---

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 March 31, 2003                                           
|                                                                  |                                                                                         
|o                                                                 | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|                                                                  |                                                                                         
|                                                                  | 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)                                          |                                                                                         
|                                                                  |                                                                                         
|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 o
|----- | ----

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 May 13, 2003
|----------------------------- |  | ---------------------------
|                              |  |                            
|Common Stock, $1.00 par value |  | 1,080,463                  

Transitional Small Business Disclosure Format:

|Yes o | No x
|----- | ----

---



---

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CNB HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

|                                                                                                      |  | MARCH 31, 2003 |             | DECEMBER 31, 2002 |  
|----------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | -
|                                                                                                      |  |                |             |                   |  
|                                                                                                      |  | (Unaudited)    |             | (Audited)         |  
|ASSETS                                                                                                |  |                |             |                   |  
|Cash and due from banks                                                                               |  | $              | 1,904,844   |                   | $
|Interest bearing deposits in banks                                                                    |  |                | 3,031,394   |                   |  
|Investment securities:                                                                                |  |                |             |                   |  
|Securities available-for-sale, at market value                                                        |  |                | 15,014,835  |                   |  
|Securities held-to-maturity, estimated fair value of $7,015,409 and $8,053,746 respectively           |  |                | 6,963,449   |                   |  
|Restricted equity securities                                                                          |  |                | 1,588,000   |                   |  
|Loans net of deferred loan fees and allowance for loan losses of $914,181 and $918,250                |  |                | 84,367,060  |                   |  
|Premises and equipment (net)                                                                          |  |                | 651,933     |                   |  
|Other assets                                                                                          |  |                | 4,266,049   |                   |  
|                                                                                                      |  |                |             |                   |  
|TOTAL ASSETS                                                                                          |  | $              | 117,787,564 |                   | $
|                                                                                                      |  |                |             |                   |  
|LIABILITIES                                                                                           |  |                |             |                   |  
|Deposits:                                                                                             |  |                |             |                   |  
|Non interest-bearing demand                                                                           |  | $              | 10,285,055  |                   | $
|Interest-bearing demand and money market                                                              |  |                | 14,131,220  |                   |  
|Savings                                                                                               |  |                | 104,423     |                   |  
|Time deposits of $100,000 or more                                                                     |  |                | 25,255,667  |                   |  
|Other time deposits                                                                                   |  |                | 37,873,645  |                   |  
|                                                                                                      |  |                |             |                   |  
|Total Deposits                                                                                        |  |                | 87,650,010  |                   |  
|Securities sold under repurchase agreements                                                           |  |                | 1,737,120   |                   |  
|Other borrowings                                                                                      |  |                | 17,569,500  |                   |  
|Other liabilities                                                                                     |  |                | 1,653,852   |                   |  
|                                                                                                      |  |                |             |                   |  
|TOTAL LIABILITIES                                                                                     |  |                | 108,610,482 |                   |  
|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                                                                                               |  |                | 10,010,169  |                   |  
|Accumulated other comprehensive income/(loss)-                                                        |  |                | 860         |                   |  
|Treasury stock                                                                                        |  |                | (1,240,589  | )                 |  
|Unearned ESOP shares                                                                                  |  |                | (399,998    | )                 |  
|Accumulated deficit                                                                                   |  |                | (428,360    | )                 |  
|                                                                                                      |  |                |             |                   |  
|TOTAL STOCKHOLDERS EQUITY                                                                            |  |                | 9,177,082   |                   |  
|                                                                                                      |  |                |             |                   |  
|TOTAL LIABILITIES AND EQUITY                                                                          |  | $              | 117,787,564 |                   | $
|                                                                                                      |  |                |             |                   |  

See notes to the consolidated financial statements.

