an increase in
loans of $5,832,281, a $1,519,022 increase in securities available for sale, and a $2,927,835 increase in cash and due from banks. This growth was primarily funded by an $11,000,000 increase in other borrowed money. Due to increased competition in
our market, deposits decreased $3,611,037. However, we were able to fund our growth with less expensive borrowings from the Federal Home Loan Bank of Atlanta.

The $3,611,037 decrease in deposits came from a decrease of $1,130,508 in interest bearing demand and money market, a decrease of $1,377,312 in time deposits of $100,000 or more and a decrease of $1,203,029 in other time deposits.
Non-interest-bearing demand increased $79,326.

Allowance for Loan Losses

The allowance for loan losses as of
September 30, 2002 was $734,150 compared to $708,918 as of December 31, 2001. The allowance for loan losses, as a percentage of total gross loans, for September 30, 2002 was 1.07%, compared to 1.13% as of December 31, 2001. The amount provided for
the allowance during the third quarter of 2002 was prompted by one credit totaling approximately $357,000 that was charged off during the period. During the second quarter of 2002, 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. Another independent loan review will be conducted in the fourth quarter. 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 to absorb future losses; 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.



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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, 2002 financial statements evidence a satisfactory liquidity position as total cash and cash equivalents amounted to $5,583,358,
representing 4.98% of total assets. Securities amounted to $34,593,786, representing 30.86% of total assets; these securities provide a secondary source of liquidity since they can be converted into cash in a timely manner. The Companys
ability to maintain and expand its deposit base and borrowing capabilities are a source of liquidity. For the nine-month period ended September 30, 2002, total deposits decreased $3,611,037 as a result of increased competition. Additionally, the
Company has offered secure repurchase accounts to its customers that total $692,580. 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. Management is not aware of any trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, the
Companys liquidity increasing or decreasing in any material way.

During 2002, the Company reissued 10,000 shares of its common stock which were
purchased by the Banks 401k Plan. Participants in the plan purchased the common stock for $88,785.

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

|                               |  | SEPTEMBER 30,2002 |       | MINIMUMREGULATORYREQUIREMENT | 
|------------------------------ |  | ----------------- | ----- | ---------------------------- | 
|                               |  |                   |       |                              | 
|Tier 1 Capital                 |  |                   | 11.88 | %                            | 
|Tier 2 Capital                 |  |                   | 0.87  |                              | 
|                               |  |                   |       |                              | 
|Total risk-based capital ratio |  |                   | 12.75 | %                            | 
|                               |  |                   |       |                              | 
|Leverage ratio                 |  |                   | 8.68  | %                            | 
|                               |  |                   |       |                              | 

RESULTS OF OPERATIONS

Nine-Month Period Ended September 30, 2002

Net income for the nine-month period ended September 30, 2002 amounted to $112,686, or $.11 per basic and diluted income per share compared to net income of $59,199 or
$.06 per basic and diluted earnings per share. 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.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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|September 30, 2002          |  |         |            |          |   |            | 
|--------------------------- |  | ------- | ---------- | -------- | - | ---------- | 
|                            |  |         |            |          |   |            | 
|Interest                    |  |         |            | Interest |   | Annualized | 
|Earning Assets/             |  | Average |            | Income/  |   | Yield/     | 
|Bearing Liabilities         |  | Balance |            | Cost     |   | Cost       | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Federal funds sold          |  | $       | 6,993,376  |          | $ | 90,523     | 
|Securities                  |  |         | 27,929,446 |          |   | 1,051,270  | 
|Loans                       |  |         | 63,659,181 |          |   | 3,652,346  | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 98,582,003 |          | $ | 4,794,139  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Deposits                    |  | $       | 71,232,574 |          | $ | 2,213,363  | 
|Other borrowings            |  |         | 12,190,529 |          |   | 381,270    | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 83,423,103 |          | $ | 2,594,633  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net interest income         |  |         |            |          | $ | 2,199,506  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net yield on earning assets |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 

|September 30, 2001          |  |         |            |          |   |            | 
|--------------------------- |  | ------- | ---------- | -------- | - | ---------- | 
|                            |  |         |            |          |   |            | 
|Interest                    |  |         |            | Interest |   | Annualized | 
|Earning Assets/             |  | Average |            | Income/  |   | Yield/     | 
|Bearing Liabilities         |  | Balance |            | Cost     |   | Cost       | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Federal funds sold          |  | $       | 7,311,792  |          | $ | 272,187    | 
|Securities                  |  |         | 27,852,734 |          |   | 1,306,621  | 
|Loans                       |  |         | 50,574,130 |          |   | 3,689,482  | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 85,738,656 |          | $ | 5,268,290  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Deposits                    |  | $       | 73,872,896 |          | $ | 3,029,493  | 
|Other borrowings            |  |         | 4,497,045  |          |   | 169,639    | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 78,369,941 |          | $ | 3,199,132  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net interest income         |  |         |            |          | $ | 2,069,158  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net yield on earning assets |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 