2



---

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

|                                                             |  | FOR THE THREE-MONTH PERIOD ENDED MARCH 31, |          
|------------------------------------------------------------ |  | ------------------------------------------ | ---------
|                                                             |  |                                            |          
|                                                             |  | 2003                                       |          
|                                                             |  |                                            |          
|Interest income:                                             |  |                                            |          
|Loans and leases, including fees                             |  | $                                          | 1,441,902
|Investment securities:                                       |  |                                            |          
|U.S. Government agencies                                     |  |                                            | 162,496  
|Other investments                                            |  |                                            | 44,369   
|Interest bearing deposits in banks                           |  |                                            | 11,138   
|                                                             |  |                                            |          
|Total interest income                                        |  |                                            | 1,659,905
|                                                             |  |                                            |          
|Interest expense:                                            |  |                                            |          
|Interest bearing demand and money market                     |  |                                            | 36,880   
|Savings                                                      |  |                                            | 168      
|Time deposits of $100,000 or more                            |  |                                            | 202,567  
|Other time deposits                                          |  |                                            | 381,040  
|Other borrowings                                             |  |                                            | 169,754  
|                                                             |  |                                            |          
|Total interest expense                                       |  |                                            | 790,409  
|                                                             |  |                                            |          
|Net interest income                                          |  |                                            | 869,496  
|                                                             |  |                                            |          
|Provision for possible loan losses                           |  |                                            | 79,900   
|                                                             |  |                                            |          
|Net interest income after provision for possible loan losses |  |                                            | 789,596  
|                                                             |  |                                            |          
|Other income:                                                |  |                                            |          
|Service charges on deposit accounts                          |  |                                            | 13,367   
|Gains on the sale of loans and leases (net)                  |  |                                            | 181,199  
|Other income                                                 |  |                                            | 138,790  
|                                                             |  |                                            |          
|Total other income                                           |  |                                            | 333,356  
|                                                             |  |                                            |          
|Other expense:                                               |  |                                            |          
|Salaries and other compensation                              |  |                                            | 476,420  
|Employee benefits                                            |  |                                            | 106,401  
|Net occupancy and equipment expense                          |  |                                            | 133,380  
|Professional and other outside services                      |  |                                            | 79,055   
|Other expense                                                |  |                                            | 178,166  
|                                                             |  |                                            |          
|Total other expenses                                         |  |                                            | 973,422  
|                                                             |  |                                            |          
|Net income before income taxes                               |  |                                            | 149,530  
|Income taxes                                                 |  |                                            | 21,704   
|                                                             |  |                                            |          
|Net income                                                   |  | $                                          | 127,826  
|                                                             |  |                                            |          
|Basic and diluted income per share                           |  | $                                          | 0.12     
|                                                             |  |                                            |          

See notes to the consolidated financial statements.

3



---

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

|                                                                                                         |  | FOR THE THREE-MONTH PERIOD ENDED MARCH 31, |        
|-------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ | -------
|                                                                                                         |  |                                            |        
|                                                                                                         |  | 2003                                       |        
|                                                                                                         |  |                                            |        
|Net income                                                                                               |  | $                                          | 127,826
|                                                                                                         |  |                                            |        
|Other comprehensive income (loss):                                                                       |  |                                            |        
|Unrealized holding gains (losses) on securities available for sale:                                      |  |                                            |        
|Unrealized holding gains losses arising during period, net of tax of $11,299, and ($61,107) repectively  |  |                                            | 20,088 
|Reclassification adjustment for gains realized in net income, net of tax of $162, and $592, respectively |  |                                            | (289   
|Unrealized losses on cash flow hedges, net of tax of $2,861                                              |  |                                            | (5,086 
|                                                                                                         |  |                                            |        
|Other comprehensive income (loss)                                                                        |  |                                            | 14,713 
|                                                                                                         |  |                                            |        
|Comprehensive income (loss)                                                                              |  | $                                          | 142,539
|                                                                                                         |  |                                            |        

See notes to the consolidated financial statements.