| | b. |  | Total other income for the nine-month period ended September 30, 2002 amounted to $863,206 compared to $394,292 for 2001. On an annualized basis, this represents 1.03% of total assets compared to 0.39% of total assets for
the same period in 2001. The Bank sold loans totaling $4,314,892 without recourse compared with $3,962,127 in 2001. The profit from these sales was $302,341 or 35.03% of total other income compared with $207,367 and 52.59% for 2001. The service
charge on deposit accounts is relatively low, at $45,248 or 5.24% of total other income compared with $43,266 or 10.97% for 2001. Most of our deposit customers maintain balances at levels that prevent service charges. Additionally, available for
sale securities were sold for net gains of $233,857 or 27.09% of total other income compared with $57,581 or 14.60% for the same period in 2001. Of the $281,760 miscellaneous other income or 32.64% of total other income, $169,663 or 60.22% 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 2001, of the $86,078 of miscellaneous other income, or 21.83% of total other income, $75,693
or 87.94% related to mortgage origination activity. An additional $103,129 or 36.60% of miscellaneous other income consisted of income from bank owned life insurance. This was not a source of miscellaneous other income in 2001.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | c. |  | Operating expenses for the nine-month period ended September 30, 2002 amounted to $2,563,944 compared to $2,263,251 for 2001. The largest expense being related to salaries and employee benefits and
professional                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





---

| | and outside services. The largest component of the increase was a result of increased volumes of loan activity from employees compensated through incentives. Incentives increased from $149,197 in 2001 to $204,271. The
additional increase was a result of increased loan servicing, deposit servicing and general overhead that routinely occurs in a growing financial institution. On an annualized basis, operating expenses represent 3.04% of total assets compared to
3.02% in 2001. | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

| | d. |  | The Company has recorded no provision for income taxes due to accumulated deficits incurred to date.
| | -- |  | ----------------------------------------------------------------------------------------------------

Three-Month Period Ended September 30, 2002

Net income for the three-month period ended September 30, 2002 amounted to $10,226, or $.01 per diluted share compared to $40,679, or $.04 per diluted share for the same
three-month period ended September 30, 2001. 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, 2002          |  |         |             |          |   |            | 
|--------------------------- |  | ------- | ----------- | -------- | - | ---------- | 
|                            |  |         |             |          |   |            | 
|Interest                    |  |         |             | Interest |   | Annualized | 
|Earning Assets/             |  | Average |             | Income/  |   | Yield/     | 
|Bearing Liabilities         |  | Balance |             | Cost     |   | Cost       | 
|                            |  |         |             |          |   |            | 
|Federal funds sold          |  | $       | 9,952,243   |          | $ | 43,601     | 
|Securities                  |  |         | 28,153,362  |          |   | 312,985    | 
|Loans                       |  |         | 63,043,542  |          |   | 1,229,799  | 
|                            |  |         |             |          |   |            | 
|Total                       |  | $       | 101,149,147 |          | $ | 1,586,385  | 
|                            |  |         |             |          |   |            | 
|                            |  |         |             |          |   |            | 
|Deposits                    |  | $       | 73,223,458  |          | $ | 725,019    | 
|Other borrowings            |  |         | 14,039,243  |          |   | 146,076    | 
|                            |  |         |             |          |   |            | 
|Total                       |  | $       | 87,262,701  |          | $ | 871,095    | 
|                            |  |         |             |          |   |            | 
|                            |  |         |             |          |   |            | 
|Net interest income         |  |         |             |          | $ | 715,290    | 
|                            |  |         |             |          |   |            | 
|                            |  |         |             |          |   |            | 
|Net yield on earning assets |  |         |             |          |   |            | 
|                            |  |         |             |          |   |            | 