4



---

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

|                                                                                            |  | FOR THE THREE-MONTH PERIOD ENDED MARCH 31, |           
|------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ----------
|                                                                                            |  |                                            |           
|                                                                                            |  | 2003                                       |           
|                                                                                            |  |                                            |           
|Cash flows from operating activities:                                                       |  |                                            |           
|Net income                                                                                  |  | $                                          | 127,826   
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                                            |           
|Net amortization of investment securities                                                   |  |                                            | 65,031    
|Depreciation and amortization of premises and equipment                                     |  |                                            | 42,454    
|Gain on sale of investment securities available-for-sale                                    |  |                                            | (451      
|Gain on sale of loans                                                                       |  |                                            | (181,199  
|Loss on sale of repossessed assets                                                          |  |                                            | 14,046    
|Provision for loan losses                                                                   |  |                                            | 79,900    
|(Increase) decrease in other assets                                                         |  |                                            | 21,702    
|Increase/(decrease) in other liabilities                                                    |  |                                            | 125,831   
|                                                                                            |  |                                            |           
|Net cash provided by (used in) operating activities                                         |  |                                            | 295,140   
|                                                                                            |  |                                            |           
|Cash flows from investing activities:                                                       |  |                                            |           
|Maturities of investment securities available-for-sale                                      |  |                                            | 4,351,086 
|Proceeds from sale of investment securities available-for-sale                              |  |                                            | 566,270   
|Purchases of investment securities available-for-sale                                       |  |                                            |          
|Maturities of investment securities held-to-maturity                                        |  |                                            | 992,890   
|Proceeds from sale of loans and leases                                                      |  |                                            | 2,705,963 
|Loans originated, net of principal repayments                                               |  |                                            | (2,791,295
|Purchases of premises and equipment                                                         |  |                                            | (161,845  
|Proceeds from sale of repossessed assets                                                    |  |                                            | 34,400    
|                                                                                            |  |                                            |           
|Net cash provided by (used in) investing activities                                         |  |                                            | 5,697,469 
|                                                                                            |  |                                            |           
|Cash flows from financing activities:                                                       |  |                                            |           
|Sale of treasury stock                                                                      |  |                                            | 15,095    
|Increase (decrease) in other borrowed funds                                                 |  |                                            | (7,000,000
|Increase  (decrease) in deposits                                                            |  |                                            | 2,930,081 
|Increase in securities sold under repurchase agreements                                     |  |                                            | 981,543   
|                                                                                            |  |                                            |           
|Net cash provided by (used in) financing activities                                         |  |                                            | (3,073,281
|                                                                                            |  |                                            |           
|Net increase in cash and cash equivalents                                                   |  |                                            | 2,919,328 
|Cash and cash equivalents, beginning of period                                              |  |                                            | 2,016,910 
|                                                                                            |  |                                            |           
|Cash and cash equivalents, end of period                                                    |  | $                                          | 4,936,238 
|                                                                                            |  |                                            |           

See notes to the consolidated financial statements.

5



---

CNB HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited 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 three month period ended March 31, 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 it 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 income
available to common stockholders by the weighted average number of share outstanding during the period, which totaled 1,076,374 shares for the three months ended March 31, 2003.

NOTE 3 
STOCK COMPENSATION PLANS

At March 31, 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.

6



---

|                                                                                                                |  | Three Months Ended March 31, |        
|--------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------
|                                                                                                                |  |                              |        
|                                                                                                                |  | 2003                         |        
|                                                                                                                |  |                              |        
|Net income, as reported                                                                                         |  | $                            | 127,826
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards |  |                              |       
|                                                                                                                |  |                              |        
|Pro forma net income                                                                                            |  | $                            | 127,826
|                                                                                                                |  |                              |        
|Earnings per share:                                                                                             |  |                              |        
|Basic - as reported                                                                                             |  | $                            | 0.12   
|                                                                                                                |  |                              |        
|Basic - pro forma                                                                                               |  | $                            | 0.12   
|                                                                                                                |  |                              |        
|Diluted - as reported                                                                                           |  | $                            | 0.12   
|                                                                                                                |  |                              |        
|Diluted - pro forma                                                                                             |  | $                            | 0.12   
|                                                                                                                |  |                              |        

NOTE 3  LOANS AND LEASES RECEIVABLE

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

|                                           |  | MARCH 31, 2003 |        | DECEMBER 31, 2002 |  
|------------------------------------------ |  | -------------- | ------ | ----------------- | -
|                                           |  |                |        |                   |  
|Commercial Loans                           |  | $              | 29,918 |                   | $
|Real Estate  construction                 |  |                | 15,413 |                   |  
|Real Estate  mortgage                     |  |                | 35,156 |                   |  
|Lease financing                            |  |                | 2,207  |                   |  
|Installment and other loans to individuals |  |                | 2,754  |                   |  
|                                           |  |                |        |                   |  
|Subtotal                                   |  |                | 85,448 |                   |  
|Less: Deferred loan fees and costs         |  |                | 167    |                   |  
|Less: Allowance for loans and lease losses |  |                | 914    |                   |  
|                                           |  |                |        |                   |  
|Loans and leases receivable, net           |  | $              | 84,367 |                   | $
|                                           |  |                |        |                   |  