---

|September 30, 2001          |  |         |            |          |   |            | 
|--------------------------- |  | ------- | ---------- | -------- | - | ---------- | 
|                            |  |         |            |          |   |            | 
|Interest                    |  |         |            | Interest |   | Annualized | 
|Earning Assets/             |  | Average |            | Income/  |   | Yield/     | 
|Bearing Liabilities         |  | Balance |            | Cost     |   | Cost       | 
|                            |  |         |            |          |   |            | 
|Federal funds sold          |  | $       | 3,693,354  |          | $ | 30,565     | 
|Securities                  |  |         | 29,911,543 |          |   | 461,052    | 
|Loans                       |  |         | 55,959,413 |          |   | 1,249,035  | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 89,564,310 |          | $ | 1,740,652  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Deposits                    |  | $       | 77,979,596 |          | $ | 1,008,804  | 
|Other borrowings            |  |         | 4,635,765  |          |   | 46,134     | 
|                            |  |         |            |          |   |            | 
|Total                       |  | $       | 82,615,361 |          | $ | 1,054,938  | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net interest income         |  |         |            |          | $ | 685,714    | 
|                            |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 
|Net yield on earning assets |  |         |            |          |   |            | 
|                            |  |         |            |          |   |            | 

| | b. |  | Total other income for three-month period ended September 30, 2002 amounted to $447,389 compared with $141,328 for 2001. On an annualized basis, this represents 1.59% of total assets compared with 0.56% for 2001. The Bank
sold loans and leases totaling $1,437,410 without recourse compared to $1,015,999 in 2001. The profit in 2002 from these sales was $86,391 or 19.31% of total other income compared with $81,653 or 57.78% for 2001. The service charge on deposit
accounts was $14,357 or 3.21% of total other income compared with $15,975 or 11.30% for 2001. Most of our deposit customers maintain balances at levels that prevent service charges. Miscellaneous other income was $113,253 or 25.31% of total other
income compared to $26,403 or 18.68% of total other income for 2001. The majority of 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, 2002 amounted to $850,453 compared to $753,363 in 2001, with the largest expense being related to salaries and employee benefits and professional and
outside services. On an annualized basis, this represents 3.03% of total assets compared with 3.01% of total assets in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|Item 3. | Controls and Procedures
|------- | -----------------------

Within 90 days prior to the date of filing of 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. Based on this evaluation, our Chief Executive Officer
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
significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of this evaluation.





---

PART II. OTHER INFORMATION

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

|(a) |  | Exhibits. The following exhibits are filed with this Report:
|--- |  | ------------------------------------------------------------

Exhibit No.Description

| |  | 99.1            Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---------------------------------------------------------------------------------------

| |  | 99.2            Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---------------------------------------------------------------------------------------

|(b) |  | Reports on Form 8-K. None
|--- |  | -------------------------





---



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 13, 2002 |  | By:
|                        |  |    
|                        |  |    

|                        |  |    
|----------------------- |  | ---
|Date: November 13, 2002 |  | By:
|                        |  |    
|                        |  |    



---

CERTIFICATIONS

I, H.N. Padget, Jr., President and C.E.O., certify that:

|1. |  | I have reviewed this quarterly report on Form 10-QSB of CNB Holdings, Inc.                                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                                                                                                                                                                                                                               
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;
|   |  |                                                                                                                                                                                                                                                                                                                               
|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;                   
|   |  |                                                                                                                                                                                                                                                                                                                               
|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                         

| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during
the period in which this quarterly report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing of this quarterly report (the Evaluation Date); and                                                                                                  
| |    | 
| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;                                                                                                                   

|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of
directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        





---



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: November 13, 2002 |  |  |                                                                    
|----------------------- |  |  | -------------------------------------------------------------------
|                        |  |  | /s/H.N.PADGET,JR.                                                  
|                        |  |  |                                                                    
|                        |  |  | H.N. Padget, Jr., President and C.E.O.(Principal Executive Officer)



---



I, Danny F. Dukes, C.F.O., certify that:

|1. |  | I have reviewed this quarterly report on Form 10-QSB of CNB Holdings, Inc.                                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                                                                                                                                                                                                                               
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;
|   |  |                                                                                                                                                                                                                                                                                                                               
|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;                   
|   |  |                                                                                                                                                                                                                                                                                                                               
|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                         

| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during
the period in which this quarterly report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing of this quarterly report (the Evaluation Date); and                                                                                                  
| |    | 
| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;                                                                                                                   

|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of
directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | 
| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        





---



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: November 13, 2002 |  |  |                                                                         
|----------------------- |  |  | ------------------------------------------------------------------------
|                        |  |  | /s/ DANNYF.DUKES                                                        
|                        |  |  |                                                                         
|                        |  |  | Danny F. Dukes, S.V.P/C.F.O.(Principal Financial and Accounting Officer)