NOTE 4  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

|                                    |  | Securities |        | Cash Flow Hedges |   | Total   |  
|----------------------------------- |  | ---------- | ------ | ---------------- | - | ------- | -
|                                    |  |            |        |                  |   |         |  
|Beginning balance - January 1, 2003 |  | $          | 10,360 |                  | $ | (24,213 | )
|Current - period change             |  |            | 19,799 |                  |   | (5,086  | )
|                                    |  |            |        |                  |   |         |  
|Ending balance - March 31, 2003     |  | $          | 30,159 |                  | $ | (29,299 | )
|                                    |  |            |        |                  |   |         |  

NOTE 5  NEW ACCOUNTING PRONOUNCEMENTS

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

7



---

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 federal
securities laws. 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 our forward-looking statements, although we may use other phrasing.  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 and (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 or threats of terrorism. 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.

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

CNB Holdings, Inc. (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 a de novo bank, Chattahoochee National Bank, Alpharetta, Georgia (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 decreased from $120,592,475 on December 31, 2002 to $117,787,564 on March 31, 2003, a decrease of $2,804,911. This decrease was due to a $5,943,890
decrease in investment securities, a $2,919,328 increase in cash and cash equivalents and a $481,209 decrease in net loans. The Bank also experienced a shift from other borrowings, with a decrease of $7,000,000, to deposits, with an increase of
$2,930,081, and securities sold under repurchase agreements, with an increase of $981,543.

8



---

The $2,930,081 increase in deposits resulted from an increase of  $5,188,711 in time deposits of $100,000 or
more, an increase of $1,482,281 in interest-bearing demand and money market accounts, a decrease of $994,817 in non interest-bearing demand accounts and a decrease of $2,764,670 in other time deposits. Brokered deposits made up $5,090,000 of the
increase in time deposits of $100,000 or more.

Allowance for Loan Losses

The allowance for loan losses as of March 31, 2003 was $914,181 compared to $918,250 as of December 31, 2002. The allowance for loan losses, as a percentage of total
gross loans, for March 31, 2003 was 1.07%, compared to 1.07% as of December 31, 2002. The decrease in the allowance during the first quarter of 2003 was prompted by normal risks inherent in a slightly decreasing loan portfolio. During the second
quarter of 2003, a review of the Banks loan portfolio by an independent firm will be conducted.  The purpose of this review, which is conducted regularly, will be to assess the risk in the loan portfolio and to determine the adequacy of
the allowance for loan losses.  The review is expected to include 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, the report will be reviewed by the Banks Board of Directors and management. 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 March 31, 2003
financial statements evidence a satisfactory liquidity position as total cash and cash equivalents amounted to approximately $4.6 million, representing 3.9% of total assets. Securities amounted to $24.0 million, representing 20.3% 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 also a source of liquidity. For the
three-month period ended March 31, 2003, total deposits increased $2.9 million. During  this quarter, the Bank seized an opportunity to raise $5.1 million in brokered deposits with maturities of one to two years. At the time, these brokered
deposits were cheaper than raising deposits with similar maturities in our local market.  The bank used the increase in deposits and the decrease in investment securities to repay other borrowings by $7.0 million. 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. There are no 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.

9



---

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

|                               |  | MARCH 31, 2003 |       | MINIMUM REGULATORY REQUIREMENT | 
|------------------------------ |  | -------------- | ----- | ------------------------------ | 
|                               |  |                |       |                                | 
|Tier 1 Capital                 |  |                | 9.86  | %                              | 
|Tier 2 Capital                 |  |                | 0.93  |                                | 
|                               |  |                |       |                                | 
|Total risk-based capital ratio |  |                | 10.79 | %                              | 
|                               |  |                |       |                                | 
|Leverage ratio                 |  |                | 7.92  | %                              | 
|                               |  |                |       |                                | 

RESULTS OF OPERATIONS

Three-Month Period Ended March 31, 2003

Net income for the three-month period ended March 31, 2003 was
$127,826 compared to $56,347 for the same period in 2002. Earnings per share for the three-month period ended March 31, 2003 were $0.12 basic and diluted compared to basic and diluted earnings per share of $0.05 for the same 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.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                  
| |    | March 31, 2003                                                                                                                                                                                                                                                                   

|Interest Earning Assets/ Bearing Liabilities |  |   | Average Balance |  |   | Interest Income/ Cost |  |  | Annualized Yield/ Cost |  
|-------------------------------------------- |  | - | --------------- |  | - | --------------------- |  |  | ---------------------- | -
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Interest-bearing deposits in banks           |  | $ | 3,322,526       |  | $ | 11,138                |  |  | 1.34                   | %
|Securities                                   |  |   | 27,157,436      |  |   | 206,865               |  |  | 3.05                   | %
|Loans                                        |  |   | 85,683,424      |  |   | 1,441,902             |  |  | 6.73                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Total                                        |  | $ | 116,163,386     |  | $ | 1,659,905             |  |  | 5.72                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Deposits                                     |  | $ | 77,734,265      |  | $ | 620,655               |  |  | 3.19                   | %
|Securities sold under repurchase agreements  |  |   | 1,326,237       |  |   | 4,621                 |  |  | 1.39                   | %
|Other borrowings                             |  |   | 19,726,234      |  |   | 165,133               |  |  | 3.35                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Total                                        |  | $ | 98,786,736      |  | $ | 790,409               |  |  | 3.20                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Net interest income                          |  |   |                 |  | $ | 869,496               |  |  | 2.52                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  
|Net yield on earning assets                  |  |   |                 |  |   |                       |  |  | 2.99                   | %
|                                             |  |   |                 |  |   |                       |  |  |                        |  

10



---

|March 31, 2002
|--------------

|Interest Earning Assets/ Bearing Liabilities |  | Average Balance |             | Interest Income/ Cost |   | Annualized Yield/ Cost | 
|-------------------------------------------- |  | --------------- | ----------- | --------------------- | - | ---------------------- | 
|                                             |  |                 |             |                       |   |                        | 
|Federal funds sold                           |  | $               | 6,257,324   |                       | $ | 25,648                 | 
|Securities                                   |  |                 | 31,106,321  |                       |   | 409,754                | 
|Loans                                        |  |                 | 62,993,462  |                       |   | 1,185,164              | 
|                                             |  |                 |             |                       |   |                        | 
|Total                                        |  | $               | 100,357,107 |                       | $ | 1,620,566              | 
|                                             |  |                 |             |                       |   |                        | 
|Deposits                                     |  | $               | 72,351,495  |                       | $ | 793,207                | 
|Other borrowings                             |  |                 | 11,795,923  |                       |   | 110,477                | 
|                                             |  |                 |             |                       |   |                        | 
|Total                                        |  | $               | 84,147,418  |                       | $ | 903,684                | 
|                                             |  |                 |             |                       |   |                        | 
|Net interest income                          |  |                 |             |                       | $ | 716,882                | 
|                                             |  |                 |             |                       |   |                        | 
|Net yield on earning assets                  |  |                 |             |                       |   |                        | 
|                                             |  |                 |             |                       |   |                        | 

| |    | The Banks margin has increased compared to the prior period. Certificates repriced to lower rates in the fourth quarter of 2002 and the current period. This repricing, as
well as more reliance on less expensive other borrowed money caused this positive variance compared to the same period in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b. | Total other income for three-month period ended March 31, 2003 amounted to $333,356 compared to $226,807 in 2002. In the first quarter of 2002, the Bank sold loans totaling
$1,440,072 without recourse, recognizing a gain of $127,052 or 56.02% of total other income. Loans sold in the first quarter of 2003 totaled $2,705,963, recognizing a gain of $181,199 or 54.36% of total other income. Service charges on deposit
accounts were $13,367 or 4.00% of total other income compared to $15,714 or 6.93% in the first quarter of 2002. Of the $138,790 of miscellaneous other income or 41.63% of total other income, $106,562 or 76.78% 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 $84,041 of miscellaneous other income, or 37.05% of total other income, $52,078 or 61.97% related to mortgage
origination activity. Income from increased cash surrender values of bank owned life insurance was $40,643 or 29.28% of miscellaneous other income and 12.19% of total other income compared to  $28,966 or 34.47% of miscellaneous other income and
12.77% of total other income for the period ended March 31, 2002. We had a loss on the sale of repossessed equipment of $14,046 that reduced total other income for the period just ended. We did not have such a loss for the same period in
2002.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | c. | Operating expenses for the three-month period ended March 31, 2003 amounted to $973,422 compared to $840,342 in 2002, with the largest expense being related to salaries and
employee benefits and miscellaneous other expense.  On an annualized basis, this represents 3.35% of total assets in 2003 compared to 3.20% in 2002. The increase in salaries and employee benefits was largely due to higher incentives paid in the
mortgage banking and Small Business Administration (SBA) loan divisions based on corresponding increases in revenues. Also, the deferred compensation plan for executive officers and directors was in place for this quarter, but it did not exist for
the first quarter of 2002. The increase in miscellaneous other expense was due to costs for the repossession and disposition of other repossessed assets and the acquisition of other real estate owned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

11



---

The Company recorded its first current tax liability for income taxes in March of this quarter. The amount of the
accrual was $21,704.

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.

12



---

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                                                                                                                                                                                
| | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |             |  |                                                                                                                                                                                            
| | 10.1        |  | North Point Parkway Office Lease, dated March 24, 1998, between W. B. Wiggins, Jr. and CNB Holdings, Inc. d/b/a Chattahoochee National Bank                                                
| | 10.2        |  | Brookside Parkway Office Lease, dated October 29, 1999, between Duke-Weeks Realty Limited Partnership and Chattahoochee National Bank                                                      
| | 10.3        |  | Amendment No. 1 to Employment Agreement by and among CNB Holdings, Inc. and Chattahoochee National Bank and H.N. Padget, Jr.,
dated April 30, 2001                                         
| | 10.4        |  | Amendment No. 2 to Employment Agreement by and among CNB Holdings, Inc. and Chattahoochee National Bank and H.N. Padget, Jr., dated January 2,
2003                                        
| | 10.5        |  | Employment Agreement by and between Steven G. Deaton and CNB Holdings, Inc. and Chattahoochee National Bank, dated September 24, 2001                                                      
| | 10.6        |  | Amendment No. 1 to Employment Agreement by and between Steven G. Deaton and CNB Holdings, Inc. and Chattahoochee National Bank, dated
January 2, 2003                                      
| | 10.7        |  | Employment Agreement by and between Danny F. Dukes and CNB Holdings, Inc. and Chattahoochee National Bank datedJanuary 2,
2003                                                             
| | 99.1        |  | Certification by H.N. Padget, Jr., as President and Chief Executive Officer of CNB Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350)       
| | 99.2        |  | Certification by Danny F. Dukes, as Senior Vice President, Chief Financial Officer of CNB Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350)

(b) Reports on Form 8-K. No report on Form 8-K was filed during the quarter ended March 31, 2003.

13



---

SIGNATURES

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

|Date: May 13, 2003 | By: | /s/ H. N. PADGET, JR.                                                                                       | 
|------------------ | --- | ----------------------------------------------------------------------------------------------------------- | 
|                   |     |                                                                                                             | 
|                   |     | H. N. Padget, Jr., President and Chief Executive Officer (principal executive officer)                      | 
|                   |     |                                                                                                             | 
|Date: May 13, 2003 | By: | /s/ DANNY F. DUKES                                                                                          | 
|                   |     |                                                                                                             | 
|                   |     | Danny F. Dukes, Senior Vice President, Chief Financial Officer (principal financial and accounting officer) | 

14



---

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.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | c.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|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.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                            

15



---

|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:  May 13, 2003

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

16



---

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.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | c.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|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.                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                            

17



---

|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:  May 13, 2003

| | /s/ DANNY F. DUKES                                                         | 
| | -------------------------------------------------------------------------- | 
| |                                                                            | 
| | Danny F. Dukes , S.V.P/C.F.O. (Principal Financial and Accounting Officer) | 

18